Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A)
While the Philippines are located in the vicinity of many of the "Asian Tigers," its development has followed a unique path. The country suffered for years under a dictatorial political regime and protectionist economic policies. Remittances were the largest source of hard currency and the industrial sector was marked by significant concentration and rent seeking. Recent economic reforms have shaken up many sectors of the economy and stimulated rapid economic growth. Conglomerates, which account for a substantial portion of large, organized business activity, need to decide how to adapt to this new environment. Ayala Corporation is one of the largest and most important conglomerates in the Philippines and has been controlled by the Zobel de Ayala family for seven generations. Company leadership must decide whether to alter their strategy in the wake of an election that could dramatically transform the political and business climate of the Philippines in a positive way.
Authors :: Eric Werker, Yasmin Mandviwala, Henry Motte-Munoz, Arthur Wit
Swot Analysis of "Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A)" written by Eric Werker, Yasmin Mandviwala, Henry Motte-Munoz, Arthur Wit includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Philippines Ayala facing as an external strategic factors. Some of the topics covered in Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) case study are - Strategic Management Strategies, Financial analysis, Financial management and Global Business.
Some of the macro environment factors that can be used to understand the Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) casestudy better are - – talent flight as more people leaving formal jobs, technology disruption, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing commodity prices,
there is increasing trade war between United States & China, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Philippines Ayala, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Philippines Ayala 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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) can be done for the following purposes –
1. Strategic planning using facts provided in Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) case study
2. Improving business portfolio management of Philippines Ayala
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 Philippines Ayala
Strengths Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Philippines Ayala in Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) Harvard Business Review case study are -
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Philippines Ayala digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Philippines Ayala 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.
Ability to recruit top talent
– Philippines Ayala is one of the leading recruiters in the industry. Managers in the Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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.
Operational resilience
– The operational resilience strategy in the Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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.
Organizational Resilience of Philippines Ayala
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Philippines Ayala does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Global Business industry
– Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) firm has clearly differentiated products in the market place. This has enabled Philippines Ayala to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Philippines Ayala to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Philippines Ayala has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Philippines Ayala 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 Philippines Ayala in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Philippines Ayala 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 Eric Werker, Yasmin Mandviwala, Henry Motte-Munoz, Arthur Wit 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.
Strong track record of project management
– Philippines Ayala is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Philippines Ayala has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Philippines Ayala 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.
Low bargaining power of suppliers
– Suppliers of Philippines Ayala in the sector have low bargaining power. Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Philippines Ayala to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) are -
Low market penetration in new markets
– Outside its home market of Philippines Ayala, firm in the HBR case study Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Philippines Ayala 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.
Skills based hiring
– The stress on hiring functional specialists at Philippines Ayala 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 bargaining power of channel partners
– Because of the regulatory requirements, Eric Werker, Yasmin Mandviwala, Henry Motte-Munoz, Arthur Wit suggests that, Philippines Ayala 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Philippines Ayala has relatively successful track record of launching new products.
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 Philippines Ayala supply chain. Even after few cautionary changes mentioned in the HBR case study - Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Philippines Ayala vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Philippines Ayala is dominated by functional specialists. It is not different from other players in the Global Business segment. Philippines Ayala needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Philippines Ayala to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) can leverage the sales team experience to cultivate customer relationships as Philippines Ayala is planning to shift buying processes online.
Products dominated business model
– Even though Philippines Ayala 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 - Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) 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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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.
Workers concerns about automation
– As automation is fast increasing in the segment, Philippines Ayala 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.
Opportunities Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Philippines Ayala 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 Philippines Ayala to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Philippines Ayala can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Philippines Ayala can use these opportunities to build new business models that can help the communities that Philippines Ayala operates in. Secondly it can use opportunities from government spending in Global Business sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Philippines Ayala 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, Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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.
Better consumer reach
– The expansion of the 5G network will help Philippines Ayala to increase its market reach. Philippines Ayala 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.
Creating value in data economy
– The success of analytics program of Philippines Ayala has opened avenues for new revenue streams for the organization in the industry. This can help Philippines Ayala to build a more holistic ecosystem as suggested in the Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) case study. Philippines Ayala can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Philippines Ayala 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.
Using analytics as competitive advantage
– Philippines Ayala 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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Philippines Ayala to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Philippines Ayala 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.
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 Philippines Ayala 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
– Philippines Ayala 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.
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 Philippines Ayala in the consumer business. Now Philippines Ayala can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Philippines Ayala 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.
Threats Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A) are -
Technology acceleration in Forth Industrial Revolution
– Philippines Ayala has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Philippines Ayala 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.
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 Philippines Ayala in the Global Business sector and impact the bottomline of the organization.
Increasing wage structure of Philippines Ayala
– 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 Philippines Ayala.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Philippines Ayala with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Philippines Ayala 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.
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. Philippines Ayala will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Philippines Ayala 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (A), Philippines Ayala 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 .
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. Philippines Ayala can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Philippines Ayala needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Philippines Ayala business can come under increasing regulations regarding data privacy, data security, 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 Philippines Ayala.
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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Ayala Corporation & the Philippines: Asset Allocation in a Growing Economy (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 Philippines Ayala needs to make to build a sustainable competitive advantage.