Case Study Description of Mexico (D): Stabilization and Retrenchment
Describes the response of the Mexican authorities and the international community to the Mexican Peso crisis of 1994 and the banking, financial, and macroeconomic crisis that followed it.
Swot Analysis of "Mexico (D): Stabilization and Retrenchment" written by Huw Pill includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mexican Retrenchment facing as an external strategic factors. Some of the topics covered in Mexico (D): Stabilization and Retrenchment case study are - Strategic Management Strategies, Economics, Global strategy, Government, Recession and Global Business.
Some of the macro environment factors that can be used to understand the Mexico (D): Stabilization and Retrenchment casestudy better are - – talent flight as more people leaving formal jobs, increasing commodity prices, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies,
central banks are concerned over increasing inflation, technology disruption, etc
Introduction to SWOT Analysis of Mexico (D): Stabilization and Retrenchment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Mexico (D): Stabilization and Retrenchment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mexican Retrenchment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mexican Retrenchment 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 Mexico (D): Stabilization and Retrenchment can be done for the following purposes –
1. Strategic planning using facts provided in Mexico (D): Stabilization and Retrenchment case study
2. Improving business portfolio management of Mexican Retrenchment
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 Mexican Retrenchment
Strengths Mexico (D): Stabilization and Retrenchment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mexican Retrenchment in Mexico (D): Stabilization and Retrenchment Harvard Business Review case study are -
Organizational Resilience of Mexican Retrenchment
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mexican Retrenchment does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Mexican Retrenchment is one of the leading recruiters in the industry. Managers in the Mexico (D): Stabilization and Retrenchment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Mexican Retrenchment is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Mexican Retrenchment 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 Huw Pill 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
– Mexican Retrenchment has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mexican Retrenchment to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Global Business industry
– Mexico (D): Stabilization and Retrenchment firm has clearly differentiated products in the market place. This has enabled Mexican Retrenchment to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Mexican Retrenchment to invest into research and development (R&D) and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Mexican Retrenchment digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mexican Retrenchment 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.
Low bargaining power of suppliers
– Suppliers of Mexican Retrenchment in the sector have low bargaining power. Mexico (D): Stabilization and Retrenchment has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mexican Retrenchment to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Mexican Retrenchment 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 Mexican Retrenchment is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Mexico (D): Stabilization and Retrenchment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Mexico (D): Stabilization and Retrenchment 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.
Successful track record of launching new products
– Mexican Retrenchment has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mexican Retrenchment 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.
Training and development
– Mexican Retrenchment has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Mexico (D): Stabilization and Retrenchment 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.
Weaknesses Mexico (D): Stabilization and Retrenchment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mexico (D): Stabilization and Retrenchment are -
Workers concerns about automation
– As automation is fast increasing in the segment, Mexican Retrenchment 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Mexico (D): Stabilization and Retrenchment, is just above the industry average. Mexican Retrenchment 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 star products
– The top 2 products and services of the firm as mentioned in the Mexico (D): Stabilization and Retrenchment 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 Mexican Retrenchment has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Mexican Retrenchment, firm in the HBR case study Mexico (D): Stabilization and Retrenchment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Mexico (D): Stabilization and Retrenchment, in the dynamic environment Mexican Retrenchment has struggled to respond to the nimble upstart competition. Mexican Retrenchment has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Mexican Retrenchment products
– To increase the profitability and margins on the products, Mexican Retrenchment needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Mexican Retrenchment has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Mexico (D): Stabilization and Retrenchment, it seems that the employees of Mexican Retrenchment 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 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 Mexican Retrenchment supply chain. Even after few cautionary changes mentioned in the HBR case study - Mexico (D): Stabilization and Retrenchment, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mexican Retrenchment vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Mexican Retrenchment 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.
No frontier risks strategy
– After analyzing the HBR case study Mexico (D): Stabilization and Retrenchment, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Opportunities Mexico (D): Stabilization and Retrenchment | 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 Mexico (D): Stabilization and Retrenchment are -
Building a culture of innovation
– managers at Mexican Retrenchment 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.
Developing new processes and practices
– Mexican Retrenchment 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.
Buying journey improvements
– Mexican Retrenchment can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Mexico (D): Stabilization and Retrenchment 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.
Using analytics as competitive advantage
– Mexican Retrenchment 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 Mexico (D): Stabilization and Retrenchment - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mexican Retrenchment to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mexican Retrenchment is facing challenges because of the dominance of functional experts in the organization. Mexico (D): Stabilization and Retrenchment 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mexican Retrenchment 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mexican Retrenchment 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 Mexican Retrenchment to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Mexican Retrenchment 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.
Creating value in data economy
– The success of analytics program of Mexican Retrenchment has opened avenues for new revenue streams for the organization in the industry. This can help Mexican Retrenchment to build a more holistic ecosystem as suggested in the Mexico (D): Stabilization and Retrenchment case study. Mexican Retrenchment can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mexican Retrenchment can use these opportunities to build new business models that can help the communities that Mexican Retrenchment operates in. Secondly it can use opportunities from government spending in Global Business sector.
Manufacturing automation
– Mexican Retrenchment 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mexican Retrenchment 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, Mexico (D): Stabilization and Retrenchment, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mexican Retrenchment can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Mexico (D): Stabilization and Retrenchment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Mexico (D): Stabilization and Retrenchment 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. Mexican Retrenchment can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Mexican Retrenchment is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Mexican Retrenchment 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.
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 Mexican Retrenchment in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Mexican Retrenchment 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.
Consumer confidence and its impact on Mexican Retrenchment 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mexican Retrenchment 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 Mexico (D): Stabilization and Retrenchment .
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. Mexican Retrenchment 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.
High dependence on third party suppliers
– Mexican Retrenchment 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.
Environmental challenges
– Mexican Retrenchment 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. Mexican Retrenchment can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mexican Retrenchment with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Mexican Retrenchment
– 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 Mexican Retrenchment.
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 Mexican Retrenchment business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Mexico (D): Stabilization and Retrenchment 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 Mexico (D): Stabilization and Retrenchment 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 Mexico (D): Stabilization and Retrenchment 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 Mexico (D): Stabilization and Retrenchment 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 Mexico (D): Stabilization and Retrenchment 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 Mexican Retrenchment needs to make to build a sustainable competitive advantage.
