WLR Foods and Pilgrim's Pride SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of WLR Foods and Pilgrim's Pride
This case is a sequel to "WLR Foods and Tyson Foods" (UV2529), which presents the attempted acquisition of WLR by Tyson Foods in 1994. Over the ensuing six years, WLR's stock price slides consistently downhill until 2000, when it is trading at a fraction of its 1994 value. When WLR's share price hits $4.59, Pilgrim's Pride Corporation (PPC) views the company as an attractive acquisition. This case asks the student to determine how much of a premium PPC should offer and whether WLR management will resist a takeover in 2000 as it did in 1994. Financial information is provided to allow students to compute both stand-alone and with-synergies valuations. The case is best taught immediately following UVA-F-1465. It is designed to be taught as a firm-valuation exercise in a first-year or second-year MBA finance course. It is also suitable for executive and undergraduate audiences. Student (F-1466 WLR-Pilgrims Pride.xls) and instructor (F-1466 TN.xls) spreadsheets are available.
Authors :: Kenneth Eades, Ali Erarac, Katherine Merhige
Swot Analysis of "WLR Foods and Pilgrim's Pride" written by Kenneth Eades, Ali Erarac, Katherine Merhige includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wlr 1466 facing as an external strategic factors. Some of the topics covered in WLR Foods and Pilgrim's Pride case study are - Strategic Management Strategies, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the WLR Foods and Pilgrim's Pride casestudy better are - – there is increasing trade war between United States & China, technology disruption, there is backlash against globalization, talent flight as more people leaving formal jobs, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs,
competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of WLR Foods and Pilgrim's Pride
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in WLR Foods and Pilgrim's Pride case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wlr 1466, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wlr 1466 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 WLR Foods and Pilgrim's Pride can be done for the following purposes –
1. Strategic planning using facts provided in WLR Foods and Pilgrim's Pride case study
2. Improving business portfolio management of Wlr 1466
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 Wlr 1466
Strengths WLR Foods and Pilgrim's Pride | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wlr 1466 in WLR Foods and Pilgrim's Pride Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– WLR Foods and Pilgrim's Pride firm has clearly differentiated products in the market place. This has enabled Wlr 1466 to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Wlr 1466 to invest into research and development (R&D) and innovation.
Strong track record of project management
– Wlr 1466 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Wlr 1466 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 WLR Foods and Pilgrim's Pride HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Finance & Accounting field
– Wlr 1466 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 Wlr 1466 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Wlr 1466 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 Kenneth Eades, Ali Erarac, Katherine Merhige 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.
Successful track record of launching new products
– Wlr 1466 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wlr 1466 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
– Wlr 1466 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in WLR Foods and Pilgrim's Pride 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.
High switching costs
– The high switching costs that Wlr 1466 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.
Low bargaining power of suppliers
– Suppliers of Wlr 1466 in the sector have low bargaining power. WLR Foods and Pilgrim's Pride has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wlr 1466 to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Wlr 1466 is present in almost all the verticals within the industry. This has provided firm in WLR Foods and Pilgrim's Pride 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Wlr 1466 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wlr 1466 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.
Superior customer experience
– The customer experience strategy of Wlr 1466 in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses WLR Foods and Pilgrim's Pride | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of WLR Foods and Pilgrim's Pride are -
Lack of clear differentiation of Wlr 1466 products
– To increase the profitability and margins on the products, Wlr 1466 needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Kenneth Eades, Ali Erarac, Katherine Merhige suggests that, Wlr 1466 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.
Increasing silos among functional specialists
– The organizational structure of Wlr 1466 is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Wlr 1466 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wlr 1466 to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the WLR Foods and Pilgrim's Pride 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 Wlr 1466 has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study WLR Foods and Pilgrim's Pride 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 Wlr 1466 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study WLR Foods and Pilgrim's Pride, is just above the industry average. Wlr 1466 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, Wlr 1466 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.
Skills based hiring
– The stress on hiring functional specialists at Wlr 1466 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.
No frontier risks strategy
– After analyzing the HBR case study WLR Foods and Pilgrim's Pride, 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.
Low market penetration in new markets
– Outside its home market of Wlr 1466, firm in the HBR case study WLR Foods and Pilgrim's Pride needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study WLR Foods and Pilgrim's Pride, it seems that the employees of Wlr 1466 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.
Opportunities WLR Foods and Pilgrim's Pride | 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 WLR Foods and Pilgrim's Pride are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wlr 1466 is facing challenges because of the dominance of functional experts in the organization. WLR Foods and Pilgrim's Pride 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 Wlr 1466 in the consumer business. Now Wlr 1466 can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Wlr 1466 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wlr 1466 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, WLR Foods and Pilgrim's Pride, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Wlr 1466 has opened avenues for new revenue streams for the organization in the industry. This can help Wlr 1466 to build a more holistic ecosystem as suggested in the WLR Foods and Pilgrim's Pride case study. Wlr 1466 can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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, Wlr 1466 can use these opportunities to build new business models that can help the communities that Wlr 1466 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. Wlr 1466 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wlr 1466 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wlr 1466 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.
Manufacturing automation
– Wlr 1466 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. Wlr 1466 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. Wlr 1466 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wlr 1466 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 Wlr 1466 to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Wlr 1466 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.
Threats WLR Foods and Pilgrim's Pride External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study WLR Foods and Pilgrim's Pride are -
Stagnating economy with rate increase
– Wlr 1466 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wlr 1466 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wlr 1466 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Wlr 1466 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Wlr 1466 is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Wlr 1466 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.
Environmental challenges
– Wlr 1466 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. Wlr 1466 can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study WLR Foods and Pilgrim's Pride, Wlr 1466 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 .
Technology acceleration in Forth Industrial Revolution
– Wlr 1466 has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Wlr 1466 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.
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 Wlr 1466.
Consumer confidence and its impact on Wlr 1466 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of WLR Foods and Pilgrim's Pride 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 WLR Foods and Pilgrim's Pride 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 WLR Foods and Pilgrim's Pride 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 WLR Foods and Pilgrim's Pride 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 WLR Foods and Pilgrim's Pride 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 Wlr 1466 needs to make to build a sustainable competitive advantage.
