International Power PLC: Financial Performance in the Global Power Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of International Power PLC: Financial Performance in the Global Power Industry
This is a Darden case study.This case illustrates ratio analysis using financial data for a global power company. It is best suited for an introductory discussion of ratio analysis for both the cross-section and time-series. Ten years of standard ratios pertaining to profitability, efficiency, liquidity, solvency, capital structure, and market multiples are provided. The case highlights the correspondence between firm performance and equity values.
Swot Analysis of "International Power PLC: Financial Performance in the Global Power Industry" written by Paul Simko includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ratio Power facing as an external strategic factors. Some of the topics covered in International Power PLC: Financial Performance in the Global Power Industry case study are - Strategic Management Strategies, Corporate governance, Financial management, International business and Global Business.
Some of the macro environment factors that can be used to understand the International Power PLC: Financial Performance in the Global Power Industry casestudy better are - – increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, geopolitical disruptions, central banks are concerned over increasing inflation, wage bills are increasing, increasing energy prices,
digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of International Power PLC: Financial Performance in the Global Power Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in International Power PLC: Financial Performance in the Global Power Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ratio Power, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ratio Power 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 International Power PLC: Financial Performance in the Global Power Industry can be done for the following purposes –
1. Strategic planning using facts provided in International Power PLC: Financial Performance in the Global Power Industry case study
2. Improving business portfolio management of Ratio Power
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 Ratio Power
Strengths International Power PLC: Financial Performance in the Global Power Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ratio Power in International Power PLC: Financial Performance in the Global Power Industry Harvard Business Review case study are -
Effective Research and Development (R&D)
– Ratio Power 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 International Power PLC: Financial Performance in the Global Power 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.
Superior customer experience
– The customer experience strategy of Ratio Power in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Ratio Power 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 Paul Simko 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.
Successful track record of launching new products
– Ratio Power has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ratio Power 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.
High brand equity
– Ratio Power has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ratio Power to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Ratio Power 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 Ratio Power is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in International Power PLC: Financial Performance in the Global Power Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Global Business industry
– International Power PLC: Financial Performance in the Global Power Industry firm has clearly differentiated products in the market place. This has enabled Ratio Power to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Ratio Power to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Ratio Power is present in almost all the verticals within the industry. This has provided firm in International Power PLC: Financial Performance in the Global Power 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.
Low bargaining power of suppliers
– Suppliers of Ratio Power in the sector have low bargaining power. International Power PLC: Financial Performance in the Global Power Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ratio Power to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Global Business field
– Ratio Power 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 Ratio Power in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Ratio Power has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in International Power PLC: Financial Performance in the Global Power 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.
Ability to recruit top talent
– Ratio Power is one of the leading recruiters in the industry. Managers in the International Power PLC: Financial Performance in the Global Power Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses International Power PLC: Financial Performance in the Global Power Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of International Power PLC: Financial Performance in the Global Power Industry are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study International Power PLC: Financial Performance in the Global Power Industry, in the dynamic environment Ratio Power has struggled to respond to the nimble upstart competition. Ratio Power has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study International Power PLC: Financial Performance in the Global Power Industry has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ratio Power 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ratio Power is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study International Power PLC: Financial Performance in the Global Power 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the International Power PLC: Financial Performance in the Global Power 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 Ratio Power has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul Simko suggests that, Ratio Power is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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 Ratio Power supply chain. Even after few cautionary changes mentioned in the HBR case study - International Power PLC: Financial Performance in the Global Power Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ratio Power vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Ratio Power 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 - International Power PLC: Financial Performance in the Global Power Industry should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study International Power PLC: Financial Performance in the Global Power Industry, it seems that the employees of Ratio Power 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 International Power PLC: Financial Performance in the Global Power Industry, is just above the industry average. Ratio Power 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
– Ratio Power 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.
Increasing silos among functional specialists
– The organizational structure of Ratio Power is dominated by functional specialists. It is not different from other players in the Global Business segment. Ratio Power needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ratio Power to focus more on services rather than just following the product oriented approach.
Opportunities International Power PLC: Financial Performance in the Global Power 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 International Power PLC: Financial Performance in the Global Power Industry are -
Building a culture of innovation
– managers at Ratio Power 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ratio Power 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.
Creating value in data economy
– The success of analytics program of Ratio Power has opened avenues for new revenue streams for the organization in the industry. This can help Ratio Power to build a more holistic ecosystem as suggested in the International Power PLC: Financial Performance in the Global Power Industry case study. Ratio Power can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Ratio Power 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 International Power PLC: Financial Performance in the Global Power Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ratio Power to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Ratio Power in the consumer business. Now Ratio Power can target international markets with far fewer capital restrictions requirements than the existing system.
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 Ratio Power 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ratio Power 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 Ratio Power to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Ratio Power 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ratio Power is facing challenges because of the dominance of functional experts in the organization. International Power PLC: Financial Performance in the Global Power Industry case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. Ratio Power can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ratio Power can use these opportunities to build new business models that can help the communities that Ratio Power operates in. Secondly it can use opportunities from government spending in Global Business sector.
Manufacturing automation
– Ratio Power 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.
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. Ratio Power 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. Ratio Power 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 International Power PLC: Financial Performance in the Global Power Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study International Power PLC: Financial Performance in the Global Power Industry are -
Environmental challenges
– Ratio Power 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. Ratio Power can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ratio Power 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 International Power PLC: Financial Performance in the Global Power Industry .
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. Ratio Power 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 Ratio Power with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Ratio Power demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Ratio Power
– 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 Ratio Power.
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 Ratio Power business can come under increasing regulations regarding data privacy, data security, etc.
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 Ratio Power.
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 Ratio Power in the Global Business sector and impact the bottomline of the organization.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study International Power PLC: Financial Performance in the Global Power Industry, Ratio Power 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ratio Power 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 acceleration in Forth Industrial Revolution
– Ratio Power has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Ratio Power 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.
Weighted SWOT Analysis of International Power PLC: Financial Performance in the Global Power 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 International Power PLC: Financial Performance in the Global Power 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 International Power PLC: Financial Performance in the Global Power 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 International Power PLC: Financial Performance in the Global Power 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 International Power PLC: Financial Performance in the Global Power 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 Ratio Power needs to make to build a sustainable competitive advantage.
