In 2001, Allianz Capital Partners and Goldman Sachs acquired a majority stake in Messer Griesheim, a European industrial gas concern held by Hoechst. The dealmakers faced several challenges, including delicate corporate governance issues due to partial family ownership and a consolidating market for industrial gases. Aiming to make Messer Griesheim a more attractive potential acquisition, Messer Griesheim management had drawn up a restructuring plan as early as 2000. By late 2003 the private equity players were ready to exit and the Messer family agitated for further control. Several factors were in play: the family had a buy-back option, the window of which was quickly closing; there were few possible strategic buyers, given the anti-trust issues facing a European player interested in buying the firm; and the family made no secret of its desire to retain a piece of the firm, at the very least, and some measure of control. The case explores the steps taken by the private equity investors to restructure the firm, and the relationship the partners forged with the family owners, to bring about a favorable exit for the private equity partners and ownership for the Messer family.
Authors :: Josh Lerner, Ann-Kristin Achleitner, Eva Nathusius, Kerry Herman
Swot Analysis of "Messer Griesheim (A)" written by Josh Lerner, Ann-Kristin Achleitner, Eva Nathusius, Kerry Herman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Messer Griesheim facing as an external strategic factors. Some of the topics covered in Messer Griesheim (A) case study are - Strategic Management Strategies, Manufacturing, Mergers & acquisitions, Reorganization, Venture capital and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Messer Griesheim (A) casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing,
increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Messer Griesheim (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Messer Griesheim (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Messer Griesheim, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Messer Griesheim 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 Messer Griesheim (A) can be done for the following purposes –
1. Strategic planning using facts provided in Messer Griesheim (A) case study
2. Improving business portfolio management of Messer Griesheim
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 Messer Griesheim
Strengths Messer Griesheim (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Messer Griesheim in Messer Griesheim (A) Harvard Business Review case study are -
Learning organization
- Messer Griesheim 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 Messer Griesheim is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Messer Griesheim (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Messer Griesheim 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 Josh Lerner, Ann-Kristin Achleitner, Eva Nathusius, Kerry Herman 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.
Cross disciplinary teams
– Horizontal connected teams at the Messer Griesheim 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.
Operational resilience
– The operational resilience strategy in the Messer Griesheim (A) 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.
Highly skilled collaborators
– Messer Griesheim 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 Messer Griesheim (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Messer Griesheim digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Messer Griesheim 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.
Low bargaining power of suppliers
– Suppliers of Messer Griesheim in the sector have low bargaining power. Messer Griesheim (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Messer Griesheim to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Messer Griesheim is one of the most innovative firm in sector. Manager in Messer Griesheim (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Messer Griesheim has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Messer Griesheim 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.
High switching costs
– The high switching costs that Messer Griesheim 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.
Superior customer experience
– The customer experience strategy of Messer Griesheim in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Messer Griesheim has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Messer Griesheim (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Messer Griesheim (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Messer Griesheim (A) are -
Aligning sales with marketing
– It come across in the case study Messer Griesheim (A) 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 Messer Griesheim (A) can leverage the sales team experience to cultivate customer relationships as Messer Griesheim is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Messer Griesheim 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. Messer Griesheim 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Messer Griesheim (A) 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 Messer Griesheim has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Messer Griesheim has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Messer Griesheim (A), it seems that the employees of Messer Griesheim 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, Messer Griesheim 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 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 Messer Griesheim supply chain. Even after few cautionary changes mentioned in the HBR case study - Messer Griesheim (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Messer Griesheim vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Messer Griesheim (A), in the dynamic environment Messer Griesheim has struggled to respond to the nimble upstart competition. Messer Griesheim has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Messer Griesheim (A), is just above the industry average. Messer Griesheim 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Messer Griesheim (A) 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 Messer Griesheim 's lucrative customers.
Interest costs
– Compare to the competition, Messer Griesheim 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.
Opportunities Messer Griesheim (A) | 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 Messer Griesheim (A) are -
Creating value in data economy
– The success of analytics program of Messer Griesheim has opened avenues for new revenue streams for the organization in the industry. This can help Messer Griesheim to build a more holistic ecosystem as suggested in the Messer Griesheim (A) case study. Messer Griesheim can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Messer Griesheim 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Messer Griesheim can use these opportunities to build new business models that can help the communities that Messer Griesheim operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Messer Griesheim can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Messer Griesheim is facing challenges because of the dominance of functional experts in the organization. Messer Griesheim (A) 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.
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 Messer Griesheim in the consumer business. Now Messer Griesheim can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Messer Griesheim has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Messer Griesheim 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.
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. Messer Griesheim 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. Messer Griesheim 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 Messer Griesheim 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 Messer Griesheim 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 Messer Griesheim to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Messer Griesheim can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Messer Griesheim (A) 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.
Using analytics as competitive advantage
– Messer Griesheim 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 Messer Griesheim (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Messer Griesheim to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Messer Griesheim (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Messer Griesheim (A) are -
Increasing wage structure of Messer Griesheim
– 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 Messer Griesheim.
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 Messer Griesheim business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Messer Griesheim with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Messer Griesheim 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.
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 Messer Griesheim in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Messer Griesheim 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.
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. Messer Griesheim can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Messer Griesheim 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.
Technology acceleration in Forth Industrial Revolution
– Messer Griesheim has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Messer Griesheim 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Messer Griesheim 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 Messer Griesheim (A) .
Shortening product life cycle
– it is one of the major threat that Messer Griesheim is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Messer Griesheim needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Messer Griesheim (A), Messer Griesheim 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 .
Weighted SWOT Analysis of Messer Griesheim (A) 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 Messer Griesheim (A) 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 Messer Griesheim (A) 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 Messer Griesheim (A) 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 Messer Griesheim (A) 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 Messer Griesheim needs to make to build a sustainable competitive advantage.
