Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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 - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, increasing household debt because of falling income levels,
digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , 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.
Analytics focus
– Cpl Conglomerate 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 Michael R King, Michael Zawalsky 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.
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.
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.
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.
Organizational Resilience of Cpl Conglomerate
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cpl Conglomerate does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
High switching costs
– The high switching costs that Cpl Conglomerate 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 lead change in Finance & Accounting field
– Cpl Conglomerate 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 Cpl Conglomerate in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Cross disciplinary teams
– Horizontal connected teams at the Cpl Conglomerate 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.
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.
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 -
Slow to strategic competitive environment developments
– As Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate HBR case study mentions - Cpl Conglomerate 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.
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.
Increasing silos among functional specialists
– The organizational structure of Cpl Conglomerate is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cpl Conglomerate needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cpl Conglomerate to focus more on services rather than just following the product oriented approach.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Canadian Pacific Ltd: Unlocking Shareholder Value in a Conglomerate, is just above the industry average. Cpl Conglomerate needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
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.
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.
Lack of clear differentiation of Cpl Conglomerate products
– To increase the profitability and margins on the products, Cpl Conglomerate needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Skills based hiring
– The stress on hiring functional specialists at Cpl Conglomerate 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.
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 -
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 Cpl Conglomerate in the consumer business. Now Cpl Conglomerate can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Cpl Conglomerate 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.
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.
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.
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.
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.
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.
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.
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.
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 Cpl Conglomerate 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.
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.
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. Cpl Conglomerate can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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 -
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 dependence on third party suppliers
– Cpl Conglomerate 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.
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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cpl Conglomerate 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.
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.
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.
Consumer confidence and its impact on Cpl Conglomerate 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.
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.
Increasing wage structure of Cpl Conglomerate
– 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 Cpl Conglomerate.
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.
Shortening product life cycle
– it is one of the major threat that Cpl Conglomerate is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.