Case Study Description of Engro Chemicals Pakistan Limited - Business Disaster Overcome
Engro Chemicals Pakistan Limited (Engro) was a very large manufacturer and marketer of fertilizer in Pakistan. It had a number of subsidiaries and joint ventures in a variety of businesses. The company was listed on the Karachi Stock Exchange (KSE) and was among the top companies as ranked by the KSE. In August 2007, the company's head office was completely destroyed by a fire. The office was located in Karachi and the fire destroyed all the equipment as well as the hardcopies of the accounting records. The company was suddenly faced with a catastrophic loss as the records were critical to Engro's day to day operations. The information technology (IT) department had developed a disaster recovery plan (DRP) in 2005 that was exclusively related to reestablishing the IT facilities after any event that could make the business systems inoperable. The company invoked the DRP as soon as the news of the complete destruction of the office facilities was received. The IT and finance staff had to use the backup equipment and data files to restart the transaction processing.The case includes a description of various business systems used by Engro and the data security processes that had enabled the company to restore the accounting and other systems needed at its head office. The main teaching objective is to focus on minimizing the business risks arising due to the destruction of the IT facilities. The case also has details of the DRP, which can be analysed as to its contents, and details of the management processes of Engro, which allows for a discussion on corporate governance within the company.
Swot Analysis of "Engro Chemicals Pakistan Limited - Business Disaster Overcome" written by Muntazar B. Ahmed includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Engro Drp facing as an external strategic factors. Some of the topics covered in Engro Chemicals Pakistan Limited - Business Disaster Overcome case study are - Strategic Management Strategies, IT, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Engro Chemicals Pakistan Limited - Business Disaster Overcome casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, there is backlash against globalization, challanges to central banks by blockchain based private currencies, geopolitical disruptions, talent flight as more people leaving formal jobs,
central banks are concerned over increasing inflation, wage bills are increasing, etc
Introduction to SWOT Analysis of Engro Chemicals Pakistan Limited - Business Disaster Overcome
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Engro Chemicals Pakistan Limited - Business Disaster Overcome case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Engro Drp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Engro Drp 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome can be done for the following purposes –
1. Strategic planning using facts provided in Engro Chemicals Pakistan Limited - Business Disaster Overcome case study
2. Improving business portfolio management of Engro Drp
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 Engro Drp
Strengths Engro Chemicals Pakistan Limited - Business Disaster Overcome | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Engro Drp in Engro Chemicals Pakistan Limited - Business Disaster Overcome Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Engro Drp in the sector have low bargaining power. Engro Chemicals Pakistan Limited - Business Disaster Overcome has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Engro Drp to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Engro Drp 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Engro Drp is present in almost all the verticals within the industry. This has provided firm in Engro Chemicals Pakistan Limited - Business Disaster Overcome 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.
Superior customer experience
– The customer experience strategy of Engro Drp in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Engro Drp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Engro Drp 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.
Operational resilience
– The operational resilience strategy in the Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 brand equity
– Engro Drp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Engro Drp 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
– Engro Chemicals Pakistan Limited - Business Disaster Overcome firm has clearly differentiated products in the market place. This has enabled Engro Drp to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Engro Drp to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Engro Drp has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Engro Drp 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.
Organizational Resilience of Engro Drp
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Engro Drp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Engro Drp is one of the leading recruiters in the industry. Managers in the Engro Chemicals Pakistan Limited - Business Disaster Overcome 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
– Engro Drp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Engro Chemicals Pakistan Limited - Business Disaster Overcome | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Engro Chemicals Pakistan Limited - Business Disaster Overcome are -
Skills based hiring
– The stress on hiring functional specialists at Engro Drp 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.
Capital Spending Reduction
– Even during the low interest decade, Engro Drp has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Drp 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Engro Drp, firm in the HBR case study Engro Chemicals Pakistan Limited - Business Disaster Overcome needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Engro Drp 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.
Interest costs
– Compare to the competition, Engro Drp 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, Engro Drp is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Engro Chemicals Pakistan Limited - Business Disaster Overcome can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Engro Chemicals Pakistan Limited - Business Disaster Overcome, in the dynamic environment Engro Drp has struggled to respond to the nimble upstart competition. Engro Drp has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Drp has relatively successful track record of launching new products.
Products dominated business model
– Even though Engro Drp 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 - Engro Chemicals Pakistan Limited - Business Disaster Overcome should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Engro Chemicals Pakistan Limited - Business Disaster Overcome, 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome | 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome are -
Better consumer reach
– The expansion of the 5G network will help Engro Drp to increase its market reach. Engro Drp 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Engro Drp can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Engro Drp 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, Engro Chemicals Pakistan Limited - Business Disaster Overcome, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Engro Drp 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 Engro Drp 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Engro Drp can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Engro Drp has opened avenues for new revenue streams for the organization in the industry. This can help Engro Drp to build a more holistic ecosystem as suggested in the Engro Chemicals Pakistan Limited - Business Disaster Overcome case study. Engro Drp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Engro Drp 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. Engro Drp 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.
Using analytics as competitive advantage
– Engro Drp 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Engro Drp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Engro Drp 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Engro Drp is facing challenges because of the dominance of functional experts in the organization. Engro Chemicals Pakistan Limited - Business Disaster Overcome 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.
Leveraging digital technologies
– Engro Drp 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.
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 Engro Drp 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.
Threats Engro Chemicals Pakistan Limited - Business Disaster Overcome External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Engro Chemicals Pakistan Limited - Business Disaster Overcome are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Stagnating economy with rate increase
– Engro Drp 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.
Regulatory challenges
– Engro Drp 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.
Shortening product life cycle
– it is one of the major threat that Engro Drp is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Engro Drp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Engro Drp needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Consumer confidence and its impact on Engro Drp 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.
Environmental challenges
– Engro Drp 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. Engro Drp can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Engro Drp 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Engro Drp 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome .
Increasing wage structure of Engro Drp
– 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 Engro Drp.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Engro Chemicals Pakistan Limited - Business Disaster Overcome, Engro Drp 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 .
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 Engro Drp business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Chemicals Pakistan Limited - Business Disaster Overcome 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 Engro Drp needs to make to build a sustainable competitive advantage.
