Unified Energy System of Russia SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Unified Energy System of Russia
On April 4, 2000, at a board of directors' meeting, CEO Anatoly Chubais, Russia's legendary reformer, announced his plan to break up the Russian joint stock company Unified Energy System (UES). The plan envisioned breaking up the giant energy monopoly along two lines of business: electricity transmissions and generation and sales. His proposal met a fierce storm of opposition from foreign minority shareholders of UES as well as from Boris Fedorov, a fellow reformer in the early to mid-1990s. This case examines the dynamics of implementing structural reforms in a highly uncertain environment.
Authors :: Yasheng Huang, Kirsten J. O'Neil-Massaro, Anatoli Miliukov
Swot Analysis of "Unified Energy System of Russia" written by Yasheng Huang, Kirsten J. O'Neil-Massaro, Anatoli Miliukov includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ues Reformer facing as an external strategic factors. Some of the topics covered in Unified Energy System of Russia case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the Unified Energy System of Russia casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
wage bills are increasing, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Unified Energy System of Russia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Unified Energy System of Russia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ues Reformer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ues Reformer 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 Unified Energy System of Russia can be done for the following purposes –
1. Strategic planning using facts provided in Unified Energy System of Russia case study
2. Improving business portfolio management of Ues Reformer
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 Ues Reformer
Strengths Unified Energy System of Russia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ues Reformer in Unified Energy System of Russia Harvard Business Review case study are -
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Ues Reformer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ues Reformer 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.
High switching costs
– The high switching costs that Ues Reformer 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.
Successful track record of launching new products
– Ues Reformer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ues Reformer 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.
Low bargaining power of suppliers
– Suppliers of Ues Reformer in the sector have low bargaining power. Unified Energy System of Russia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ues Reformer to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Ues Reformer is one of the most innovative firm in sector. Manager in Unified Energy System of Russia Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Unified Energy System of Russia 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.
Ability to recruit top talent
– Ues Reformer is one of the leading recruiters in the industry. Managers in the Unified Energy System of Russia are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Ues Reformer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ues Reformer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Ues Reformer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Unified Energy System of Russia 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 brand equity
– Ues Reformer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ues Reformer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Ues Reformer is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Ues Reformer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Unified Energy System of Russia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Unified Energy System of Russia are -
No frontier risks strategy
– After analyzing the HBR case study Unified Energy System of Russia, it seems that company is thinking about the frontier risks that can impact Global Business 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 Ues Reformer is dominated by functional specialists. It is not different from other players in the Global Business segment. Ues Reformer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ues Reformer to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Unified Energy System of Russia, is just above the industry average. Ues Reformer 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.
Slow to strategic competitive environment developments
– As Unified Energy System of Russia HBR case study mentions - Ues Reformer 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 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 Ues Reformer supply chain. Even after few cautionary changes mentioned in the HBR case study - Unified Energy System of Russia, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ues Reformer vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Unified Energy System of Russia 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 Unified Energy System of Russia can leverage the sales team experience to cultivate customer relationships as Ues Reformer is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Unified Energy System of Russia 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 Ues Reformer has relatively successful track record of launching new products.
High cash cycle compare to competitors
Ues Reformer has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Ues Reformer 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.
Products dominated business model
– Even though Ues Reformer 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 - Unified Energy System of Russia should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Unified Energy System of Russia, in the dynamic environment Ues Reformer has struggled to respond to the nimble upstart competition. Ues Reformer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Unified Energy System of Russia | 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 Unified Energy System of Russia are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ues Reformer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Ues Reformer 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.
Creating value in data economy
– The success of analytics program of Ues Reformer has opened avenues for new revenue streams for the organization in the industry. This can help Ues Reformer to build a more holistic ecosystem as suggested in the Unified Energy System of Russia case study. Ues Reformer can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Ues Reformer 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.
Building a culture of innovation
– managers at Ues Reformer can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Developing new processes and practices
– Ues Reformer can develop new processes and procedures in Global Business 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ues Reformer 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.
Buying journey improvements
– Ues Reformer can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Unified Energy System of Russia 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ues Reformer is facing challenges because of the dominance of functional experts in the organization. Unified Energy System of Russia 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.
Learning at scale
– Online learning technologies has now opened space for Ues Reformer 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.
Manufacturing automation
– Ues Reformer can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Using analytics as competitive advantage
– Ues Reformer 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 Unified Energy System of Russia - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ues Reformer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Ues Reformer to increase its market reach. Ues Reformer 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.
Threats Unified Energy System of Russia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Unified Energy System of Russia are -
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. Ues Reformer 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.
Increasing wage structure of Ues Reformer
– 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 Ues Reformer.
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. Ues Reformer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ues Reformer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Ues Reformer in the Global Business sector and impact the bottomline of the organization.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ues Reformer 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 Unified Energy System of Russia .
Technology acceleration in Forth Industrial Revolution
– Ues Reformer has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Ues Reformer 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.
Stagnating economy with rate increase
– Ues Reformer 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.
Shortening product life cycle
– it is one of the major threat that Ues Reformer is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Ues Reformer 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 Global Business industry regulations.
Environmental challenges
– Ues Reformer 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. Ues Reformer can take advantage of this fund but it will also bring new competitors in the Global Business 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 Ues Reformer business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Unified Energy System of Russia 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 Unified Energy System of Russia 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 Unified Energy System of Russia 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 Unified Energy System of Russia 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 Unified Energy System of Russia 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 Ues Reformer needs to make to build a sustainable competitive advantage.