Case Study Description of Unocal Corporation: China's Unwelcome Bid
Shareholders of Unocal, a mid-sized American oil and gas firm, had watched the value of their stock rise ever since rumors of a takeover surfaced early in 2005. Trading in the low US$40s at the beginning of the year, competing firms outbid each other, taking Unocal's per share price above US$60 by mid-summer. International oil companies, flush with cash due to high oil prices and facing low reserve replacement rates, increasingly sought to acquire strategic assets. Unocal's significant natural gas reserves in Asia, combined with its expertise in deep water drilling, made it a particularly attractive target for CNOOC, China's state-controlled offshore oil company. Though CNOOC trumped earlier offers with a US$67 per share, all-cash deal, valued at US$18.5 billion, the firm encountered stiff opposition from Washington and Wall Street.
Swot Analysis of "Unocal Corporation: China's Unwelcome Bid" written by Mark Stimson, Ka-Fu Wong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Unocal Unocal's facing as an external strategic factors. Some of the topics covered in Unocal Corporation: China's Unwelcome Bid case study are - Strategic Management Strategies, Financial markets, Global strategy, Globalization, Mergers & acquisitions, Negotiations, Policy and Global Business.
Some of the macro environment factors that can be used to understand the Unocal Corporation: China's Unwelcome Bid casestudy better are - – challanges to central banks by blockchain based private currencies, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing transportation and logistics costs, cloud computing is disrupting traditional business models,
talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Unocal Corporation: China's Unwelcome Bid
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Unocal Corporation: China's Unwelcome Bid case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Unocal Unocal's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Unocal Unocal's 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 Unocal Corporation: China's Unwelcome Bid can be done for the following purposes –
1. Strategic planning using facts provided in Unocal Corporation: China's Unwelcome Bid case study
2. Improving business portfolio management of Unocal Unocal's
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 Unocal Unocal's
Strengths Unocal Corporation: China's Unwelcome Bid | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Unocal Unocal's in Unocal Corporation: China's Unwelcome Bid Harvard Business Review case study are -
Innovation driven organization
– Unocal Unocal's is one of the most innovative firm in sector. Manager in Unocal Corporation: China's Unwelcome Bid Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Unocal Unocal's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Unocal Unocal's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Unocal Unocal's 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 Unocal Corporation: China's Unwelcome Bid - 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
- Unocal Unocal's 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 Unocal Unocal's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Unocal Corporation: China's Unwelcome Bid Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Unocal Unocal's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Unocal Unocal's 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.
Operational resilience
– The operational resilience strategy in the Unocal Corporation: China's Unwelcome Bid 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.
Analytics focus
– Unocal Unocal's 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 Mark Stimson, Ka-Fu Wong 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.
Ability to recruit top talent
– Unocal Unocal's is one of the leading recruiters in the industry. Managers in the Unocal Corporation: China's Unwelcome Bid are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Unocal Unocal's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Unocal Corporation: China's Unwelcome Bid 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.
High switching costs
– The high switching costs that Unocal Unocal's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Superior customer experience
– The customer experience strategy of Unocal Unocal's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Unocal Unocal's is present in almost all the verticals within the industry. This has provided firm in Unocal Corporation: China's Unwelcome Bid 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.
Weaknesses Unocal Corporation: China's Unwelcome Bid | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Unocal Corporation: China's Unwelcome Bid are -
Slow decision making process
– As mentioned earlier in the report, Unocal Unocal's 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. Unocal Unocal's 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.
Interest costs
– Compare to the competition, Unocal Unocal's 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.
Low market penetration in new markets
– Outside its home market of Unocal Unocal's, firm in the HBR case study Unocal Corporation: China's Unwelcome Bid needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Unocal Unocal's 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, Unocal Unocal's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Unocal Corporation: China's Unwelcome Bid 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 Unocal Corporation: China's Unwelcome Bid 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 Unocal Unocal's has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Unocal Unocal's is dominated by functional specialists. It is not different from other players in the Global Business segment. Unocal Unocal's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Unocal Unocal's to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Unocal Unocal's products
– To increase the profitability and margins on the products, Unocal Unocal's needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Unocal Corporation: China's Unwelcome Bid 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 Unocal Unocal's 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Unocal Corporation: China's Unwelcome Bid 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 Unocal Corporation: China's Unwelcome Bid can leverage the sales team experience to cultivate customer relationships as Unocal Unocal's is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Unocal Corporation: China's Unwelcome Bid HBR case study mentions - Unocal Unocal's 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.
Opportunities Unocal Corporation: China's Unwelcome Bid | 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 Unocal Corporation: China's Unwelcome Bid are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Unocal Unocal's 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.
Using analytics as competitive advantage
– Unocal Unocal's 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 Unocal Corporation: China's Unwelcome Bid - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Unocal Unocal's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Unocal Unocal's 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.
Manufacturing automation
– Unocal Unocal's 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.
Creating value in data economy
– The success of analytics program of Unocal Unocal's has opened avenues for new revenue streams for the organization in the industry. This can help Unocal Unocal's to build a more holistic ecosystem as suggested in the Unocal Corporation: China's Unwelcome Bid case study. Unocal Unocal's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Unocal Unocal's 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.
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 Unocal Unocal's 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.
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. Unocal Unocal's 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, Unocal Unocal's is facing challenges because of the dominance of functional experts in the organization. Unocal Corporation: China's Unwelcome Bid 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.
Better consumer reach
– The expansion of the 5G network will help Unocal Unocal's to increase its market reach. Unocal Unocal's 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.
Learning at scale
– Online learning technologies has now opened space for Unocal Unocal's 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.
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 Unocal Unocal's in the consumer business. Now Unocal Unocal's can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Unocal Unocal's 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.
Threats Unocal Corporation: China's Unwelcome Bid External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Unocal Corporation: China's Unwelcome Bid are -
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. Unocal Unocal's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Unocal Unocal's 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 Unocal Corporation: China's Unwelcome Bid .
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 Unocal Unocal's business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Unocal Unocal's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Unocal Unocal's needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing wage structure of Unocal Unocal's
– 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 Unocal Unocal's.
Technology acceleration in Forth Industrial Revolution
– Unocal Unocal's has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Unocal Unocal's 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.
Stagnating economy with rate increase
– Unocal Unocal's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Unocal Unocal's 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.
Consumer confidence and its impact on Unocal Unocal's 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 Unocal Unocal's is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Unocal Corporation: China's Unwelcome Bid, Unocal Unocal's 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 .
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.
Weighted SWOT Analysis of Unocal Corporation: China's Unwelcome Bid 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 Unocal Corporation: China's Unwelcome Bid 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 Unocal Corporation: China's Unwelcome Bid 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 Unocal Corporation: China's Unwelcome Bid 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 Unocal Corporation: China's Unwelcome Bid 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 Unocal Unocal's needs to make to build a sustainable competitive advantage.
