Old Problems Remain, New Ones Crop up: Political Risk in the 21st century SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Old Problems Remain, New Ones Crop up: Political Risk in the 21st century
Despite the fact that most developing countries now generally welcome multinational companies, political risk still represents a huge concern for international business. In fact, multinational companies today probably face a much broader array of risks than during the nationalization wave of the 1960s and 1970s. To substantiate this claim, a theoretical framework is presented herein which outlines the key causal relationships in the political risk landscape. It is explained why a discernible attitude change in the developing and emerging world does not necessarily equal a reduced overall level of political risk. To illustrate the framework and the complexity of the political risk phenomenon, a number of recent case examples are presented from the international bauxite and aluminum industry-an industry whose wide-ranging value chain, international focus, global significance, and natural exposure to risks make it very suitable for analysis. The conceptual discussion and the empirical examples presented in this article suggest that political risk is now surely a highly complex, multidimensional phenomenon. This trait poses major challenges for the global business community, particularly in terms of accurately assessing these risks.
Swot Analysis of "Old Problems Remain, New Ones Crop up: Political Risk in the 21st century" written by Jo Jakobsen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Political Risk facing as an external strategic factors. Some of the topics covered in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century case study are - Strategic Management Strategies, Financial management, Global strategy, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Old Problems Remain, New Ones Crop up: Political Risk in the 21st century casestudy better are - – central banks are concerned over increasing inflation, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, technology disruption,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Old Problems Remain, New Ones Crop up: Political Risk in the 21st century
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Political Risk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Political Risk 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century can be done for the following purposes –
1. Strategic planning using facts provided in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century case study
2. Improving business portfolio management of Political Risk
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 Political Risk
Strengths Old Problems Remain, New Ones Crop up: Political Risk in the 21st century | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Political Risk in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Political Risk in the sector have low bargaining power. Old Problems Remain, New Ones Crop up: Political Risk in the 21st century has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Political Risk to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Political Risk 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.
Training and development
– Political Risk has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Political Risk digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Political Risk 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.
Sustainable margins compare to other players in Global Business industry
– Old Problems Remain, New Ones Crop up: Political Risk in the 21st century firm has clearly differentiated products in the market place. This has enabled Political Risk to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Political Risk to invest into research and development (R&D) and innovation.
High brand equity
– Political Risk has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Political Risk to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Political Risk is one of the most innovative firm in sector. Manager in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Political Risk is one of the leading recruiters in the industry. Managers in the Old Problems Remain, New Ones Crop up: Political Risk in the 21st century are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Political Risk in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Political Risk is present in almost all the verticals within the industry. This has provided firm in Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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.
Successful track record of launching new products
– Political Risk has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Political Risk 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.
High switching costs
– The high switching costs that Political Risk 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.
Weaknesses Old Problems Remain, New Ones Crop up: Political Risk in the 21st century | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Old Problems Remain, New Ones Crop up: Political Risk in the 21st century are -
Slow decision making process
– As mentioned earlier in the report, Political Risk 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. Political Risk 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Old Problems Remain, New Ones Crop up: Political Risk in the 21st century, in the dynamic environment Political Risk has struggled to respond to the nimble upstart competition. Political Risk 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Political Risk has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century can leverage the sales team experience to cultivate customer relationships as Political Risk is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Political Risk 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.
Interest costs
– Compare to the competition, Political Risk 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.
Capital Spending Reduction
– Even during the low interest decade, Political Risk 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 cash cycle compare to competitors
Political Risk has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As Old Problems Remain, New Ones Crop up: Political Risk in the 21st century HBR case study mentions - Political Risk 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Political Risk 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Old Problems Remain, New Ones Crop up: Political Risk in the 21st century, it seems that the employees of Political Risk don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Old Problems Remain, New Ones Crop up: Political Risk in the 21st century | 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century are -
Leveraging digital technologies
– Political Risk 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.
Developing new processes and practices
– Political Risk 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Political Risk can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Political Risk has opened avenues for new revenue streams for the organization in the industry. This can help Political Risk to build a more holistic ecosystem as suggested in the Old Problems Remain, New Ones Crop up: Political Risk in the 21st century case study. Political Risk can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Political Risk can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Political Risk in the consumer business. Now Political Risk can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Political Risk 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Political Risk can use these opportunities to build new business models that can help the communities that Political Risk operates in. Secondly it can use opportunities from government spending in Global Business sector.
Building a culture of innovation
– managers at Political Risk 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.
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. Political Risk can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Political Risk 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 Political Risk to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Political Risk 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.
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. Political Risk 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. Political Risk 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.
Threats Old Problems Remain, New Ones Crop up: Political Risk in the 21st century External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Old Problems Remain, New Ones Crop up: Political Risk in the 21st century are -
Stagnating economy with rate increase
– Political Risk 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.
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. Political Risk can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Political Risk 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. Political Risk can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Consumer confidence and its impact on Political Risk 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, Political Risk 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century .
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 Political Risk in the Global Business sector and impact the bottomline of the organization.
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 Political Risk.
Regulatory challenges
– Political Risk 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.
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 Political Risk business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Political Risk has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Political Risk 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.
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. Political Risk needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Political Risk 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.
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.
Weighted SWOT Analysis of Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Old Problems Remain, New Ones Crop up: Political Risk in the 21st century 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 Political Risk needs to make to build a sustainable competitive advantage.
