Ahold: A Royal Dutch Disaster SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ahold: A Royal Dutch Disaster
The case traces the history of Ahold, the world's third largest food retailer, describing in detail the events in the 10 years leading up to its collapse. After the new CEO, Cees van der Hoeven, took over in 1993, Ahold embarked on a program of rapid expansion with a target of 15 per cent growth in earnings per share per year. The strategy took the form of penetrating new geographic markets and diversification into related industries. While van der Hoeven appeared to be achieving his targets, in reality, he was sowing the seeds of his own destruction. While the apparent reason for Ahold's downfall was the discovery of fraud at one of its US subsidiaries, the actual causes were much more complex. The company itself survived, thanks in part to the existence of a "poison pill", but was radically restructured over the next two years with many of van der Hoeven's ventures being dismantled. The case offers the opportunity to discuss many of the common causes of company failure: 1) poor strategic decisions, 2) over-expansion, especially through ill-judged acquisitions, 3) a dominant CEO driven by greed and hubris, 4) weak internal controls, particularly in regard to remote operations, 5) ineffective boards. The case can also be used to comment on the existence and effect of "poison pills" and other restrictions on ordinary shareholder power; corporate governance and the many reforms now in place or being proposed; and how distant operations can be effectively controlled.
Swot Analysis of "Ahold: A Royal Dutch Disaster" written by Stewart Hamilton, Alicia Micklethwait includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ahold Der facing as an external strategic factors. Some of the topics covered in Ahold: A Royal Dutch Disaster case study are - Strategic Management Strategies, Growth strategy, Mergers & acquisitions, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Ahold: A Royal Dutch Disaster casestudy better are - – digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, increasing energy prices, geopolitical disruptions, challanges to central banks by blockchain based private currencies,
competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Ahold: A Royal Dutch Disaster
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ahold: A Royal Dutch Disaster case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ahold Der, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ahold Der 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 Ahold: A Royal Dutch Disaster can be done for the following purposes –
1. Strategic planning using facts provided in Ahold: A Royal Dutch Disaster case study
2. Improving business portfolio management of Ahold Der
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 Ahold Der
Strengths Ahold: A Royal Dutch Disaster | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ahold Der in Ahold: A Royal Dutch Disaster Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Ahold Der in the sector have low bargaining power. Ahold: A Royal Dutch Disaster has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ahold Der to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Ahold Der 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 Stewart Hamilton, Alicia Micklethwait 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.
Organizational Resilience of Ahold Der
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ahold Der does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Ahold Der 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 Ahold: A Royal Dutch Disaster HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Ahold Der has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ahold Der to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Ahold Der has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ahold: A Royal Dutch Disaster 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.
Strong track record of project management
– Ahold Der is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Ahold Der is present in almost all the verticals within the industry. This has provided firm in Ahold: A Royal Dutch Disaster 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.
Operational resilience
– The operational resilience strategy in the Ahold: A Royal Dutch Disaster 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)
– Ahold Der 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 Ahold: A Royal Dutch Disaster - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Ahold Der has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ahold Der 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.
Cross disciplinary teams
– Horizontal connected teams at the Ahold Der are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Ahold: A Royal Dutch Disaster | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ahold: A Royal Dutch Disaster are -
Increasing silos among functional specialists
– The organizational structure of Ahold Der is dominated by functional specialists. It is not different from other players in the Global Business segment. Ahold Der needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ahold Der to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Ahold Der products
– To increase the profitability and margins on the products, Ahold Der needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Ahold: A Royal Dutch Disaster 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 Ahold: A Royal Dutch Disaster can leverage the sales team experience to cultivate customer relationships as Ahold Der is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Ahold Der 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. Ahold Der 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ahold Der is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ahold: A Royal Dutch Disaster 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 operating costs
– Compare to the competitors, firm in the HBR case study Ahold: A Royal Dutch Disaster 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 Ahold Der 's lucrative customers.
High cash cycle compare to competitors
Ahold Der 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.
Need for greater diversity
– Ahold Der 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ahold: A Royal Dutch Disaster, in the dynamic environment Ahold Der has struggled to respond to the nimble upstart competition. Ahold Der has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Ahold: A Royal Dutch Disaster HBR case study mentions - Ahold Der 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.
Products dominated business model
– Even though Ahold Der 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 - Ahold: A Royal Dutch Disaster should strive to include more intangible value offerings along with its core products and services.
Opportunities Ahold: A Royal Dutch Disaster | 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 Ahold: A Royal Dutch Disaster are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ahold Der 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. Ahold Der 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. Ahold Der 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.
Better consumer reach
– The expansion of the 5G network will help Ahold Der to increase its market reach. Ahold Der 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ahold Der 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 Ahold Der to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ahold Der can use these opportunities to build new business models that can help the communities that Ahold Der operates in. Secondly it can use opportunities from government spending in Global Business sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ahold Der can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Ahold: A Royal Dutch Disaster, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Ahold Der 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 Ahold: A Royal Dutch Disaster - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ahold Der 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 Ahold Der in the consumer business. Now Ahold Der 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. Ahold Der can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Ahold Der 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.
Leveraging digital technologies
– Ahold Der 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.
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 Ahold Der 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ahold Der is facing challenges because of the dominance of functional experts in the organization. Ahold: A Royal Dutch Disaster 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.
Threats Ahold: A Royal Dutch Disaster External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ahold: A Royal Dutch Disaster are -
Shortening product life cycle
– it is one of the major threat that Ahold Der is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Ahold Der 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.
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. Ahold Der can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Ahold Der 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.
Stagnating economy with rate increase
– Ahold Der 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.
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 Ahold Der.
High dependence on third party suppliers
– Ahold Der 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.
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. Ahold Der 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.
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 Ahold Der business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Ahold Der
– 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 Ahold Der.
Technology acceleration in Forth Industrial Revolution
– Ahold Der has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Ahold Der 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.
Consumer confidence and its impact on Ahold Der 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.
Weighted SWOT Analysis of Ahold: A Royal Dutch Disaster 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 Ahold: A Royal Dutch Disaster 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 Ahold: A Royal Dutch Disaster 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 Ahold: A Royal Dutch Disaster 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 Ahold: A Royal Dutch Disaster 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 Ahold Der needs to make to build a sustainable competitive advantage.