Case Study Description of Argentina's YPF Sociedad Anonima (A)
Examines the process of privatization and transformation the company underwent and identifies challenges facing the company as it seeks to become a global oil company.
Swot Analysis of "Argentina's YPF Sociedad Anonima (A)" written by Michael Y. Yoshino, Carin-Isabel Knoop includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Anonima Sociedad facing as an external strategic factors. Some of the topics covered in Argentina's YPF Sociedad Anonima (A) case study are - Strategic Management Strategies, Competitive strategy, Economy, Globalization and Global Business.
Some of the macro environment factors that can be used to understand the Argentina's YPF Sociedad Anonima (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, increasing energy prices, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google,
there is backlash against globalization, technology disruption, etc
Introduction to SWOT Analysis of Argentina's YPF Sociedad Anonima (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Argentina's YPF Sociedad Anonima (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Anonima Sociedad, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Anonima Sociedad 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 Argentina's YPF Sociedad Anonima (A) can be done for the following purposes –
1. Strategic planning using facts provided in Argentina's YPF Sociedad Anonima (A) case study
2. Improving business portfolio management of Anonima Sociedad
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Anonima Sociedad
Strengths Argentina's YPF Sociedad Anonima (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Anonima Sociedad in Argentina's YPF Sociedad Anonima (A) Harvard Business Review case study are -
High brand equity
– Anonima Sociedad has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Anonima Sociedad to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Anonima Sociedad is one of the leading recruiters in the industry. Managers in the Argentina's YPF Sociedad Anonima (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.
Superior customer experience
– The customer experience strategy of Anonima Sociedad in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Anonima Sociedad has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Argentina's YPF Sociedad Anonima (A) 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.
Sustainable margins compare to other players in Global Business industry
– Argentina's YPF Sociedad Anonima (A) firm has clearly differentiated products in the market place. This has enabled Anonima Sociedad to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Anonima Sociedad to invest into research and development (R&D) and innovation.
Learning organization
- Anonima Sociedad 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 Anonima Sociedad is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Argentina's YPF Sociedad Anonima (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Global Business field
– Anonima Sociedad 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 Anonima Sociedad in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Anonima Sociedad is present in almost all the verticals within the industry. This has provided firm in Argentina's YPF Sociedad Anonima (A) 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.
High switching costs
– The high switching costs that Anonima Sociedad 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.
Strong track record of project management
– Anonima Sociedad is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Anonima Sociedad has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Anonima Sociedad 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Anonima Sociedad digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Anonima Sociedad 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.
Weaknesses Argentina's YPF Sociedad Anonima (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Argentina's YPF Sociedad Anonima (A) are -
Slow to strategic competitive environment developments
– As Argentina's YPF Sociedad Anonima (A) HBR case study mentions - Anonima Sociedad takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Argentina's YPF Sociedad Anonima (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Anonima Sociedad has relatively successful track record of launching new products.
Lack of clear differentiation of Anonima Sociedad products
– To increase the profitability and margins on the products, Anonima Sociedad needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Argentina's YPF Sociedad Anonima (A), it seems that the employees of Anonima Sociedad 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 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 Anonima Sociedad supply chain. Even after few cautionary changes mentioned in the HBR case study - Argentina's YPF Sociedad Anonima (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Anonima Sociedad vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Anonima Sociedad 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.
Increasing silos among functional specialists
– The organizational structure of Anonima Sociedad is dominated by functional specialists. It is not different from other players in the Global Business segment. Anonima Sociedad needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Anonima Sociedad to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Anonima Sociedad 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Argentina's YPF Sociedad Anonima (A), is just above the industry average. Anonima Sociedad 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.
Skills based hiring
– The stress on hiring functional specialists at Anonima Sociedad 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.
Need for greater diversity
– Anonima Sociedad 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.
Opportunities Argentina's YPF Sociedad Anonima (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 Argentina's YPF Sociedad Anonima (A) are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Anonima Sociedad is facing challenges because of the dominance of functional experts in the organization. Argentina's YPF Sociedad Anonima (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Anonima Sociedad to increase its market reach. Anonima Sociedad 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Anonima Sociedad can use these opportunities to build new business models that can help the communities that Anonima Sociedad operates in. Secondly it can use opportunities from government spending in Global Business sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Anonima Sociedad 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 Anonima Sociedad in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Anonima Sociedad 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, Argentina's YPF Sociedad Anonima (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Anonima Sociedad 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.
Learning at scale
– Online learning technologies has now opened space for Anonima Sociedad 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.
Leveraging digital technologies
– Anonima Sociedad 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.
Using analytics as competitive advantage
– Anonima Sociedad 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 Argentina's YPF Sociedad Anonima (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Anonima Sociedad to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Anonima Sociedad 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.
Creating value in data economy
– The success of analytics program of Anonima Sociedad has opened avenues for new revenue streams for the organization in the industry. This can help Anonima Sociedad to build a more holistic ecosystem as suggested in the Argentina's YPF Sociedad Anonima (A) case study. Anonima Sociedad can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Anonima Sociedad in the consumer business. Now Anonima Sociedad can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Argentina's YPF Sociedad Anonima (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Argentina's YPF Sociedad Anonima (A) are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Anonima Sociedad in the Global Business industry. The Global Business 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.
Shortening product life cycle
– it is one of the major threat that Anonima Sociedad is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Anonima Sociedad with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Anonima Sociedad has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Anonima Sociedad needs to keep up with the evolution of technology in the Global Business 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.
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 Anonima Sociedad in the Global Business sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Anonima Sociedad can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Anonima Sociedad business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Anonima Sociedad 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. Anonima Sociedad can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
Increasing wage structure of Anonima Sociedad
– 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 Anonima Sociedad.
Stagnating economy with rate increase
– Anonima Sociedad 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.
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 Anonima Sociedad.
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. Anonima Sociedad needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Argentina's YPF Sociedad Anonima (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 Argentina's YPF Sociedad Anonima (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 Argentina's YPF Sociedad Anonima (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 Argentina's YPF Sociedad Anonima (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 Argentina's YPF Sociedad Anonima (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 Anonima Sociedad needs to make to build a sustainable competitive advantage.
