National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor
This case is a multi-party M&A negotiation between companies in the liquor business. The target company National Distilleries Corporation (NDC) is the target of two competitors, namely Liquor America (LA) and International Liquor (IL).
Swot Analysis of "National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor" written by Horacio Falcao, Reza Zargham includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Liquor Distilleries facing as an external strategic factors. Some of the topics covered in National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models,
increasing energy prices, technology disruption, etc
Introduction to SWOT Analysis of National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Liquor Distilleries, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Liquor Distilleries 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor can be done for the following purposes –
1. Strategic planning using facts provided in National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor case study
2. Improving business portfolio management of Liquor Distilleries
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 Liquor Distilleries
Strengths National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Liquor Distilleries in National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Liquor Distilleries 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.
Analytics focus
– Liquor Distilleries is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Horacio Falcao, Reza Zargham can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Finance & Accounting industry
– National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor firm has clearly differentiated products in the market place. This has enabled Liquor Distilleries to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Liquor Distilleries to invest into research and development (R&D) and innovation.
Ability to lead change in Finance & Accounting field
– Liquor Distilleries 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 Liquor Distilleries in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Liquor Distilleries in the sector have low bargaining power. National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Liquor Distilleries to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Liquor Distilleries has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Liquor Distilleries to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Liquor Distilleries is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Liquor Distilleries
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Liquor Distilleries does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Liquor Distilleries is one of the leading recruiters in the industry. Managers in the National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Liquor Distilleries is present in almost all the verticals within the industry. This has provided firm in National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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.
Successful track record of launching new products
– Liquor Distilleries has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Liquor Distilleries 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.
Operational resilience
– The operational resilience strategy in the National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor are -
Skills based hiring
– The stress on hiring functional specialists at Liquor Distilleries has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Liquor Distilleries products
– To increase the profitability and margins on the products, Liquor Distilleries needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Liquor Distilleries supply chain. Even after few cautionary changes mentioned in the HBR case study - National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Liquor Distilleries vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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 Liquor Distilleries has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Liquor Distilleries 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 decision making process
– As mentioned earlier in the report, Liquor Distilleries 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. Liquor Distilleries 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.
High cash cycle compare to competitors
Liquor Distilleries 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.
Need for greater diversity
– Liquor Distilleries 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor, it seems that the employees of Liquor Distilleries 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 operating costs
– Compare to the competitors, firm in the HBR case study National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Liquor Distilleries 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Liquor Distilleries 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.
Opportunities National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor | 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor are -
Creating value in data economy
– The success of analytics program of Liquor Distilleries has opened avenues for new revenue streams for the organization in the industry. This can help Liquor Distilleries to build a more holistic ecosystem as suggested in the National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor case study. Liquor Distilleries can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Liquor Distilleries 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.
Better consumer reach
– The expansion of the 5G network will help Liquor Distilleries to increase its market reach. Liquor Distilleries 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.
Learning at scale
– Online learning technologies has now opened space for Liquor Distilleries 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.
Loyalty marketing
– Liquor Distilleries 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.
Developing new processes and practices
– Liquor Distilleries can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Liquor Distilleries 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Liquor Distilleries 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, National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Liquor Distilleries in the consumer business. Now Liquor Distilleries can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Liquor Distilleries 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Liquor Distilleries 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 Liquor Distilleries 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 Liquor Distilleries can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Liquor Distilleries 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.
Threats National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor are -
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. Liquor Distilleries 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. Liquor Distilleries 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
– Liquor Distilleries 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.
Environmental challenges
– Liquor Distilleries 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. Liquor Distilleries 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.
Increasing wage structure of Liquor Distilleries
– 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 Liquor Distilleries.
Shortening product life cycle
– it is one of the major threat that Liquor Distilleries is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Liquor Distilleries 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.
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 Liquor Distilleries business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Liquor Distilleries 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Liquor Distilleries 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor .
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 Liquor Distilleries.
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. Liquor Distilleries can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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 National Distilleries Corp. (A): An M&A Negotiation Role Play - Confidential Instructions for International Liquor 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 Liquor Distilleries needs to make to build a sustainable competitive advantage.
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