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 - – competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, there is backlash against globalization, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, geopolitical disruptions,
central banks are concerned over increasing inflation, wage bills are increasing, 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 -
Cross disciplinary teams
– Horizontal connected teams at the Pearson Oil 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
– Pearson Oil is one of the leading recruiters in the industry. Managers in the Weetman Pearson and the Mexican Oil Industry (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Weetman Pearson and the Mexican Oil Industry (A) 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.
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.
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.
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.
Learning organization
- Pearson Oil 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 Pearson Oil is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Weetman Pearson and the Mexican Oil Industry (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 -
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Weetman Pearson and the Mexican Oil Industry (A), it seems that the employees of Pearson Oil 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.
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.
Need for greater diversity
– Pearson Oil 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pearson Oil is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Weetman Pearson and the Mexican Oil Industry (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Pearson Oil, firm in the HBR case study Weetman Pearson and the Mexican Oil Industry (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Pearson Oil products
– To increase the profitability and margins on the products, Pearson Oil needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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.
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 -
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.
Learning at scale
– Online learning technologies has now opened space for Pearson Oil 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.
Better consumer reach
– The expansion of the 5G network will help Pearson Oil to increase its market reach. Pearson Oil 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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pearson Oil 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.
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.
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.
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. Pearson Oil can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pearson Oil is facing challenges because of the dominance of functional experts in the organization. Weetman Pearson and the Mexican Oil Industry (A) 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.
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.
Building a culture of innovation
– managers at Pearson Oil 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.
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.
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 -
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.
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 .
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.
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 Pearson Oil business can come under increasing regulations regarding data privacy, data security, etc.
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) .
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. Pearson Oil 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. Pearson Oil needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
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. Pearson Oil 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 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.
Shortening product life cycle
– it is one of the major threat that Pearson Oil is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.