Case Study Description of Atlantic Energy/Delmarva Power & Light (A)
Delmarva Power & Light and Atlantic Energy are neighboring electric utilities based in Delaware and New Jersey, respectively. In early 1996, they entered into merger negotiations, but were unable to reach an agreement on price because they could not agree on what impact deregulation would have on Atlantic. In the currently regulated electricity market, Atlantic was profitable even though it was one of the high-cost power producers in the region. But in a deregulated environment, where prices would surely fall, Atlantic might become unprofitable and, therefore, worth significantly less. The key issues are to determine how much to pay for Atlantic and how to structure a deal that will bridge the disagreements over value. Unlike certain situations where hedging can resolve uncertainty, there is no way to hedge either the speed of deregulation or the magnitude of price declines due to competition.
Authors :: Benjamin C. Esty, Tracy Aronson, Mathew Mateo Millett
Swot Analysis of "Atlantic Energy/Delmarva Power & Light (A)" written by Benjamin C. Esty, Tracy Aronson, Mathew Mateo Millett includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Atlantic Delmarva facing as an external strategic factors. Some of the topics covered in Atlantic Energy/Delmarva Power & Light (A) case study are - Strategic Management Strategies, Managing uncertainty, Mergers & acquisitions, Negotiations, Regulation, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Atlantic Energy/Delmarva Power & Light (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, wage bills are increasing, there is backlash against globalization,
banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, etc
Introduction to SWOT Analysis of Atlantic Energy/Delmarva Power & Light (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Atlantic Energy/Delmarva Power & Light (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Atlantic Delmarva, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Atlantic Delmarva 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 Atlantic Energy/Delmarva Power & Light (A) can be done for the following purposes –
1. Strategic planning using facts provided in Atlantic Energy/Delmarva Power & Light (A) case study
2. Improving business portfolio management of Atlantic Delmarva
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 Atlantic Delmarva
Strengths Atlantic Energy/Delmarva Power & Light (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Atlantic Delmarva in Atlantic Energy/Delmarva Power & Light (A) Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Atlantic Delmarva 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 Atlantic Delmarva digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Atlantic Delmarva 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.
Organizational Resilience of Atlantic Delmarva
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Atlantic Delmarva does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Atlantic Delmarva 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 Atlantic Energy/Delmarva Power & Light (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Atlantic Delmarva has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Atlantic Delmarva to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Atlantic Energy/Delmarva Power & Light (A) firm has clearly differentiated products in the market place. This has enabled Atlantic Delmarva to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Atlantic Delmarva to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Atlantic Delmarva 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.
Ability to recruit top talent
– Atlantic Delmarva is one of the leading recruiters in the industry. Managers in the Atlantic Energy/Delmarva Power & Light (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Atlantic Delmarva 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 Atlantic Delmarva is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Atlantic Energy/Delmarva Power & Light (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Atlantic Delmarva is one of the most innovative firm in sector. Manager in Atlantic Energy/Delmarva Power & Light (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
– Atlantic Delmarva has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Atlantic Delmarva 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 Atlantic Delmarva 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.
Weaknesses Atlantic Energy/Delmarva Power & Light (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Atlantic Energy/Delmarva Power & Light (A) are -
Capital Spending Reduction
– Even during the low interest decade, Atlantic Delmarva 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.
Slow decision making process
– As mentioned earlier in the report, Atlantic Delmarva 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. Atlantic Delmarva 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.
Low market penetration in new markets
– Outside its home market of Atlantic Delmarva, firm in the HBR case study Atlantic Energy/Delmarva Power & Light (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Atlantic Energy/Delmarva Power & Light (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 Atlantic Delmarva 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Atlantic Energy/Delmarva Power & Light (A), it seems that the employees of Atlantic Delmarva 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 cash cycle compare to competitors
Atlantic Delmarva 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 Atlantic Delmarva products
– To increase the profitability and margins on the products, Atlantic Delmarva needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Atlantic Delmarva is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Atlantic Energy/Delmarva Power & Light (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Atlantic Delmarva 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.
Skills based hiring
– The stress on hiring functional specialists at Atlantic Delmarva 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.
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 Atlantic Delmarva supply chain. Even after few cautionary changes mentioned in the HBR case study - Atlantic Energy/Delmarva Power & Light (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Atlantic Delmarva vulnerable to further global disruptions in South East Asia.
Opportunities Atlantic Energy/Delmarva Power & Light (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 Atlantic Energy/Delmarva Power & Light (A) are -
Manufacturing automation
– Atlantic Delmarva 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.
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. Atlantic Delmarva 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. Atlantic Delmarva 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.
Learning at scale
– Online learning technologies has now opened space for Atlantic Delmarva 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Atlantic Delmarva can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Atlantic Delmarva has opened avenues for new revenue streams for the organization in the industry. This can help Atlantic Delmarva to build a more holistic ecosystem as suggested in the Atlantic Energy/Delmarva Power & Light (A) case study. Atlantic Delmarva can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Atlantic Delmarva 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.
Building a culture of innovation
– managers at Atlantic Delmarva 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.
Buying journey improvements
– Atlantic Delmarva can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Atlantic Energy/Delmarva Power & Light (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.
Leveraging digital technologies
– Atlantic Delmarva 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Atlantic Delmarva can use these opportunities to build new business models that can help the communities that Atlantic Delmarva 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. Atlantic Delmarva can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Atlantic Delmarva 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.
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 Atlantic Delmarva 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.
Threats Atlantic Energy/Delmarva Power & Light (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Atlantic Energy/Delmarva Power & Light (A) are -
Regulatory challenges
– Atlantic Delmarva 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.
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 Atlantic Delmarva business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Atlantic Delmarva 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.
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. Atlantic Delmarva needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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. Atlantic Delmarva 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.
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.
Stagnating economy with rate increase
– Atlantic Delmarva 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 Atlantic Delmarva 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.
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 Atlantic Delmarva in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Atlantic Delmarva 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 Atlantic Energy/Delmarva Power & Light (A) .
Increasing wage structure of Atlantic Delmarva
– 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 Atlantic Delmarva.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Atlantic Energy/Delmarva Power & Light (A), Atlantic Delmarva 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 Atlantic Energy/Delmarva Power & Light (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 Atlantic Energy/Delmarva Power & Light (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 Atlantic Energy/Delmarva Power & Light (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 Atlantic Energy/Delmarva Power & Light (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 Atlantic Energy/Delmarva Power & Light (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 Atlantic Delmarva needs to make to build a sustainable competitive advantage.
