Weetman Pearson and the Mexican Oil Industry (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Weetman Pearson and the Mexican Oil Industry (A)
Taught in the MBA Evolution of Global Business course, a business history course on the growth of multinationals. Explores the role of the British entrepreneur Weetman Pearson in developing the Mexican oil industry before 1914. Shows this entrepreneur's evolution from a domestic British builder to an international contractor, building tunnels, railroads, and harbors worldwide, including the United States and Mexico. In Mexico, where Pearson developed close relations with the dictator Porfirio Diaz, the government awarded large oil concessions. In 1910, Pearson discovered one of the world's largest oil wells, and this was used as a basis to build an integrated oil company. But by 1918--when the case ends--Pearson is considering whether to sell his investment in the face of growing political risk.
Swot Analysis of "Weetman Pearson and the Mexican Oil Industry (A)" written by Geoffrey G. Jones, Lisa Bud-Frierman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pearson Oil facing as an external strategic factors. Some of the topics covered in Weetman Pearson and the Mexican Oil Industry (A) case study are - Strategic Management Strategies, Collaboration, Economic development, Emerging markets, Entrepreneurship, Managing uncertainty, Operations management, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Weetman Pearson and the Mexican Oil Industry (A) casestudy better are - – there is increasing trade war between United States & China, technology disruption, wage bills are increasing, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, increasing energy prices, geopolitical disruptions,
central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Weetman Pearson and the Mexican Oil Industry (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Weetman Pearson and the Mexican Oil Industry (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pearson Oil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) can be done for the following purposes –
1. Strategic planning using facts provided in Weetman Pearson and the Mexican Oil Industry (A) case study
2. Improving business portfolio management of Pearson Oil
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 Pearson Oil
Strengths Weetman Pearson and the Mexican Oil Industry (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pearson Oil in Weetman Pearson and the Mexican Oil Industry (A) Harvard Business Review case study are -
Effective Research and Development (R&D)
– Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Pearson Oil has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pearson Oil to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Pearson Oil in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Pearson Oil is one of the most innovative firm in sector. Manager in Weetman Pearson and the Mexican Oil Industry (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Pearson Oil has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pearson Oil 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.
Strong track record of project management
– Pearson Oil 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 Pearson Oil digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pearson Oil 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.
Diverse revenue streams
– Pearson Oil is present in almost all the verticals within the industry. This has provided firm in Weetman Pearson and the Mexican Oil Industry (A) 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.
Analytics focus
– Pearson Oil 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 Geoffrey G. Jones, Lisa Bud-Frierman 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.
Low bargaining power of suppliers
– Suppliers of Pearson Oil in the sector have low bargaining power. Weetman Pearson and the Mexican Oil Industry (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pearson Oil to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Pearson Oil has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Weetman Pearson and the Mexican Oil Industry (A) 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 Weetman Pearson and the Mexican Oil Industry (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Weetman Pearson and the Mexican Oil Industry (A) are -
Interest costs
– Compare to the competition, Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A), in the dynamic environment Pearson Oil has struggled to respond to the nimble upstart competition. Pearson Oil has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Pearson Oil 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.
Skills based hiring
– The stress on hiring functional specialists at Pearson Oil 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Weetman Pearson and the Mexican Oil Industry (A), is just above the industry average. Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) 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 Pearson Oil has relatively successful track record of launching new products.
High cash cycle compare to competitors
Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) 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 Weetman Pearson and the Mexican Oil Industry (A) can leverage the sales team experience to cultivate customer relationships as Pearson Oil is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Pearson Oil 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. Pearson Oil 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.
Capital Spending Reduction
– Even during the low interest decade, Pearson Oil 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.
Increasing silos among functional specialists
– The organizational structure of Pearson Oil is dominated by functional specialists. It is not different from other players in the Global Business segment. Pearson Oil needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pearson Oil to focus more on services rather than just following the product oriented approach.
Opportunities Weetman Pearson and the Mexican Oil Industry (A) | 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 Weetman Pearson and the Mexican Oil Industry (A) are -
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. Pearson Oil 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, Pearson Oil can use these opportunities to build new business models that can help the communities that Pearson Oil operates in. Secondly it can use opportunities from government spending in Global Business sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pearson Oil can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Pearson Oil can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Weetman Pearson and the Mexican Oil Industry (A) 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.
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 Pearson Oil in the consumer business. Now Pearson Oil can target international markets with far fewer capital restrictions requirements than the existing system.
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. Pearson Oil 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. Pearson Oil 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.
Using analytics as competitive advantage
– Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pearson Oil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Pearson Oil 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.
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 Pearson Oil 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
– Pearson Oil 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pearson Oil 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 Pearson Oil to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Pearson Oil has opened avenues for new revenue streams for the organization in the industry. This can help Pearson Oil to build a more holistic ecosystem as suggested in the Weetman Pearson and the Mexican Oil Industry (A) case study. Pearson Oil can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pearson Oil 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.
Threats Weetman Pearson and the Mexican Oil Industry (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Weetman Pearson and the Mexican Oil Industry (A) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pearson Oil 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 Weetman Pearson and the Mexican Oil Industry (A) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pearson Oil 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.
Technology acceleration in Forth Industrial Revolution
– Pearson Oil has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Pearson Oil 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.
Environmental challenges
– Pearson Oil 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. Pearson Oil can take advantage of this fund but it will also bring new competitors in the Global Business industry.
High dependence on third party suppliers
– Pearson Oil 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.
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. Pearson Oil needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pearson Oil with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Weetman Pearson and the Mexican Oil Industry (A), Pearson Oil 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 Pearson Oil in the Global Business sector and impact the bottomline of the organization.
Consumer confidence and its impact on Pearson Oil 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.
Stagnating economy with rate increase
– Pearson Oil 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.
Increasing wage structure of Pearson Oil
– 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 Pearson Oil.
Weighted SWOT Analysis of Weetman Pearson and the Mexican Oil Industry (A) 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 Weetman Pearson and the Mexican Oil Industry (A) 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 Weetman Pearson and the Mexican Oil Industry (A) 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 Weetman Pearson and the Mexican Oil Industry (A) 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 Weetman Pearson and the Mexican Oil Industry (A) 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 Pearson Oil needs to make to build a sustainable competitive advantage.