Gazprom (B): Energy and Strategy in a New Era SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Gazprom (B): Energy and Strategy in a New Era
President Putin publicly stated that Gazprom, the largest natural gas producer in the world, was a powerful political lever of the Russian state in the world and a keystone in the foundation of the country's energy security. Thus the top leadership of Russia has charted the course of the company's future away from the seemingly imminent dismemberment, privatization, and, by implication, de-monopolization toward a challenging combination of strengthened state control, professional, transparent management, and a major expansion. The case explores how in 2000-2008 Gazprom's management has pursued the strategy defined by the politicians. Gazprom's impressive expansion strategy envisioned diversification of markets, products, transportation routes, and modes of delivery. The challenges were equally formidable: massive investment needs, a possibility of a production shortfall, and a chronic problem with the transit state of Ukraine, to name a few. In fact, Gazprom's ambitiousness fully reflected the ambitiousness of Russia as a whole, characteristic of the Putin era.
Authors :: Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov
Swot Analysis of "Gazprom (B): Energy and Strategy in a New Era" written by Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gazprom's Ambitiousness facing as an external strategic factors. Some of the topics covered in Gazprom (B): Energy and Strategy in a New Era case study are - Strategic Management Strategies, Government, Joint ventures and Global Business.
Some of the macro environment factors that can be used to understand the Gazprom (B): Energy and Strategy in a New Era casestudy better are - – cloud computing is disrupting traditional business models, technology disruption, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing energy prices, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, etc
Introduction to SWOT Analysis of Gazprom (B): Energy and Strategy in a New Era
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gazprom (B): Energy and Strategy in a New Era case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gazprom's Ambitiousness, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era can be done for the following purposes –
1. Strategic planning using facts provided in Gazprom (B): Energy and Strategy in a New Era case study
2. Improving business portfolio management of Gazprom's Ambitiousness
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 Gazprom's Ambitiousness
Strengths Gazprom (B): Energy and Strategy in a New Era | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gazprom's Ambitiousness in Gazprom (B): Energy and Strategy in a New Era Harvard Business Review case study are -
High switching costs
– The high switching costs that Gazprom's Ambitiousness 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.
Strong track record of project management
– Gazprom's Ambitiousness is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Gazprom's Ambitiousness in the sector have low bargaining power. Gazprom (B): Energy and Strategy in a New Era has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Gazprom's Ambitiousness to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Gazprom's Ambitiousness 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 Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov 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.
Superior customer experience
– The customer experience strategy of Gazprom's Ambitiousness in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Gazprom's Ambitiousness digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gazprom's Ambitiousness 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.
Diverse revenue streams
– Gazprom's Ambitiousness is present in almost all the verticals within the industry. This has provided firm in Gazprom (B): Energy and Strategy in a New Era 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.
Innovation driven organization
– Gazprom's Ambitiousness is one of the most innovative firm in sector. Manager in Gazprom (B): Energy and Strategy in a New Era Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Gazprom's Ambitiousness 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.
High brand equity
– Gazprom's Ambitiousness has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gazprom's Ambitiousness to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Gazprom's Ambitiousness has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gazprom's Ambitiousness 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.
Highly skilled collaborators
– Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Gazprom (B): Energy and Strategy in a New Era | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gazprom (B): Energy and Strategy in a New Era are -
Increasing silos among functional specialists
– The organizational structure of Gazprom's Ambitiousness is dominated by functional specialists. It is not different from other players in the Global Business segment. Gazprom's Ambitiousness needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Gazprom's Ambitiousness to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Gazprom's Ambitiousness 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 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 Gazprom's Ambitiousness supply chain. Even after few cautionary changes mentioned in the HBR case study - Gazprom (B): Energy and Strategy in a New Era, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Gazprom's Ambitiousness vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Rawi Abdelal, Sogomon Tarontsi, Alexander Jorov suggests that, Gazprom's Ambitiousness 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.
Need for greater diversity
– Gazprom's Ambitiousness has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Gazprom's Ambitiousness 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 - Gazprom (B): Energy and Strategy in a New Era should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Gazprom's Ambitiousness has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Gazprom (B): Energy and Strategy in a New Era HBR case study mentions - Gazprom's Ambitiousness 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Gazprom (B): Energy and Strategy in a New Era, it seems that the employees of Gazprom's Ambitiousness 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.
High cash cycle compare to competitors
Gazprom's Ambitiousness 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.
Lack of clear differentiation of Gazprom's Ambitiousness products
– To increase the profitability and margins on the products, Gazprom's Ambitiousness needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Gazprom (B): Energy and Strategy in a New Era | 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 Gazprom (B): Energy and Strategy in a New Era are -
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 Gazprom's Ambitiousness in the consumer business. Now Gazprom's Ambitiousness can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Gazprom's Ambitiousness 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.
Leveraging digital technologies
– Gazprom's Ambitiousness 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.
Better consumer reach
– The expansion of the 5G network will help Gazprom's Ambitiousness to increase its market reach. Gazprom's Ambitiousness 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Gazprom's Ambitiousness can use these opportunities to build new business models that can help the communities that Gazprom's Ambitiousness operates in. Secondly it can use opportunities from government spending in Global Business sector.
Developing new processes and practices
– Gazprom's Ambitiousness 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.
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. Gazprom's Ambitiousness 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. Gazprom's Ambitiousness 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.
Manufacturing automation
– Gazprom's Ambitiousness 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gazprom's Ambitiousness 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, Gazprom (B): Energy and Strategy in a New Era, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Gazprom's Ambitiousness 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Gazprom's Ambitiousness is facing challenges because of the dominance of functional experts in the organization. Gazprom (B): Energy and Strategy in a New Era 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.
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 Gazprom's Ambitiousness 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.
Using analytics as competitive advantage
– Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Gazprom's Ambitiousness to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Gazprom (B): Energy and Strategy in a New Era External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gazprom (B): Energy and Strategy in a New Era are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gazprom's Ambitiousness 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.
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 Gazprom's Ambitiousness.
High dependence on third party suppliers
– Gazprom's Ambitiousness 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.
Technology acceleration in Forth Industrial Revolution
– Gazprom's Ambitiousness has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Gazprom's Ambitiousness 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. Gazprom's Ambitiousness needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Gazprom's Ambitiousness 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 Gazprom's Ambitiousness is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Gazprom's Ambitiousness 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 Gazprom's Ambitiousness business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Gazprom (B): Energy and Strategy in a New Era, Gazprom's Ambitiousness 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 .
Increasing wage structure of Gazprom's Ambitiousness
– 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 Gazprom's Ambitiousness.
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. Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era 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 Gazprom (B): Energy and Strategy in a New Era 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 Gazprom (B): Energy and Strategy in a New Era 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 Gazprom (B): Energy and Strategy in a New Era 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 Gazprom (B): Energy and Strategy in a New Era 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 Gazprom's Ambitiousness needs to make to build a sustainable competitive advantage.
