Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority
The Saudi Arabia General Investment Authority (SAGIA) is an agency established in 2000 to improve the business environment and encourage foreign investment in the Kingdom of Saudi Arabia. This agency was created out of the Kingdom's landmark Foreign Investment Law of 2000 with the mandate to diversify the economy and provide jobs for its burgeoning young population. The fledgling agency was expected to enlist the aid of other government ministries and agencies in reducing barriers to investment-including the politically sensitive "Saudization" policy, which gave employment preference to Saudis over foreign workers-and in marketing Saudi Arabia as a welcoming location for foreign investors. However, the law that had formed SAGIA, gave it few tools to work with. Therefore, it had to find a way to cooperate with the rest of the government to effect change. SAGIA's first governor, Prince Abdullah, retired in 2004, and it would be the task of his successor, Amr Al Dabbagh, to advance SAGIA's mission. It remains to be seen whether Al Dabbagh, a successful businessman, could overcome the challenges that had thus far stymied the young agency. The case should be used for class discussions of several important themes: the difficulty of collaboration across government bureaucracy with little authority or resources; effecting change in an unfavorable political climate - both external and internal; human capital development with the skill for strategic planning and communications; and the impact of an individual dynamic leader on an organization. HKS Case Number 1926.0
Swot Analysis of "Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority" written by Stephen Goldsmith, Khalid O. Al-Yahya includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arabia Saudi facing as an external strategic factors. Some of the topics covered in Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority case study are - Strategic Management Strategies, Economy, Globalization, Government, Human resource management, Innovation, Joint ventures, Project management, Strategic planning and Global Business.
Some of the macro environment factors that can be used to understand the Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority casestudy better are - – increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arabia Saudi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arabia Saudi 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority can be done for the following purposes –
1. Strategic planning using facts provided in Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority case study
2. Improving business portfolio management of Arabia Saudi
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 Arabia Saudi
Strengths Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arabia Saudi in Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority Harvard Business Review case study are -
Ability to recruit top talent
– Arabia Saudi is one of the leading recruiters in the industry. Managers in the Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Arabia Saudi in the sector have low bargaining power. Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arabia Saudi to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Arabia Saudi 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Arabia Saudi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Arabia Saudi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Arabia Saudi is present in almost all the verticals within the industry. This has provided firm in Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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.
Analytics focus
– Arabia Saudi 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 Stephen Goldsmith, Khalid O. Al-Yahya 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.
Effective Research and Development (R&D)
– Arabia Saudi 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Arabia Saudi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Arabia Saudi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Arabia Saudi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Arabia Saudi 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.
Innovation driven organization
– Arabia Saudi is one of the most innovative firm in sector. Manager in Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Arabia Saudi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Arabia Saudi 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.
Weaknesses Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority are -
Workers concerns about automation
– As automation is fast increasing in the segment, Arabia Saudi 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority, in the dynamic environment Arabia Saudi has struggled to respond to the nimble upstart competition. Arabia Saudi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Arabia Saudi 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 - Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Arabia Saudi is dominated by functional specialists. It is not different from other players in the Global Business segment. Arabia Saudi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arabia Saudi to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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 Arabia Saudi 's lucrative customers.
Lack of clear differentiation of Arabia Saudi products
– To increase the profitability and margins on the products, Arabia Saudi needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Arabia Saudi, firm in the HBR case study Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Stephen Goldsmith, Khalid O. Al-Yahya suggests that, Arabia Saudi 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.
Skills based hiring
– The stress on hiring functional specialists at Arabia Saudi 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority, it seems that the employees of Arabia Saudi 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.
Interest costs
– Compare to the competition, Arabia Saudi 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.
Opportunities Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority | 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority are -
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. Arabia Saudi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Arabia Saudi has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Arabia Saudi to increase its market reach. Arabia Saudi 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
– Arabia Saudi 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Arabia Saudi 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.
Creating value in data economy
– The success of analytics program of Arabia Saudi has opened avenues for new revenue streams for the organization in the industry. This can help Arabia Saudi to build a more holistic ecosystem as suggested in the Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority case study. Arabia Saudi can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Arabia Saudi 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Arabia Saudi can use these opportunities to build new business models that can help the communities that Arabia Saudi operates in. Secondly it can use opportunities from government spending in Global Business sector.
Using analytics as competitive advantage
– Arabia Saudi 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arabia Saudi 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 Arabia Saudi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Arabia Saudi 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Arabia Saudi is facing challenges because of the dominance of functional experts in the organization. Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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.
Developing new processes and practices
– Arabia Saudi can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Threats Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Arabia Saudi 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.
Shortening product life cycle
– it is one of the major threat that Arabia Saudi is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Arabia Saudi
– 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 Arabia Saudi.
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.
Stagnating economy with rate increase
– Arabia Saudi 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. Arabia Saudi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Arabia Saudi 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, Arabia Saudi 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority .
High dependence on third party suppliers
– Arabia Saudi 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.
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 Arabia Saudi 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 Arabia Saudi.
Environmental challenges
– Arabia Saudi 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. Arabia Saudi can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
Weighted SWOT Analysis of Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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 Creating and Managing Economic Competitiveness: The Saudi Arabia General Investment Authority 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 Arabia Saudi needs to make to build a sustainable competitive advantage.
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