Metallgesellschaft AG is a commodity and engineering conglomerate based in Frankfurt am Main, Germany. Metallgesellschaft Corp., a New York based subsidiary of the group, has made oil trading and hedging errors that could drive the group into insolvency. The impact of hedge accounting rules on the quality of the information available to top management is examined.
Swot Analysis of "Metallgesellschaft AG" written by David F. Hawkins, Guy Weyns includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Metallgesellschaft Ag facing as an external strategic factors. Some of the topics covered in Metallgesellschaft AG case study are - Strategic Management Strategies, Forecasting, International business, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Metallgesellschaft AG casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing energy prices, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy,
digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Metallgesellschaft AG
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Metallgesellschaft AG case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Metallgesellschaft Ag, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Metallgesellschaft Ag 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 Metallgesellschaft AG can be done for the following purposes –
1. Strategic planning using facts provided in Metallgesellschaft AG case study
2. Improving business portfolio management of Metallgesellschaft Ag
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 Metallgesellschaft Ag
Strengths Metallgesellschaft AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Metallgesellschaft Ag in Metallgesellschaft AG Harvard Business Review case study are -
Ability to lead change in Finance & Accounting field
– Metallgesellschaft Ag 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 Metallgesellschaft Ag in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Metallgesellschaft Ag 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 Metallgesellschaft Ag digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Metallgesellschaft Ag 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.
Successful track record of launching new products
– Metallgesellschaft Ag has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Metallgesellschaft Ag 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.
Effective Research and Development (R&D)
– Metallgesellschaft Ag 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 Metallgesellschaft AG - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Metallgesellschaft Ag is one of the most innovative firm in sector. Manager in Metallgesellschaft AG Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Metallgesellschaft Ag 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.
Highly skilled collaborators
– Metallgesellschaft Ag 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 Metallgesellschaft AG HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Metallgesellschaft Ag is one of the leading recruiters in the industry. Managers in the Metallgesellschaft AG are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Metallgesellschaft Ag is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Metallgesellschaft Ag is present in almost all the verticals within the industry. This has provided firm in Metallgesellschaft AG 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
– Metallgesellschaft AG firm has clearly differentiated products in the market place. This has enabled Metallgesellschaft Ag to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Metallgesellschaft Ag to invest into research and development (R&D) and innovation.
Weaknesses Metallgesellschaft AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Metallgesellschaft AG are -
Need for greater diversity
– Metallgesellschaft Ag has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Metallgesellschaft AG 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 Metallgesellschaft Ag has relatively successful track record of launching new products.
Lack of clear differentiation of Metallgesellschaft Ag products
– To increase the profitability and margins on the products, Metallgesellschaft Ag needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Metallgesellschaft Ag 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Metallgesellschaft AG, in the dynamic environment Metallgesellschaft Ag has struggled to respond to the nimble upstart competition. Metallgesellschaft Ag has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Metallgesellschaft AG, it seems that the employees of Metallgesellschaft Ag 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.
No frontier risks strategy
– After analyzing the HBR case study Metallgesellschaft AG, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Metallgesellschaft Ag is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Metallgesellschaft Ag needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Metallgesellschaft Ag 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, Metallgesellschaft Ag 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Metallgesellschaft Ag is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Metallgesellschaft AG can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Metallgesellschaft Ag 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.
Opportunities Metallgesellschaft AG | 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 Metallgesellschaft AG are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Metallgesellschaft Ag is facing challenges because of the dominance of functional experts in the organization. Metallgesellschaft AG 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.
Developing new processes and practices
– Metallgesellschaft Ag 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.
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 Metallgesellschaft Ag in the consumer business. Now Metallgesellschaft Ag can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Metallgesellschaft Ag 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
– Metallgesellschaft Ag can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Metallgesellschaft AG 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.
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. Metallgesellschaft Ag can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Metallgesellschaft Ag 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 Metallgesellschaft Ag to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Metallgesellschaft Ag has opened avenues for new revenue streams for the organization in the industry. This can help Metallgesellschaft Ag to build a more holistic ecosystem as suggested in the Metallgesellschaft AG case study. Metallgesellschaft Ag can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Metallgesellschaft Ag 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 Metallgesellschaft Ag to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Metallgesellschaft Ag to increase its market reach. Metallgesellschaft Ag will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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. Metallgesellschaft Ag 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. Metallgesellschaft Ag 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Metallgesellschaft Ag can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Metallgesellschaft AG, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Metallgesellschaft AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Metallgesellschaft AG are -
Shortening product life cycle
– it is one of the major threat that Metallgesellschaft Ag is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Metallgesellschaft Ag 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Metallgesellschaft Ag 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 Metallgesellschaft AG .
Stagnating economy with rate increase
– Metallgesellschaft Ag 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.
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. Metallgesellschaft Ag can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Metallgesellschaft Ag 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. Metallgesellschaft Ag can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Metallgesellschaft Ag business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Metallgesellschaft Ag
– 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 Metallgesellschaft Ag.
Regulatory challenges
– Metallgesellschaft Ag 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.
Technology acceleration in Forth Industrial Revolution
– Metallgesellschaft Ag has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Metallgesellschaft Ag 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Metallgesellschaft Ag with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Metallgesellschaft Ag 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.
Weighted SWOT Analysis of Metallgesellschaft AG 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 Metallgesellschaft AG 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 Metallgesellschaft AG 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 Metallgesellschaft AG 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 Metallgesellschaft AG 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 Metallgesellschaft Ag needs to make to build a sustainable competitive advantage.
