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 - – increasing household debt because of falling income levels, increasing energy prices, cloud computing is disrupting traditional business models, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic ,
technology disruption, digital marketing is dominated by two big players Facebook and Google, 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 -
Highly skilled collaborators
– Cemex Gresik 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 P.T. Semen Gresik HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Cemex Gresik is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Cemex Gresik is one of the leading recruiters in the industry. Managers in the P.T. Semen Gresik are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Cemex Gresik 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.
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.
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.
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 -
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study P.T. Semen Gresik, is just above the industry average. Cemex Gresik 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.
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.
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.
Lack of clear differentiation of Cemex Gresik products
– To increase the profitability and margins on the products, Cemex Gresik needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cemex Gresik is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study P.T. Semen Gresik can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Cemex Gresik is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cemex Gresik needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cemex Gresik to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study P.T. Semen Gresik, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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 -
Buying journey improvements
– Cemex Gresik can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. P.T. Semen Gresik suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
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.
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.
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.
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.
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 Cemex Gresik 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.
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.
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.
Manufacturing automation
– Cemex Gresik can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Cemex Gresik can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Cemex Gresik 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.
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 -
Regulatory challenges
– Cemex Gresik 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 Finance & Accounting industry regulations.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cemex Gresik with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Cemex Gresik.
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.
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 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study P.T. Semen Gresik, Cemex Gresik may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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.
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 .
Increasing wage structure of Cemex Gresik
– 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 Cemex Gresik.
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 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.