Gazprom (B): Energy and Strategy in a New Era SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Gazprom (B): Energy and Strategy in a New Era
President Putin publicly stated that Gazprom, the largest natural gas producer in the world, was a powerful political lever of the Russian state in the world and a keystone in the foundation of the country's energy security. Thus the top leadership of Russia has charted the course of the company's future away from the seemingly imminent dismemberment, privatization, and, by implication, de-monopolization toward a challenging combination of strengthened state control, professional, transparent management, and a major expansion. The case explores how in 2000-2008 Gazprom's management has pursued the strategy defined by the politicians. Gazprom's impressive expansion strategy envisioned diversification of markets, products, transportation routes, and modes of delivery. The challenges were equally formidable: massive investment needs, a possibility of a production shortfall, and a chronic problem with the transit state of Ukraine, to name a few. In fact, Gazprom's ambitiousness fully reflected the ambitiousness of Russia as a whole, characteristic of the Putin era.
Authors :: Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov
Swot Analysis of "Gazprom (B): Energy and Strategy in a New Era" written by Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gazprom's Ambitiousness facing as an external strategic factors. Some of the topics covered in Gazprom (B): Energy and Strategy in a New Era case study are - Strategic Management Strategies, Government, Joint ventures and Global Business.
Some of the macro environment factors that can be used to understand the Gazprom (B): Energy and Strategy in a New Era casestudy better are - – increasing transportation and logistics costs, talent flight as more people leaving formal jobs, technology disruption, supply chains are disrupted by pandemic , there is backlash against globalization, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing household debt because of falling income levels, increasing commodity prices, etc
Introduction to SWOT Analysis of Gazprom (B): Energy and Strategy in a New Era
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gazprom (B): Energy and Strategy in a New Era case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gazprom's Ambitiousness, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gazprom's Ambitiousness 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 (B): Energy and Strategy in a New Era can be done for the following purposes –
1. Strategic planning using facts provided in Gazprom (B): Energy and Strategy in a New Era case study
2. Improving business portfolio management of Gazprom's Ambitiousness
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's Ambitiousness
Strengths Gazprom (B): Energy and Strategy in a New Era | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gazprom's Ambitiousness in Gazprom (B): Energy and Strategy in a New Era Harvard Business Review case study are -
Effective Research and Development (R&D)
– Gazprom's Ambitiousness 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 (B): Energy and Strategy in a New Era - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Gazprom's Ambitiousness has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Gazprom (B): Energy and Strategy in a New Era 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.
Strong track record of project management
– Gazprom's Ambitiousness is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Gazprom's Ambitiousness digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gazprom's Ambitiousness 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.
Sustainable margins compare to other players in Global Business industry
– Gazprom (B): Energy and Strategy in a New Era firm has clearly differentiated products in the market place. This has enabled Gazprom's Ambitiousness to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Gazprom's Ambitiousness to invest into research and development (R&D) and innovation.
Analytics focus
– Gazprom's Ambitiousness is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Gazprom's Ambitiousness is one of the leading recruiters in the industry. Managers in the Gazprom (B): Energy and Strategy in a New Era are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Gazprom's Ambitiousness 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.
Diverse revenue streams
– Gazprom's Ambitiousness is present in almost all the verticals within the industry. This has provided firm in Gazprom (B): Energy and Strategy in a New Era 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.
Highly skilled collaborators
– Gazprom's Ambitiousness has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Gazprom (B): Energy and Strategy in a New Era HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Gazprom's Ambitiousness 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's Ambitiousness is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gazprom (B): Energy and Strategy in a New Era Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Gazprom's Ambitiousness in the sector have low bargaining power. Gazprom (B): Energy and Strategy in a New Era has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Gazprom's Ambitiousness to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Gazprom (B): Energy and Strategy in a New Era | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gazprom (B): Energy and Strategy in a New Era are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Gazprom (B): Energy and Strategy in a New Era 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 Gazprom's Ambitiousness has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Gazprom's Ambitiousness, firm in the HBR case study Gazprom (B): Energy and Strategy in a New Era needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Gazprom (B): Energy and Strategy in a New Era, it seems that the employees of Gazprom's Ambitiousness 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gazprom (B): Energy and Strategy in a New Era, in the dynamic environment Gazprom's Ambitiousness has struggled to respond to the nimble upstart competition. Gazprom's Ambitiousness has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Gazprom's Ambitiousness products
– To increase the profitability and margins on the products, Gazprom's Ambitiousness needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Gazprom's Ambitiousness 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 Gazprom's Ambitiousness 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 - Gazprom (B): Energy and Strategy in a New Era should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Gazprom (B): Energy and Strategy in a New Era 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 (B): Energy and Strategy in a New Era can leverage the sales team experience to cultivate customer relationships as Gazprom's Ambitiousness is planning to shift buying processes online.
High cash cycle compare to competitors
Gazprom's Ambitiousness 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.
Slow to strategic competitive environment developments
– As Gazprom (B): Energy and Strategy in a New Era HBR case study mentions - Gazprom's Ambitiousness 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.
Need for greater diversity
– Gazprom's Ambitiousness has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Gazprom (B): Energy and Strategy in a New Era | 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 (B): Energy and Strategy in a New Era are -
Better consumer reach
– The expansion of the 5G network will help Gazprom's Ambitiousness to increase its market reach. Gazprom's Ambitiousness 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gazprom's Ambitiousness 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's Ambitiousness 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's Ambitiousness can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gazprom's Ambitiousness can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gazprom's Ambitiousness 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 (B): Energy and Strategy in a New Era, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Gazprom's Ambitiousness 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.
Using analytics as competitive advantage
– Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Gazprom's Ambitiousness to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Gazprom's Ambitiousness is facing challenges because of the dominance of functional experts in the organization. Gazprom (B): Energy and Strategy in a New Era 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.
Loyalty marketing
– Gazprom's Ambitiousness 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.
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's Ambitiousness 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's Ambitiousness 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.
Developing new processes and practices
– Gazprom's Ambitiousness 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.
Manufacturing automation
– Gazprom's Ambitiousness 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.
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's Ambitiousness can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Gazprom (B): Energy and Strategy in a New Era External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gazprom (B): Energy and Strategy in a New Era are -
Consumer confidence and its impact on Gazprom's Ambitiousness 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.
Environmental challenges
– Gazprom's Ambitiousness 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's Ambitiousness can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gazprom's Ambitiousness 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.
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 (B): Energy and Strategy in a New Era, Gazprom's Ambitiousness 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 .
Shortening product life cycle
– it is one of the major threat that Gazprom's Ambitiousness 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's Ambitiousness
– 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's Ambitiousness.
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's Ambitiousness 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.
Technology acceleration in Forth Industrial Revolution
– Gazprom's Ambitiousness has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Gazprom's Ambitiousness 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.
Regulatory challenges
– Gazprom's Ambitiousness 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Gazprom's Ambitiousness with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Gazprom's Ambitiousness needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Gazprom's Ambitiousness can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Gazprom's Ambitiousness.
Weighted SWOT Analysis of Gazprom (B): Energy and Strategy in a New Era 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 (B): Energy and Strategy in a New Era 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 (B): Energy and Strategy in a New Era 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 (B): Energy and Strategy in a New Era 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 (B): Energy and Strategy in a New Era 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's Ambitiousness needs to make to build a sustainable competitive advantage.
