White Nights and Polar Lights: Investing in the Russian Oil Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of White Nights and Polar Lights: Investing in the Russian Oil Industry
In the latter half of the 1980s, the collapse of the Soviet empire created an unprecedented opportunity for Western businesses. Among those most attracted were the oil firms, who rushed to investigate Russia's vast petroleum reserves. But, as they soon discovered, investing in Russia still entailed tremendous risks--commercial, legal, and political. The case examines how three companies (Phibro, Mobil, and Conoco) have evaluated the risks of Russia and formulated a strategy for investment.
Authors :: William W Janosz, Julia Kou, Debora L. Spar
Swot Analysis of "White Nights and Polar Lights: Investing in the Russian Oil Industry" written by William W Janosz, Julia Kou, Debora L. Spar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Russia Phibro facing as an external strategic factors. Some of the topics covered in White Nights and Polar Lights: Investing in the Russian Oil Industry case study are - Strategic Management Strategies, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the White Nights and Polar Lights: Investing in the Russian Oil Industry casestudy better are - – central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, geopolitical disruptions, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization,
challanges to central banks by blockchain based private currencies, increasing commodity prices, etc
Introduction to SWOT Analysis of White Nights and Polar Lights: Investing in the Russian Oil Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in White Nights and Polar Lights: Investing in the Russian Oil Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Russia Phibro, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Russia Phibro 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 White Nights and Polar Lights: Investing in the Russian Oil Industry can be done for the following purposes –
1. Strategic planning using facts provided in White Nights and Polar Lights: Investing in the Russian Oil Industry case study
2. Improving business portfolio management of Russia Phibro
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 Russia Phibro
Strengths White Nights and Polar Lights: Investing in the Russian Oil Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Russia Phibro in White Nights and Polar Lights: Investing in the Russian Oil Industry Harvard Business Review case study are -
Training and development
– Russia Phibro has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in White Nights and Polar Lights: Investing in the Russian Oil Industry 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.
Cross disciplinary teams
– Horizontal connected teams at the Russia Phibro 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.
Ability to recruit top talent
– Russia Phibro is one of the leading recruiters in the industry. Managers in the White Nights and Polar Lights: Investing in the Russian Oil Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Russia Phibro is present in almost all the verticals within the industry. This has provided firm in White Nights and Polar Lights: Investing in the Russian Oil Industry 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.
Superior customer experience
– The customer experience strategy of Russia Phibro in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Russia Phibro 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 White Nights and Polar Lights: Investing in the Russian Oil Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Russia Phibro has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Russia Phibro 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.
Sustainable margins compare to other players in Global Business industry
– White Nights and Polar Lights: Investing in the Russian Oil Industry firm has clearly differentiated products in the market place. This has enabled Russia Phibro to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Russia Phibro to invest into research and development (R&D) and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Russia Phibro digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Russia Phibro 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
- Russia Phibro 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 Russia Phibro is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in White Nights and Polar Lights: Investing in the Russian Oil Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Russia Phibro in the sector have low bargaining power. White Nights and Polar Lights: Investing in the Russian Oil Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Russia Phibro to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Russia Phibro has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Russia Phibro to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses White Nights and Polar Lights: Investing in the Russian Oil Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of White Nights and Polar Lights: Investing in the Russian Oil Industry are -
Skills based hiring
– The stress on hiring functional specialists at Russia Phibro 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.
Low market penetration in new markets
– Outside its home market of Russia Phibro, firm in the HBR case study White Nights and Polar Lights: Investing in the Russian Oil Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Russia Phibro 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study White Nights and Polar Lights: Investing in the Russian Oil Industry, is just above the industry average. Russia Phibro 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.
Products dominated business model
– Even though Russia Phibro 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 - White Nights and Polar Lights: Investing in the Russian Oil Industry should strive to include more intangible value offerings along with its core products and services.
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 Russia Phibro supply chain. Even after few cautionary changes mentioned in the HBR case study - White Nights and Polar Lights: Investing in the Russian Oil Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Russia Phibro vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, William W Janosz, Julia Kou, Debora L. Spar suggests that, Russia Phibro 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study White Nights and Polar Lights: Investing in the Russian Oil Industry, it seems that the employees of Russia Phibro 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Russia Phibro 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.
High cash cycle compare to competitors
Russia Phibro 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.
Aligning sales with marketing
– It come across in the case study White Nights and Polar Lights: Investing in the Russian Oil Industry 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 White Nights and Polar Lights: Investing in the Russian Oil Industry can leverage the sales team experience to cultivate customer relationships as Russia Phibro is planning to shift buying processes online.
Opportunities White Nights and Polar Lights: Investing in the Russian Oil Industry | 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 White Nights and Polar Lights: Investing in the Russian Oil Industry are -
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 Russia Phibro 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.
Developing new processes and practices
– Russia Phibro 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.
Using analytics as competitive advantage
– Russia Phibro 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 White Nights and Polar Lights: Investing in the Russian Oil Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Russia Phibro to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Russia Phibro can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Russia Phibro 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 Russia Phibro to hire the very best people irrespective of their geographical location.
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. Russia Phibro 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. Russia Phibro can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Better consumer reach
– The expansion of the 5G network will help Russia Phibro to increase its market reach. Russia Phibro 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Russia Phibro 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.
Building a culture of innovation
– managers at Russia Phibro 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Russia Phibro is facing challenges because of the dominance of functional experts in the organization. White Nights and Polar Lights: Investing in the Russian Oil Industry 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 Russia Phibro in the consumer business. Now Russia Phibro can target international markets with far fewer capital restrictions requirements than the existing system.
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. Russia Phibro can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Russia Phibro can use these opportunities to build new business models that can help the communities that Russia Phibro operates in. Secondly it can use opportunities from government spending in Global Business sector.
Threats White Nights and Polar Lights: Investing in the Russian Oil Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study White Nights and Polar Lights: Investing in the Russian Oil Industry are -
Shortening product life cycle
– it is one of the major threat that Russia Phibro is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Russia Phibro needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study White Nights and Polar Lights: Investing in the Russian Oil Industry, Russia Phibro 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 .
Stagnating economy with rate increase
– Russia Phibro 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.
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. Russia Phibro can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Russia Phibro 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 Russia Phibro.
Environmental challenges
– Russia Phibro 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. Russia Phibro 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 Russia Phibro business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Russia Phibro 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.
High dependence on third party suppliers
– Russia Phibro high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Consumer confidence and its impact on Russia Phibro 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.
Increasing wage structure of Russia Phibro
– 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 Russia Phibro.
Weighted SWOT Analysis of White Nights and Polar Lights: Investing in the Russian Oil Industry 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 White Nights and Polar Lights: Investing in the Russian Oil Industry 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 White Nights and Polar Lights: Investing in the Russian Oil Industry 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 White Nights and Polar Lights: Investing in the Russian Oil Industry 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 White Nights and Polar Lights: Investing in the Russian Oil Industry 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 Russia Phibro needs to make to build a sustainable competitive advantage.