Negotiation Exercise on Tradeable Pollution Allowances: General Background Information SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Negotiation Exercise on Tradeable Pollution Allowances: General Background Information

Designed to teach students about the trade-offs faced by firms exploring alternative approaches to complying with pollution control regulations. The setting is the U.S. electric utility industry in 1993. In accordance with the provisions of the 1990 Clean Air Act, coal-burning utilities must lower their emissions of SO2 (sulfur dioxide) significantly by 1995, and then reduce their emissions by an additional 50% by the year 2000. In this stylized negotiation each utility has the option of complying with the regulations through one of three methods: 1) by installing pollution control equipment ("scrubbers"); 2) by substituting high-sulfur coal; and/or 3) by purchasing tradeable SO2 allowances from other firms that overcomply with the emission control legislation. Not only must each utility reduce its emissions by a different amount, but the costs faced by each firm with respect to scrubbing and fuel switching differ as well. Also, assumptions relating to the state regulatory environment differ across negotiating groups. Negotiations take place in groups of four utilities, and separate scenarios are available for three distinct groups. (See Supplements.)

Authors :: Willis Emmons

Topics :: Global Business

Tags :: Negotiations, Regulation, Sustainability, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Negotiation Exercise on Tradeable Pollution Allowances: General Background Information" written by Willis Emmons includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that So2 Pollution facing as an external strategic factors. Some of the topics covered in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information case study are - Strategic Management Strategies, Negotiations, Regulation, Sustainability and Global Business.

Some of the macro environment factors that can be used to understand the Negotiation Exercise on Tradeable Pollution Allowances: General Background Information casestudy better are - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, etc

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Introduction to SWOT Analysis of Negotiation Exercise on Tradeable Pollution Allowances: General Background Information

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the So2 Pollution, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which So2 Pollution 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Negotiation Exercise on Tradeable Pollution Allowances: General Background Information can be done for the following purposes –
1. Strategic planning using facts provided in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information case study
2. Improving business portfolio management of So2 Pollution
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 So2 Pollution

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Strengths Negotiation Exercise on Tradeable Pollution Allowances: General Background Information | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of So2 Pollution in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information Harvard Business Review case study are -

Innovation driven organization

– So2 Pollution is one of the most innovative firm in sector. Manager in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Ability to recruit top talent

– So2 Pollution is one of the leading recruiters in the industry. Managers in the Negotiation Exercise on Tradeable Pollution Allowances: General Background Information are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Superior customer experience

– The customer experience strategy of So2 Pollution in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Diverse revenue streams

– So2 Pollution is present in almost all the verticals within the industry. This has provided firm in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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.

Strong track record of project management

– So2 Pollution is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Learning organization

- So2 Pollution 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 So2 Pollution is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Low bargaining power of suppliers

– Suppliers of So2 Pollution in the sector have low bargaining power. Negotiation Exercise on Tradeable Pollution Allowances: General Background Information has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps So2 Pollution to manage not only supply disruptions but also source products at highly competitive prices.

Operational resilience

– The operational resilience strategy in the Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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.

Effective Research and Development (R&D)

– So2 Pollution 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Highly skilled collaborators

– So2 Pollution 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Analytics focus

– So2 Pollution 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 Willis Emmons 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.

Training and development

– So2 Pollution has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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.

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Weaknesses Negotiation Exercise on Tradeable Pollution Allowances: General Background Information | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Negotiation Exercise on Tradeable Pollution Allowances: General Background Information are -

Slow decision making process

– As mentioned earlier in the report, So2 Pollution 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. So2 Pollution 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.

Low market penetration in new markets

– Outside its home market of So2 Pollution, firm in the HBR case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, So2 Pollution is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 cash cycle compare to competitors

So2 Pollution 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information can leverage the sales team experience to cultivate customer relationships as So2 Pollution is planning to shift buying processes online.

Slow to strategic competitive environment developments

– As Negotiation Exercise on Tradeable Pollution Allowances: General Background Information HBR case study mentions - So2 Pollution 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.

Increasing silos among functional specialists

– The organizational structure of So2 Pollution is dominated by functional specialists. It is not different from other players in the Global Business segment. So2 Pollution needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help So2 Pollution to focus more on services rather than just following the product oriented approach.

Lack of clear differentiation of So2 Pollution products

– To increase the profitability and margins on the products, So2 Pollution 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 So2 Pollution 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.

Need for greater diversity

– So2 Pollution 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.

Workers concerns about automation

– As automation is fast increasing in the segment, So2 Pollution 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.

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Opportunities Negotiation Exercise on Tradeable Pollution Allowances: General Background Information | 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information are -

Redefining models of collaboration and team work

– As explained in the weaknesses section, So2 Pollution is facing challenges because of the dominance of functional experts in the organization. Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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.

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 So2 Pollution 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.

Buying journey improvements

– So2 Pollution can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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.

Developing new processes and practices

– So2 Pollution 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 So2 Pollution 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 So2 Pollution to hire the very best people irrespective of their geographical location.

Learning at scale

– Online learning technologies has now opened space for So2 Pollution 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, So2 Pollution can use these opportunities to build new business models that can help the communities that So2 Pollution operates in. Secondly it can use opportunities from government spending in Global Business sector.

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. So2 Pollution can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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. So2 Pollution can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Using analytics as competitive advantage

– So2 Pollution 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information - to build a competitive advantage using analytics. The analytics driven competitive advantage can help So2 Pollution to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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. So2 Pollution 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. So2 Pollution 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.

Leveraging digital technologies

– So2 Pollution 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for So2 Pollution 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.

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Threats Negotiation Exercise on Tradeable Pollution Allowances: General Background Information External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information are -

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. So2 Pollution 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.

High dependence on third party suppliers

– So2 Pollution 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.

Consumer confidence and its impact on So2 Pollution 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.

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 So2 Pollution business can come under increasing regulations regarding data privacy, data security, etc.

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. So2 Pollution needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.

Environmental challenges

– So2 Pollution 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. So2 Pollution can take advantage of this fund but it will also bring new competitors in the Global Business industry.

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 So2 Pollution in the Global Business sector and impact the bottomline of the organization.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents So2 Pollution with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

Technology acceleration in Forth Industrial Revolution

– So2 Pollution has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, So2 Pollution 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for So2 Pollution 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, So2 Pollution 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information .

Regulatory challenges

– So2 Pollution 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.

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. So2 Pollution can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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Weighted SWOT Analysis of Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 So2 Pollution needs to make to build a sustainable competitive advantage.

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