Negotiation Exercise on Tradeable Pollution Allowances: General Background Information SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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.)
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 - – increasing energy prices, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
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.
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
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 -
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.
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.
Sustainable margins compare to other players in Global Business industry
– Negotiation Exercise on Tradeable Pollution Allowances: General Background Information firm has clearly differentiated products in the market place. This has enabled So2 Pollution to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped So2 Pollution to invest into research and development (R&D) and innovation.
Ability to lead change in Global Business field
– So2 Pollution 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 So2 Pollution in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For So2 Pollution digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. So2 Pollution 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.
High brand equity
– So2 Pollution has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled So2 Pollution to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– So2 Pollution has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. So2 Pollution 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.
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.
Organizational Resilience of So2 Pollution
– The covid-19 pandemic has put organizational resilience at the centre of everthing that So2 Pollution does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 So2 Pollution has relatively successful track record of launching new products.
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information, it seems that the employees of So2 Pollution don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information, in the dynamic environment So2 Pollution has struggled to respond to the nimble upstart competition. So2 Pollution has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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 So2 Pollution supply chain. Even after few cautionary changes mentioned in the HBR case study - Negotiation Exercise on Tradeable Pollution Allowances: General Background Information, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left So2 Pollution vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information 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 So2 Pollution 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information, is just above the industry average. So2 Pollution 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.
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 -
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, So2 Pollution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects So2 Pollution can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Manufacturing automation
– So2 Pollution 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.
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.
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.
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.
Loyalty marketing
– So2 Pollution 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.
Building a culture of innovation
– managers at So2 Pollution 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.
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 So2 Pollution in the consumer business. Now So2 Pollution can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Better consumer reach
– The expansion of the 5G network will help So2 Pollution to increase its market reach. So2 Pollution 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.
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 -
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 .
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Negotiation Exercise on Tradeable Pollution Allowances: General Background Information, So2 Pollution 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 .
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 So2 Pollution.
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.
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.
Shortening product life cycle
– it is one of the major threat that So2 Pollution is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of So2 Pollution
– 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 So2 Pollution.
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.
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.
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.
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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