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 - – increasing household debt because of falling income levels, increasing commodity prices, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, technology disruption, increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, wage bills are increasing, 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 -
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.
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.
Organizational Resilience of Russia Phibro
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Russia Phibro does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Ability to lead change in Global Business field
– Russia Phibro 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 Russia Phibro in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Innovation driven organization
– Russia Phibro is one of the most innovative firm in sector. Manager in White Nights and Polar Lights: Investing in the Russian Oil Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Operational resilience
– The operational resilience strategy in the White Nights and Polar Lights: Investing in the Russian Oil Industry 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.
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.
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.
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.
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 -
Lack of clear differentiation of Russia Phibro products
– To increase the profitability and margins on the products, Russia Phibro needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Capital Spending Reduction
– Even during the low interest decade, Russia Phibro 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.
Slow decision making process
– As mentioned earlier in the report, Russia Phibro 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. Russia Phibro 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.
Interest costs
– Compare to the competition, Russia Phibro 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Russia Phibro is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study White Nights and Polar Lights: Investing in the Russian Oil Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the White Nights and Polar Lights: Investing in the Russian Oil Industry 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 Russia Phibro has relatively successful track record of launching new products.
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.
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.
No frontier risks strategy
– After analyzing the HBR case study White Nights and Polar Lights: Investing in the Russian Oil Industry, 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.
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 -
Leveraging digital technologies
– Russia Phibro 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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Russia Phibro 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, White Nights and Polar Lights: Investing in the Russian Oil Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Russia Phibro can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Loyalty marketing
– Russia Phibro 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.
Learning at scale
– Online learning technologies has now opened space for Russia Phibro 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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Russia Phibro 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.
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.
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 -
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.
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.
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.
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.
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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Russia Phibro 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 White Nights and Polar Lights: Investing in the Russian Oil Industry .
Technology acceleration in Forth Industrial Revolution
– Russia Phibro has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Russia Phibro 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.
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.
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.
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.
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.
Regulatory challenges
– Russia Phibro 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
– 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.
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.
