An Investment Analysis of Honduran Teak Plantations SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of An Investment Analysis of Honduran Teak Plantations
. Matthew Haertzen, a timber portfolio manager for Cogent Partners, the fund manager for Cambium Global Timberland (a UK listed timber investment fund), was tasked with the analysis of a managed teak plantation in Honduras for potential cumulative investment in the amount of $21-25 million. Matt was evaluating an opportunity from Beyond Forestry, a Honduran Company that employed a unique accelerated teak growth model. This accelerated growth model allowed for harvesting of teak wood in as few as 7-12 years, as compared to 20-30 years for traditional commercial plantations. The demand for teak was growing and the supply was dwindling due to significant restrictions regarding the harvest of native teak forests, which traditionally have a very long growth cycle of 70-80 years. The current supply/demand conditions led to a shortage of teak and created an opportunity for investment in companies who could grow teak in an ongoing, sustainable basis with manageable harvest rotations. Mr. Haertzen needed to perform a capital budgeting analysis, including deriving an appropriate risk-adjusted cost of capital, to use in his investment analysis. He obtained data from Beyond Forestry in Honduras including growth rates of managed teak plantations, teak pricing, and operational expenses necessary to estimate cash flows associated with the managed teak plantations. Of equal importance was an assessment of the many risks associated with the teak plantation investment, given the political and economic environment in a developing market such as Honduras.
Authors :: Lisa F Majure, Kathryn S Savage, Matthew J Haertzen, Alex Finkral
Swot Analysis of "An Investment Analysis of Honduran Teak Plantations" written by Lisa F Majure, Kathryn S Savage, Matthew J Haertzen, Alex Finkral includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Teak Plantations facing as an external strategic factors. Some of the topics covered in An Investment Analysis of Honduran Teak Plantations case study are - Strategic Management Strategies, Budgeting, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the An Investment Analysis of Honduran Teak Plantations casestudy better are - – central banks are concerned over increasing inflation, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of An Investment Analysis of Honduran Teak Plantations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in An Investment Analysis of Honduran Teak Plantations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Teak Plantations, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations can be done for the following purposes –
1. Strategic planning using facts provided in An Investment Analysis of Honduran Teak Plantations case study
2. Improving business portfolio management of Teak Plantations
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 Teak Plantations
Strengths An Investment Analysis of Honduran Teak Plantations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Teak Plantations in An Investment Analysis of Honduran Teak Plantations Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Teak Plantations in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Teak Plantations 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 Lisa F Majure, Kathryn S Savage, Matthew J Haertzen, Alex Finkral 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.
Ability to lead change in Finance & Accounting field
– Teak Plantations 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 Teak Plantations in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Teak Plantations in the sector have low bargaining power. An Investment Analysis of Honduran Teak Plantations has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Teak Plantations to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Teak Plantations is one of the leading recruiters in the industry. Managers in the An Investment Analysis of Honduran Teak Plantations are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Teak Plantations is one of the most innovative firm in sector. Manager in An Investment Analysis of Honduran Teak Plantations Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Teak Plantations has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Teak Plantations to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the An Investment Analysis of Honduran Teak Plantations 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
– Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– An Investment Analysis of Honduran Teak Plantations firm has clearly differentiated products in the market place. This has enabled Teak Plantations to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Teak Plantations to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Teak Plantations has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Teak Plantations 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.
Training and development
– Teak Plantations has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in An Investment Analysis of Honduran Teak Plantations Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses An Investment Analysis of Honduran Teak Plantations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of An Investment Analysis of Honduran Teak Plantations are -
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 Teak Plantations supply chain. Even after few cautionary changes mentioned in the HBR case study - An Investment Analysis of Honduran Teak Plantations, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations, in the dynamic environment Teak Plantations has struggled to respond to the nimble upstart competition. Teak Plantations 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 Teak Plantations is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Teak Plantations needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Teak Plantations to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Teak Plantations products
– To increase the profitability and margins on the products, Teak Plantations needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study An Investment Analysis of Honduran Teak Plantations, is just above the industry average. Teak Plantations 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Teak Plantations 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.
Aligning sales with marketing
– It come across in the case study An Investment Analysis of Honduran Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations can leverage the sales team experience to cultivate customer relationships as Teak Plantations is planning to shift buying processes online.
Need for greater diversity
– Teak Plantations 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.
Skills based hiring
– The stress on hiring functional specialists at Teak Plantations 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 bargaining power of channel partners
– Because of the regulatory requirements, Lisa F Majure, Kathryn S Savage, Matthew J Haertzen, Alex Finkral suggests that, Teak Plantations is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Teak Plantations 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 - An Investment Analysis of Honduran Teak Plantations should strive to include more intangible value offerings along with its core products and services.
Opportunities An Investment Analysis of Honduran Teak Plantations | 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 An Investment Analysis of Honduran Teak Plantations are -
Developing new processes and practices
– Teak Plantations 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.
Using analytics as competitive advantage
– Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Teak Plantations to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Teak Plantations 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.
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 Teak Plantations 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.
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 Teak Plantations in the consumer business. Now Teak Plantations can target international markets with far fewer capital restrictions requirements than the existing system.
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. Teak Plantations can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Teak Plantations 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. Teak Plantations 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.
Better consumer reach
– The expansion of the 5G network will help Teak Plantations to increase its market reach. Teak Plantations 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Teak Plantations 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Teak Plantations is facing challenges because of the dominance of functional experts in the organization. An Investment Analysis of Honduran Teak Plantations 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.
Loyalty marketing
– Teak Plantations 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.
Buying journey improvements
– Teak Plantations can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. An Investment Analysis of Honduran Teak Plantations 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.
Manufacturing automation
– Teak Plantations can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats An Investment Analysis of Honduran Teak Plantations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study An Investment Analysis of Honduran Teak Plantations are -
Technology acceleration in Forth Industrial Revolution
– Teak Plantations has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Teak Plantations 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.
High dependence on third party suppliers
– Teak Plantations 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.
Environmental challenges
– Teak Plantations 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. Teak Plantations can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Regulatory challenges
– Teak Plantations 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 Teak Plantations business can come under increasing regulations regarding data privacy, data security, etc.
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 Teak Plantations.
Stagnating economy with rate increase
– Teak Plantations 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study An Investment Analysis of Honduran Teak Plantations, Teak Plantations 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 .
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. Teak Plantations 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.
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.
Shortening product life cycle
– it is one of the major threat that Teak Plantations is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of An Investment Analysis of Honduran Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations 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 An Investment Analysis of Honduran Teak Plantations 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 Teak Plantations needs to make to build a sustainable competitive advantage.
