On July 6, 1998, the Indonesian government announced that Cementos de Mexico (Cemex) was the preferred bidder for the largest government-owned cement company in Indonesia PT Semen Gresik. The first round of bidding had pitted Cemex against Holderbank of Switzerland and Heidelberger of Germany, two of the largest cement manufacturing firms in the world, and a mere seven weeks had passed since the resignation of President Suharto, a turning point for Indonesia's political and economic future. Cemex was informed on August 20 that their first round bid would have to be restructured, the primary change being a maximum of 14% of ownership passing from the government to Cemex. Then, as preferred bidders, Cemex would wait for the other round bidders to submit second bids. If their second bids were superior to Cemex's first bid, Cemex would have the right to match them if it wished. The vice president for finance of Cemex, Hector Midina, and his acquisition staff and consultants, now had only a few weeks to finalize their position
Swot Analysis of "P.T. Semen Gresik" written by Michael Moffett includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cemex Gresik facing as an external strategic factors. Some of the topics covered in P.T. Semen Gresik case study are - Strategic Management Strategies, International business, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the P.T. Semen Gresik casestudy better are - – there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, increasing energy prices, geopolitical disruptions, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
there is backlash against globalization, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of P.T. Semen Gresik
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in P.T. Semen Gresik case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cemex Gresik, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cemex Gresik 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 P.T. Semen Gresik can be done for the following purposes –
1. Strategic planning using facts provided in P.T. Semen Gresik case study
2. Improving business portfolio management of Cemex Gresik
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cemex Gresik
Strengths P.T. Semen Gresik | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cemex Gresik in P.T. Semen Gresik Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Cemex Gresik in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Finance & Accounting field
– Cemex Gresik 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 Cemex Gresik in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Cemex Gresik 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 Cemex Gresik is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in P.T. Semen Gresik Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Cemex Gresik has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cemex Gresik to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Cemex Gresik is present in almost all the verticals within the industry. This has provided firm in P.T. Semen Gresik 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.
Successful track record of launching new products
– Cemex Gresik has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cemex Gresik 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.
Low bargaining power of suppliers
– Suppliers of Cemex Gresik in the sector have low bargaining power. P.T. Semen Gresik has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cemex Gresik to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Cemex Gresik is one of the most innovative firm in sector. Manager in P.T. Semen Gresik Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Cemex Gresik 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 P.T. Semen Gresik - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Cemex Gresik 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 Michael Moffett 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 Cemex Gresik
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cemex Gresik does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Finance & Accounting industry
– P.T. Semen Gresik firm has clearly differentiated products in the market place. This has enabled Cemex Gresik to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cemex Gresik to invest into research and development (R&D) and innovation.
Weaknesses P.T. Semen Gresik | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of P.T. Semen Gresik are -
Products dominated business model
– Even though Cemex Gresik 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 - P.T. Semen Gresik should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study P.T. Semen Gresik 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 Cemex Gresik 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Cemex Gresik, firm in the HBR case study P.T. Semen Gresik 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 P.T. Semen Gresik, it seems that the employees of Cemex Gresik 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the P.T. Semen Gresik 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 Cemex Gresik has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Cemex Gresik 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. Cemex Gresik 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.
High cash cycle compare to competitors
Cemex Gresik 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 P.T. Semen Gresik 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 P.T. Semen Gresik can leverage the sales team experience to cultivate customer relationships as Cemex Gresik is planning to shift buying processes online.
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 Cemex Gresik supply chain. Even after few cautionary changes mentioned in the HBR case study - P.T. Semen Gresik, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cemex Gresik vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study P.T. Semen Gresik, in the dynamic environment Cemex Gresik has struggled to respond to the nimble upstart competition. Cemex Gresik has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Cemex Gresik 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.
Opportunities P.T. Semen Gresik | 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 P.T. Semen Gresik are -
Developing new processes and practices
– Cemex Gresik can develop new processes and procedures in Finance & Accounting 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.
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 Cemex Gresik in the consumer business. Now Cemex Gresik can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cemex Gresik can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Cemex Gresik has opened avenues for new revenue streams for the organization in the industry. This can help Cemex Gresik to build a more holistic ecosystem as suggested in the P.T. Semen Gresik case study. Cemex Gresik can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Cemex Gresik 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 P.T. Semen Gresik - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cemex Gresik to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cemex Gresik in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Cemex Gresik 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 Finance & Accounting segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cemex Gresik can use these opportunities to build new business models that can help the communities that Cemex Gresik operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cemex Gresik 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 Cemex Gresik to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Cemex Gresik to increase its market reach. Cemex Gresik 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cemex Gresik is facing challenges because of the dominance of functional experts in the organization. P.T. Semen Gresik 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.
Learning at scale
– Online learning technologies has now opened space for Cemex Gresik 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cemex Gresik 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. Cemex Gresik can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats P.T. Semen Gresik External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study P.T. Semen Gresik are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cemex Gresik 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 P.T. Semen Gresik .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cemex Gresik in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Cemex Gresik has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cemex Gresik needs to keep up with the evolution of technology in the Finance & Accounting 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. Cemex Gresik needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Cemex Gresik business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Cemex Gresik 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.
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.
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 Cemex Gresik in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Cemex Gresik is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Stagnating economy with rate increase
– Cemex Gresik 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.
Environmental challenges
– Cemex Gresik 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. Cemex Gresik can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Cemex Gresik 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.
Weighted SWOT Analysis of P.T. Semen Gresik 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 P.T. Semen Gresik 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 P.T. Semen Gresik 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 P.T. Semen Gresik 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 P.T. Semen Gresik 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 Cemex Gresik needs to make to build a sustainable competitive advantage.
