Case Study Description of Baker Hughes: Foreign Corrupt Practices Act
In 2002, Baker Hughes was accused of violating the Foreign Corrupt Practices Act (FCPA). This case describes the actions taken by the company in response to those accusations. These include hiring a third-party law firm to undertake an independent investigation and voluntarily reviewing its entire global operations with the purpose of discovering other FCPA violations. Simultaneously, the company engaged in a comprehensive restructuring of its policies and systems for preventing and detecting the issuance of questionable payments.
Swot Analysis of "Baker Hughes: Foreign Corrupt Practices Act" written by Brian Tayan, David F. Larcker includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fcpa Hughes facing as an external strategic factors. Some of the topics covered in Baker Hughes: Foreign Corrupt Practices Act case study are - Strategic Management Strategies, Ethics, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Baker Hughes: Foreign Corrupt Practices Act casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, increasing energy prices, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, technology disruption,
wage bills are increasing, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Baker Hughes: Foreign Corrupt Practices Act
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Baker Hughes: Foreign Corrupt Practices Act case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fcpa Hughes, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fcpa Hughes 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 Baker Hughes: Foreign Corrupt Practices Act can be done for the following purposes –
1. Strategic planning using facts provided in Baker Hughes: Foreign Corrupt Practices Act case study
2. Improving business portfolio management of Fcpa Hughes
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 Fcpa Hughes
Strengths Baker Hughes: Foreign Corrupt Practices Act | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fcpa Hughes in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study are -
Learning organization
- Fcpa Hughes is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Fcpa Hughes is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Fcpa Hughes is present in almost all the verticals within the industry. This has provided firm in Baker Hughes: Foreign Corrupt Practices Act case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Fcpa Hughes is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Fcpa Hughes digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fcpa Hughes 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
– Fcpa Hughes 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 Baker Hughes: Foreign Corrupt Practices Act HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Fcpa Hughes in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Fcpa Hughes has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Fcpa Hughes has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fcpa Hughes 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Baker Hughes: Foreign Corrupt Practices Act firm has clearly differentiated products in the market place. This has enabled Fcpa Hughes to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Fcpa Hughes to invest into research and development (R&D) and innovation.
Ability to lead change in Finance & Accounting field
– Fcpa Hughes 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 Fcpa Hughes in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Fcpa Hughes 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.
Ability to recruit top talent
– Fcpa Hughes is one of the leading recruiters in the industry. Managers in the Baker Hughes: Foreign Corrupt Practices Act are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Baker Hughes: Foreign Corrupt Practices Act | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Baker Hughes: Foreign Corrupt Practices Act are -
Lack of clear differentiation of Fcpa Hughes products
– To increase the profitability and margins on the products, Fcpa Hughes needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Fcpa Hughes 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.
No frontier risks strategy
– After analyzing the HBR case study Baker Hughes: Foreign Corrupt Practices Act, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study Baker Hughes: Foreign Corrupt Practices Act that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Baker Hughes: Foreign Corrupt Practices Act can leverage the sales team experience to cultivate customer relationships as Fcpa Hughes is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fcpa Hughes is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Baker Hughes: Foreign Corrupt Practices Act can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Brian Tayan, David F. Larcker suggests that, Fcpa Hughes 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 cash cycle compare to competitors
Fcpa Hughes has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Baker Hughes: Foreign Corrupt Practices Act, it seems that the employees of Fcpa Hughes 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Fcpa Hughes 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Baker Hughes: Foreign Corrupt Practices Act HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Fcpa Hughes has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Fcpa Hughes is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Fcpa Hughes needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fcpa Hughes to focus more on services rather than just following the product oriented approach.
Opportunities Baker Hughes: Foreign Corrupt Practices Act | 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 Baker Hughes: Foreign Corrupt Practices Act are -
Manufacturing automation
– Fcpa Hughes can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fcpa Hughes can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Baker Hughes: Foreign Corrupt Practices Act, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Fcpa Hughes 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.
Leveraging digital technologies
– Fcpa Hughes can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Creating value in data economy
– The success of analytics program of Fcpa Hughes has opened avenues for new revenue streams for the organization in the industry. This can help Fcpa Hughes to build a more holistic ecosystem as suggested in the Baker Hughes: Foreign Corrupt Practices Act case study. Fcpa Hughes can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Fcpa Hughes to increase its market reach. Fcpa Hughes will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Fcpa Hughes 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 Baker Hughes: Foreign Corrupt Practices Act - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fcpa Hughes to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fcpa Hughes 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fcpa Hughes can use these opportunities to build new business models that can help the communities that Fcpa Hughes operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Fcpa Hughes 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. Fcpa Hughes 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.
Building a culture of innovation
– managers at Fcpa Hughes can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fcpa Hughes to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fcpa Hughes to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fcpa Hughes can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Baker Hughes: Foreign Corrupt Practices Act External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Baker Hughes: Foreign Corrupt Practices Act are -
Stagnating economy with rate increase
– Fcpa Hughes 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fcpa Hughes can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Baker Hughes: Foreign Corrupt Practices Act .
Shortening product life cycle
– it is one of the major threat that Fcpa Hughes is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Fcpa Hughes 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.
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. Fcpa Hughes can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fcpa Hughes.
Consumer confidence and its impact on Fcpa Hughes demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fcpa Hughes in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Baker Hughes: Foreign Corrupt Practices Act, Fcpa Hughes may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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 Fcpa Hughes in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Fcpa Hughes
– 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 Fcpa Hughes.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fcpa Hughes business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Baker Hughes: Foreign Corrupt Practices Act 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 Baker Hughes: Foreign Corrupt Practices Act 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 Baker Hughes: Foreign Corrupt Practices Act 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 Baker Hughes: Foreign Corrupt Practices Act 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 Baker Hughes: Foreign Corrupt Practices Act 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 Fcpa Hughes needs to make to build a sustainable competitive advantage.
