Case Study Description of Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc.
California telecommunications company Wireworld is considering an acquisition of Nusantara Communications, a subsidiary of Indonesian conglomerate Bakrie & Brothers. Nusantara had invested $50 million in developing the advanced rural telephone system, which had the potential to provide much-needed telecommunications services to the mostly rural Indonesian population. If if were exported, the worldwide market for this product in the next five years was projected to be in the billions. Should Wireworld acquire this small company halfway around the world? Was it prepared to enter the Indonesian marketplace and beyond?
Swot Analysis of "Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc." written by Sergio Rebelo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nusantara Indonesian facing as an external strategic factors. Some of the topics covered in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. case study are - Strategic Management Strategies, International business, Mergers & acquisitions, Technology and Global Business.
Some of the macro environment factors that can be used to understand the Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. casestudy better are - – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, technology disruption, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
central banks are concerned over increasing inflation, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nusantara Indonesian, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nusantara Indonesian 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. can be done for the following purposes –
1. Strategic planning using facts provided in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. case study
2. Improving business portfolio management of Nusantara Indonesian
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 Nusantara Indonesian
Strengths Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nusantara Indonesian in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. Harvard Business Review case study are -
Successful track record of launching new products
– Nusantara Indonesian has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nusantara Indonesian 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.
Superior customer experience
– The customer experience strategy of Nusantara Indonesian in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Nusantara Indonesian has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nusantara Indonesian to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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.
High switching costs
– The high switching costs that Nusantara Indonesian has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Nusantara Indonesian digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nusantara Indonesian 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.
Diverse revenue streams
– Nusantara Indonesian is present in almost all the verticals within the industry. This has provided firm in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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.
Organizational Resilience of Nusantara Indonesian
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nusantara Indonesian does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Global Business field
– Nusantara Indonesian 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 Nusantara Indonesian in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Nusantara Indonesian 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 Nusantara Indonesian is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Nusantara Indonesian 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.
Innovation driven organization
– Nusantara Indonesian is one of the most innovative firm in sector. Manager in Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. are -
Interest costs
– Compare to the competition, Nusantara Indonesian has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
No frontier risks strategy
– After analyzing the HBR case study Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc., 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.
Slow decision making process
– As mentioned earlier in the report, Nusantara Indonesian 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. Nusantara Indonesian 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc., it seems that the employees of Nusantara Indonesian 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc., in the dynamic environment Nusantara Indonesian has struggled to respond to the nimble upstart competition. Nusantara Indonesian has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Nusantara Indonesian 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 - Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. should strive to include more intangible value offerings along with its core products and services.
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 Nusantara Indonesian supply chain. Even after few cautionary changes mentioned in the HBR case study - Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nusantara Indonesian vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Nusantara Indonesian 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.
Increasing silos among functional specialists
– The organizational structure of Nusantara Indonesian is dominated by functional specialists. It is not different from other players in the Global Business segment. Nusantara Indonesian needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nusantara Indonesian to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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 Nusantara Indonesian has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. HBR case study mentions - Nusantara Indonesian takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. | 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. are -
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. Nusantara Indonesian can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Nusantara Indonesian 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nusantara Indonesian can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Nusantara Indonesian can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Nusantara Indonesian can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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.
Loyalty marketing
– Nusantara Indonesian 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.
Creating value in data economy
– The success of analytics program of Nusantara Indonesian has opened avenues for new revenue streams for the organization in the industry. This can help Nusantara Indonesian to build a more holistic ecosystem as suggested in the Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. case study. Nusantara Indonesian 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
– Nusantara Indonesian 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nusantara Indonesian to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Nusantara Indonesian 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. Nusantara Indonesian 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.
Developing new processes and practices
– Nusantara Indonesian 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nusantara Indonesian can use these opportunities to build new business models that can help the communities that Nusantara Indonesian operates in. Secondly it can use opportunities from government spending in Global Business sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nusantara Indonesian 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.
Leveraging digital technologies
– Nusantara Indonesian 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.
Threats Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. are -
Technology acceleration in Forth Industrial Revolution
– Nusantara Indonesian has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Nusantara Indonesian 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.
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.
High dependence on third party suppliers
– Nusantara Indonesian 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.
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 Nusantara Indonesian in the Global Business sector and impact the bottomline of the organization.
Regulatory challenges
– Nusantara Indonesian 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nusantara Indonesian in the Global Business industry. The Global Business 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc., Nusantara Indonesian may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nusantara Indonesian 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. .
Environmental challenges
– Nusantara Indonesian 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. Nusantara Indonesian can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Stagnating economy with rate increase
– Nusantara Indonesian 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.
Shortening product life cycle
– it is one of the major threat that Nusantara Indonesian is facing in Global Business 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 Nusantara Indonesian.
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. Nusantara Indonesian 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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 Managing Foreign Exchange Risk: Acquiring Nusantara Communications Inc. 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 Nusantara Indonesian needs to make to build a sustainable competitive advantage.
