Case Study Description of ESG Metrics: Reshaping Capitalism?
In the past twenty-five years, the world had seen an exponential growth in the number of companies reporting environmental, social and governance (ESG) data. Investor interest in ESG data also grew rapidly. A growing belief that increasing levels of social inequality and natural environment degradation were pressing problems that the capitalist system was failing to resolve had led many stakeholders to advocate for changes in measurement and corporate reporting as a potentially powerful "lever" that could move the discussion from "Reimagining" to "Reshaping" Capitalism. Some suggested that increased transparency could change corporate behavior, increase corporate accountability and lead to better outcomes for employees, customers, the environment and local communities. Others suggested that ESG data were value relevant from an investor standpoint and that firms "doing good would do well." According to this view, investors that used ESG data would be able to make better investment decisions and widespread disclosure of such data would improve market efficiency. However, some commentators doubted the sincerity of company ESG disclosures and suggested that firms that did good were less competitive, and therefore earned lower returns for their shareholders. As the business community entered the second half of the second decade of the twenty first century, whether the widespread adoption of ESG metrics would happen -- and whether, if it did, it would lead to systematic change -- was very much an open question.
Swot Analysis of "ESG Metrics: Reshaping Capitalism?" written by George Serafeim, Jody Grewal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Esg Suggested facing as an external strategic factors. Some of the topics covered in ESG Metrics: Reshaping Capitalism? case study are - Strategic Management Strategies, Economics, Organizational culture, Social responsibility, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the ESG Metrics: Reshaping Capitalism? casestudy better are - – increasing energy prices, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of ESG Metrics: Reshaping Capitalism?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ESG Metrics: Reshaping Capitalism? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Esg Suggested, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Esg Suggested operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of ESG Metrics: Reshaping Capitalism? can be done for the following purposes –
1. Strategic planning using facts provided in ESG Metrics: Reshaping Capitalism? case study
2. Improving business portfolio management of Esg Suggested
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Esg Suggested
Strengths ESG Metrics: Reshaping Capitalism? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Esg Suggested in ESG Metrics: Reshaping Capitalism? Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Esg Suggested in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Esg Suggested has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Esg Suggested to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Esg Suggested is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Esg Suggested has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study ESG Metrics: Reshaping Capitalism? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Esg Suggested digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Esg Suggested has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Highly skilled collaborators
– Esg Suggested has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in ESG Metrics: Reshaping Capitalism? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Esg Suggested are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Finance & Accounting field
– Esg Suggested is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Esg Suggested in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Finance & Accounting industry
– ESG Metrics: Reshaping Capitalism? firm has clearly differentiated products in the market place. This has enabled Esg Suggested to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Esg Suggested to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Esg Suggested has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Esg Suggested has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Esg Suggested is one of the most innovative firm in sector. Manager in ESG Metrics: Reshaping Capitalism? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Esg Suggested has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses ESG Metrics: Reshaping Capitalism? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ESG Metrics: Reshaping Capitalism? are -
Capital Spending Reduction
– Even during the low interest decade, Esg Suggested has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ESG Metrics: Reshaping Capitalism?, it seems that the employees of Esg Suggested don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, George Serafeim, Jody Grewal suggests that, Esg Suggested is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Esg Suggested supply chain. Even after few cautionary changes mentioned in the HBR case study - ESG Metrics: Reshaping Capitalism?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Esg Suggested vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Esg Suggested is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Esg Suggested needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Esg Suggested to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Esg Suggested has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Esg Suggested even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Interest costs
– Compare to the competition, Esg Suggested has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As ESG Metrics: Reshaping Capitalism? HBR case study mentions - Esg Suggested takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Need for greater diversity
– Esg Suggested has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Workers concerns about automation
– As automation is fast increasing in the segment, Esg Suggested needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Esg Suggested products
– To increase the profitability and margins on the products, Esg Suggested needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities ESG Metrics: Reshaping Capitalism? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study ESG Metrics: Reshaping Capitalism? are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Esg Suggested can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Loyalty marketing
– Esg Suggested has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Esg Suggested to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Esg Suggested can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Esg Suggested to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Esg Suggested can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Esg Suggested in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Esg Suggested in the consumer business. Now Esg Suggested can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Esg Suggested can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Esg Suggested can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Esg Suggested can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Esg Suggested has opened avenues for new revenue streams for the organization in the industry. This can help Esg Suggested to build a more holistic ecosystem as suggested in the ESG Metrics: Reshaping Capitalism? case study. Esg Suggested can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Esg Suggested has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study ESG Metrics: Reshaping Capitalism? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Esg Suggested to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Esg Suggested is facing challenges because of the dominance of functional experts in the organization. ESG Metrics: Reshaping Capitalism? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats ESG Metrics: Reshaping Capitalism? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ESG Metrics: Reshaping Capitalism? are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Esg Suggested with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Esg Suggested needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Increasing wage structure of Esg Suggested
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Esg Suggested.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Esg Suggested will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Esg Suggested needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Esg Suggested can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Esg Suggested in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Esg Suggested is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Esg Suggested can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Esg Suggested high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Esg Suggested needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Esg Suggested can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of ESG Metrics: Reshaping Capitalism? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study ESG Metrics: Reshaping Capitalism? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study ESG Metrics: Reshaping Capitalism? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study ESG Metrics: Reshaping Capitalism? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of ESG Metrics: Reshaping Capitalism? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Esg Suggested needs to make to build a sustainable competitive advantage.
