Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate
In January 2001, the chief executive officer (CEO) of Canadian Pacific Limited (CPL) was contemplating the future of his firm. CPL was one of Canada's oldest conglomerates with operations in railways, shipping, natural resources and hotels. Its stock market capitalization of CDN$13.5 billion reflected a conglomerate discount, estimated at 12 to 35 per cent of the value. In order to eliminate this conglomerate discount and maximize shareholder value, the CEO weighed the pros and cons of asset divestitures or spinoffs. Would it make sense to keep some of the related business together to preserve economies of scale and scope and to maintain synergies? What would be the tax implications of each option? There were numerous operational and legal implications to consider. Knowing he had to make a decision quickly, the CEO looked for the option that would unlock the most value for CPL's shareholders.
Swot Analysis of "Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate" written by Michael R King, Michael Zawalsky includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cpl Conglomerate facing as an external strategic factors. Some of the topics covered in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate case study are - Strategic Management Strategies, Financial management, Reorganization and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate casestudy better are - – technology disruption, central banks are concerned over increasing inflation, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, geopolitical disruptions, talent flight as more people leaving formal jobs,
supply chains are disrupted by pandemic , wage bills are increasing, etc
Introduction to SWOT Analysis of Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cpl Conglomerate, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cpl Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate can be done for the following purposes –
1. Strategic planning using facts provided in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate case study
2. Improving business portfolio management of Cpl Conglomerate
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 Cpl Conglomerate
Strengths Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cpl Conglomerate in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate Harvard Business Review case study are -
Highly skilled collaborators
– Cpl Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Cpl Conglomerate in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Cpl Conglomerate digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cpl Conglomerate 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.
High brand equity
– Cpl Conglomerate has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cpl Conglomerate to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Cpl Conglomerate in the sector have low bargaining power. Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cpl Conglomerate to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Cpl Conglomerate is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Cpl Conglomerate 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 Cpl Conglomerate is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Cpl Conglomerate is present in almost all the verticals within the industry. This has provided firm in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate firm has clearly differentiated products in the market place. This has enabled Cpl Conglomerate to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cpl Conglomerate to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Cpl Conglomerate is one of the leading recruiters in the industry. Managers in the Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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.
Innovation driven organization
– Cpl Conglomerate is one of the most innovative firm in sector. Manager in Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate are -
Low market penetration in new markets
– Outside its home market of Cpl Conglomerate, firm in the HBR case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Cpl Conglomerate has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Cpl Conglomerate 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 operating costs
– Compare to the competitors, firm in the HBR case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Cpl Conglomerate 's lucrative customers.
Interest costs
– Compare to the competition, Cpl Conglomerate 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.
High cash cycle compare to competitors
Cpl Conglomerate 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.
Products dominated business model
– Even though Cpl Conglomerate has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate, in the dynamic environment Cpl Conglomerate has struggled to respond to the nimble upstart competition. Cpl Conglomerate has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate can leverage the sales team experience to cultivate customer relationships as Cpl Conglomerate is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate, it seems that the employees of Cpl Conglomerate 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 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 Cpl Conglomerate supply chain. Even after few cautionary changes mentioned in the HBR case study - Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cpl Conglomerate vulnerable to further global disruptions in South East Asia.
Opportunities Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate | 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate are -
Using analytics as competitive advantage
– Cpl Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cpl Conglomerate to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cpl Conglomerate 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.
Buying journey improvements
– Cpl Conglomerate can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cpl Conglomerate 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 Cpl Conglomerate 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 Cpl Conglomerate can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cpl Conglomerate is facing challenges because of the dominance of functional experts in the organization. Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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.
Learning at scale
– Online learning technologies has now opened space for Cpl Conglomerate 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cpl Conglomerate 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.
Creating value in data economy
– The success of analytics program of Cpl Conglomerate has opened avenues for new revenue streams for the organization in the industry. This can help Cpl Conglomerate to build a more holistic ecosystem as suggested in the Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate case study. Cpl Conglomerate can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Cpl Conglomerate can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cpl Conglomerate can use these opportunities to build new business models that can help the communities that Cpl Conglomerate operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Cpl Conglomerate 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.
Manufacturing automation
– Cpl Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate are -
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate, Cpl Conglomerate 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 .
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 Cpl Conglomerate.
Environmental challenges
– Cpl Conglomerate 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. Cpl Conglomerate can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Cpl Conglomerate can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cpl Conglomerate with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Cpl Conglomerate 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, Cpl Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate .
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. Cpl Conglomerate needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Cpl Conglomerate business can come under increasing regulations regarding data privacy, data security, 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. Cpl Conglomerate 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.
Stagnating economy with rate increase
– Cpl Conglomerate 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.
Technology acceleration in Forth Industrial Revolution
– Cpl Conglomerate has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cpl Conglomerate needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate 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 Cpl Conglomerate needs to make to build a sustainable competitive advantage.
