Gazprom and Hermitage Capital: Shareholder Activism in Russia SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Gazprom and Hermitage Capital: Shareholder Activism in Russia
Gazprom, the Russian natural-gas production and distribution firm that, by some measures is the largest energy company in the world, and has been very cheaply valued ever since its privatization. Reasons for this include the general uncertainty prevailing in Russian equity markets and the alleged corruption in the company, including serious asset-stripping by management. Hermitage Capital Management, a Russia-focused hedge fund run by William Browder, began investing in Gazprom in 1998, hoping that shrewd activism would increase its performance as well as its share price. This case looks at Gazprom's halting efforts at reform and discusses issues Browder must consider in deciding how to proceed.
Swot Analysis of "Gazprom and Hermitage Capital: Shareholder Activism in Russia" written by John McMillan, James Twiss includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gazprom Browder facing as an external strategic factors. Some of the topics covered in Gazprom and Hermitage Capital: Shareholder Activism in Russia case study are - Strategic Management Strategies, Corporate governance, Emerging markets, Financial management, Global strategy and Global Business.
Some of the macro environment factors that can be used to understand the Gazprom and Hermitage Capital: Shareholder Activism in Russia casestudy better are - – digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, geopolitical disruptions, etc
Introduction to SWOT Analysis of Gazprom and Hermitage Capital: Shareholder Activism in Russia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gazprom and Hermitage Capital: Shareholder Activism in Russia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gazprom Browder, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gazprom Browder 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 Gazprom and Hermitage Capital: Shareholder Activism in Russia can be done for the following purposes –
1. Strategic planning using facts provided in Gazprom and Hermitage Capital: Shareholder Activism in Russia case study
2. Improving business portfolio management of Gazprom Browder
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 Gazprom Browder
Strengths Gazprom and Hermitage Capital: Shareholder Activism in Russia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gazprom Browder in Gazprom and Hermitage Capital: Shareholder Activism in Russia Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Gazprom Browder are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Effective Research and Development (R&D)
– Gazprom Browder has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Gazprom and Hermitage Capital: Shareholder Activism in Russia - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Gazprom Browder digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gazprom Browder 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.
Learning organization
- Gazprom Browder 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 Gazprom Browder is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gazprom and Hermitage Capital: Shareholder Activism in Russia Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Gazprom Browder in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Gazprom Browder is one of the leading recruiters in the industry. Managers in the Gazprom and Hermitage Capital: Shareholder Activism in 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.
Strong track record of project management
– Gazprom Browder is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Global Business field
– Gazprom Browder 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 Gazprom Browder in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Gazprom Browder has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gazprom Browder to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Gazprom Browder has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gazprom Browder 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.
Diverse revenue streams
– Gazprom Browder is present in almost all the verticals within the industry. This has provided firm in Gazprom and Hermitage Capital: Shareholder Activism in Russia 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.
Training and development
– Gazprom Browder has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Gazprom and Hermitage Capital: Shareholder Activism in 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.
Weaknesses Gazprom and Hermitage Capital: Shareholder Activism in Russia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gazprom and Hermitage Capital: Shareholder Activism in Russia are -
High bargaining power of channel partners
– Because of the regulatory requirements, John McMillan, James Twiss suggests that, Gazprom Browder 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Gazprom Browder is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Gazprom and Hermitage Capital: Shareholder Activism in Russia can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Gazprom Browder products
– To increase the profitability and margins on the products, Gazprom Browder needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Gazprom Browder has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gazprom and Hermitage Capital: Shareholder Activism in Russia, in the dynamic environment Gazprom Browder has struggled to respond to the nimble upstart competition. Gazprom Browder has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Gazprom Browder, firm in the HBR case study Gazprom and Hermitage Capital: Shareholder Activism in Russia needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Gazprom and Hermitage Capital: Shareholder Activism in Russia HBR case study mentions - Gazprom Browder 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Gazprom Browder needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow decision making process
– As mentioned earlier in the report, Gazprom Browder has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Gazprom Browder even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 Gazprom Browder supply chain. Even after few cautionary changes mentioned in the HBR case study - Gazprom and Hermitage Capital: Shareholder Activism in Russia, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Gazprom Browder vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom and Hermitage Capital: Shareholder Activism in Russia can leverage the sales team experience to cultivate customer relationships as Gazprom Browder is planning to shift buying processes online.
Opportunities Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom and Hermitage Capital: Shareholder Activism in Russia are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Gazprom Browder 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. Gazprom Browder 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Gazprom Browder can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Gazprom Browder can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Gazprom and Hermitage Capital: Shareholder Activism in 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Gazprom Browder 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.
Leveraging digital technologies
– Gazprom Browder 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.
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 Gazprom Browder in the consumer business. Now Gazprom Browder can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Gazprom Browder 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.
Better consumer reach
– The expansion of the 5G network will help Gazprom Browder to increase its market reach. Gazprom Browder 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.
Building a culture of innovation
– managers at Gazprom Browder 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.
Learning at scale
– Online learning technologies has now opened space for Gazprom Browder 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gazprom Browder 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, Gazprom and Hermitage Capital: Shareholder Activism in Russia, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gazprom Browder 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 Gazprom Browder to hire the very best people irrespective of their geographical location.
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. Gazprom Browder can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Gazprom and Hermitage Capital: Shareholder Activism in Russia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gazprom and Hermitage Capital: Shareholder Activism in Russia are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gazprom Browder 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.
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.
Shortening product life cycle
– it is one of the major threat that Gazprom Browder is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Gazprom Browder
– 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 Gazprom Browder.
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 Gazprom Browder business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Gazprom and Hermitage Capital: Shareholder Activism in Russia, Gazprom Browder may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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 Gazprom Browder in the Global Business sector and impact the bottomline 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.
Environmental challenges
– Gazprom Browder 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. Gazprom Browder can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Technology acceleration in Forth Industrial Revolution
– Gazprom Browder has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Gazprom Browder 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Gazprom Browder 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 Gazprom and Hermitage Capital: Shareholder Activism in Russia .
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. Gazprom Browder 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.
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 Gazprom Browder.
Weighted SWOT Analysis of Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom and Hermitage Capital: Shareholder Activism in 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 Gazprom Browder needs to make to build a sustainable competitive advantage.
