Peru: Economic Miracle or Just a Mirage? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Peru: Economic Miracle or Just a Mirage?
After years of rapid growth, Peru's economy had recently slowed. Mineral prices were down and the current President, Humala, had only a year remaining in office before the next election. And he could not run again. While the country had many strengths, especially in minerals, natural resources and tourism, infrastructural problems, corruption, drugs, and inequality continued to plague its growth. The next election would help determine Peru's future growth.
Authors :: Richard H.K. Vietor, Fernando A. D'Alessio, Ricardo M. Pino
Swot Analysis of "Peru: Economic Miracle or Just a Mirage?" written by Richard H.K. Vietor, Fernando A. D'Alessio, Ricardo M. Pino includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Peru's Election facing as an external strategic factors. Some of the topics covered in Peru: Economic Miracle or Just a Mirage? case study are - Strategic Management Strategies, Government, Security & privacy, Social responsibility, Sustainability and Global Business.
Some of the macro environment factors that can be used to understand the Peru: Economic Miracle or Just a Mirage? casestudy better are - – supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, geopolitical disruptions, 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%, increasing energy prices,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Peru: Economic Miracle or Just a Mirage?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Peru: Economic Miracle or Just a Mirage? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Peru's Election, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Peru's Election 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 Peru: Economic Miracle or Just a Mirage? can be done for the following purposes –
1. Strategic planning using facts provided in Peru: Economic Miracle or Just a Mirage? case study
2. Improving business portfolio management of Peru's Election
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 Peru's Election
Strengths Peru: Economic Miracle or Just a Mirage? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Peru's Election in Peru: Economic Miracle or Just a Mirage? Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Peru: Economic Miracle or Just a Mirage? 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.
Innovation driven organization
– Peru's Election is one of the most innovative firm in sector. Manager in Peru: Economic Miracle or Just a Mirage? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Peru's Election in the sector have low bargaining power. Peru: Economic Miracle or Just a Mirage? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Peru's Election to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Peru's Election has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Peru's Election to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Peru's Election is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Global Business field
– Peru's Election is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Peru's Election in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Peru's Election has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Peru: Economic Miracle or Just a Mirage? 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.
Analytics focus
– Peru's Election 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 Richard H.K. Vietor, Fernando A. D'Alessio, Ricardo M. Pino 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.
Learning organization
- Peru's Election 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 Peru's Election is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Peru: Economic Miracle or Just a Mirage? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Peru's Election is present in almost all the verticals within the industry. This has provided firm in Peru: Economic Miracle or Just a Mirage? 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.
High switching costs
– The high switching costs that Peru's Election 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.
Effective Research and Development (R&D)
– Peru's Election 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 Peru: Economic Miracle or Just a Mirage? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Peru: Economic Miracle or Just a Mirage? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Peru: Economic Miracle or Just a Mirage? are -
Capital Spending Reduction
– Even during the low interest decade, Peru's Election 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.
Increasing silos among functional specialists
– The organizational structure of Peru's Election is dominated by functional specialists. It is not different from other players in the Global Business segment. Peru's Election needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Peru's Election to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Peru's Election 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. Peru's Election 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.
Slow to strategic competitive environment developments
– As Peru: Economic Miracle or Just a Mirage? HBR case study mentions - Peru's Election 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Peru: Economic Miracle or Just a Mirage?, in the dynamic environment Peru's Election has struggled to respond to the nimble upstart competition. Peru's Election has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Peru's Election supply chain. Even after few cautionary changes mentioned in the HBR case study - Peru: Economic Miracle or Just a Mirage?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Peru's Election vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Peru: Economic Miracle or Just a Mirage?, is just above the industry average. Peru's Election needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Peru's Election 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Richard H.K. Vietor, Fernando A. D'Alessio, Ricardo M. Pino suggests that, Peru's Election 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.
Interest costs
– Compare to the competition, Peru's Election 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.
High cash cycle compare to competitors
Peru's Election 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.
Opportunities Peru: Economic Miracle or Just a Mirage? | 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 Peru: Economic Miracle or Just a Mirage? are -
Developing new processes and practices
– Peru's Election 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Peru's Election 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.
Learning at scale
– Online learning technologies has now opened space for Peru's Election 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.
Manufacturing automation
– Peru's Election 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.
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 Peru's Election in the consumer business. Now Peru's Election can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Peru's Election has opened avenues for new revenue streams for the organization in the industry. This can help Peru's Election to build a more holistic ecosystem as suggested in the Peru: Economic Miracle or Just a Mirage? case study. Peru's Election can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Peru's Election to increase its market reach. Peru's Election 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.
Leveraging digital technologies
– Peru's Election 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.
Building a culture of innovation
– managers at Peru's Election 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Peru's Election 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.
Using analytics as competitive advantage
– Peru's Election 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 Peru: Economic Miracle or Just a Mirage? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Peru's Election to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Peru's Election 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, Peru's Election 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, Peru: Economic Miracle or Just a Mirage?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Peru: Economic Miracle or Just a Mirage? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Peru: Economic Miracle or Just a Mirage? are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Peru's Election 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 Peru: Economic Miracle or Just a Mirage? .
Regulatory challenges
– Peru's Election 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Peru: Economic Miracle or Just a Mirage?, Peru's Election 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 .
Technology acceleration in Forth Industrial Revolution
– Peru's Election has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Peru's Election 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 Peru's Election in the Global Business sector and impact the bottomline of the organization.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Peru's Election with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Peru's Election is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Peru's Election 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. Peru's Election can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing wage structure of Peru's Election
– 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 Peru's Election.
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 Peru's Election.
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. Peru's Election will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Peru: Economic Miracle or Just a Mirage? 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 Peru: Economic Miracle or Just a Mirage? 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 Peru: Economic Miracle or Just a Mirage? 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 Peru: Economic Miracle or Just a Mirage? 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 Peru: Economic Miracle or Just a Mirage? 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 Peru's Election needs to make to build a sustainable competitive advantage.