Case Study Description of Empresas La Polar, S.A. (A)
On June 9, 2011, Empresas La Polar S.A., a Chilean retailer, informed the Chile's securities commission that it had detected irregularities in its accounting for credit card receivables. A fraudulent credit card scheme masterminded by key executives and missed by directors and auditors was going to result in an estimated write-off in excess of US$300 million. On June 17th, the company advised the commission that the write-off would, in fact, be double the original estimate, amounting to US$640 million, resulting in negative equity. The filing contributed to a decrease in the value of the company's stock market value, dropping from US$1.2 billion to US$281 million and putting the company at risk of bankruptcy. Should the directors be held responsible and punished for what had happened? What role did the regulators and auditors play? Edward Waitzer is affiliated with York University. Matko Koljatic is affiliated with Pontificia Universidad CatA³lica de Chile.
Swot Analysis of "Empresas La Polar, S.A. (A)" written by Edward Waitzer, Matko Koljatic includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Empresas Polar facing as an external strategic factors. Some of the topics covered in Empresas La Polar, S.A. (A) case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the Empresas La Polar, S.A. (A) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
technology disruption, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Empresas La Polar, S.A. (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Empresas La Polar, S.A. (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Empresas Polar, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Empresas Polar 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 Empresas La Polar, S.A. (A) can be done for the following purposes –
1. Strategic planning using facts provided in Empresas La Polar, S.A. (A) case study
2. Improving business portfolio management of Empresas Polar
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 Empresas Polar
Strengths Empresas La Polar, S.A. (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Empresas Polar in Empresas La Polar, S.A. (A) Harvard Business Review case study are -
Analytics focus
– Empresas Polar 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 Edward Waitzer, Matko Koljatic 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.
Low bargaining power of suppliers
– Suppliers of Empresas Polar in the sector have low bargaining power. Empresas La Polar, S.A. (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Empresas Polar to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Empresas Polar has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Empresas Polar to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Empresas La Polar, S.A. (A) 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.
Superior customer experience
– The customer experience strategy of Empresas Polar in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Empresas Polar 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 Empresas La Polar, S.A. (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Empresas Polar digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Empresas Polar 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.
Strong track record of project management
– Empresas Polar is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Empresas Polar 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 Empresas Polar is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Empresas La Polar, S.A. (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Empresas Polar has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Empresas La Polar, S.A. (A) 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.
Ability to recruit top talent
– Empresas Polar is one of the leading recruiters in the industry. Managers in the Empresas La Polar, S.A. (A) 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 Global Business industry
– Empresas La Polar, S.A. (A) firm has clearly differentiated products in the market place. This has enabled Empresas Polar to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Empresas Polar to invest into research and development (R&D) and innovation.
Weaknesses Empresas La Polar, S.A. (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Empresas La Polar, S.A. (A) are -
High bargaining power of channel partners
– Because of the regulatory requirements, Edward Waitzer, Matko Koljatic suggests that, Empresas Polar is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Empresas Polar, firm in the HBR case study Empresas La Polar, S.A. (A) 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 Empresas La Polar, S.A. (A), in the dynamic environment Empresas Polar has struggled to respond to the nimble upstart competition. Empresas Polar has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Empresas Polar 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Empresas Polar is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Empresas La Polar, S.A. (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Empresas Polar 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. Empresas Polar 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.
Aligning sales with marketing
– It come across in the case study Empresas La Polar, S.A. (A) 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 Empresas La Polar, S.A. (A) can leverage the sales team experience to cultivate customer relationships as Empresas Polar is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Empresas Polar 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Empresas La Polar, S.A. (A) 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 Empresas Polar has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Empresas La Polar, S.A. (A), 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.
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 Empresas Polar supply chain. Even after few cautionary changes mentioned in the HBR case study - Empresas La Polar, S.A. (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Empresas Polar vulnerable to further global disruptions in South East Asia.
Opportunities Empresas La Polar, S.A. (A) | 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 Empresas La Polar, S.A. (A) are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Empresas Polar 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.
Manufacturing automation
– Empresas Polar 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.
Using analytics as competitive advantage
– Empresas Polar 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 Empresas La Polar, S.A. (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Empresas Polar 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 Empresas Polar 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.
Loyalty marketing
– Empresas Polar 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.
Better consumer reach
– The expansion of the 5G network will help Empresas Polar to increase its market reach. Empresas Polar 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.
Learning at scale
– Online learning technologies has now opened space for Empresas Polar 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.
Buying journey improvements
– Empresas Polar can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Empresas La Polar, S.A. (A) 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.
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 Empresas Polar in the consumer business. Now Empresas Polar can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Empresas Polar 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 Empresas Polar to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Empresas Polar 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Empresas Polar 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, Empresas La Polar, S.A. (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Empresas Polar 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.
Threats Empresas La Polar, S.A. (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Empresas La Polar, S.A. (A) are -
Shortening product life cycle
– it is one of the major threat that Empresas Polar is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Empresas Polar 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.
Technology acceleration in Forth Industrial Revolution
– Empresas Polar has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Empresas Polar 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.
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. Empresas Polar can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Empresas Polar 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Empresas Polar 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.
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 Empresas Polar.
Environmental challenges
– Empresas Polar 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. Empresas Polar 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 Empresas Polar with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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. Empresas Polar 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.
Increasing wage structure of Empresas Polar
– 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 Empresas Polar.
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 Empresas Polar business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Empresas La Polar, S.A. (A) 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 Empresas La Polar, S.A. (A) 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 Empresas La Polar, S.A. (A) 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 Empresas La Polar, S.A. (A) 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 Empresas La Polar, S.A. (A) 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 Empresas Polar needs to make to build a sustainable competitive advantage.
