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 - – increasing commodity prices, increasing transportation and logistics costs, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, technology disruption, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion,
cloud computing is disrupting traditional business models, 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 -
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.
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.
Operational resilience
– The operational resilience strategy in the Gazprom (B): Energy and Strategy in a New Era 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.
Training and development
– Gazprom's Ambitiousness has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Gazprom (B): Energy and Strategy in a New Era 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.
Sustainable margins compare to other players in Global Business industry
– Gazprom (B): Energy and Strategy in a New Era firm has clearly differentiated products in the market place. This has enabled Gazprom's Ambitiousness to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Gazprom's Ambitiousness to invest into research and development (R&D) and innovation.
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.
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.
Learning organization
- Gazprom's Ambitiousness 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 Gazprom's Ambitiousness is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gazprom (B): Energy and Strategy in a New Era Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Gazprom's Ambitiousness is one of the leading recruiters in the industry. Managers in the Gazprom (B): Energy and Strategy in a New Era are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Effective Research and Development (R&D)
– Gazprom's Ambitiousness 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 Gazprom (B): Energy and Strategy in a New Era - 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 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.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Gazprom (B): Energy and Strategy in a New Era 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 Gazprom's Ambitiousness has relatively successful track record of launching new products.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gazprom (B): Energy and Strategy in a New Era, in the dynamic environment Gazprom's Ambitiousness has struggled to respond to the nimble upstart competition. Gazprom's Ambitiousness 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 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 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.
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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Gazprom's Ambitiousness is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Gazprom (B): Energy and Strategy in a New Era can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Aligning sales with marketing
– It come across in the case study Gazprom (B): Energy and Strategy in a New Era 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 Gazprom (B): Energy and Strategy in a New Era can leverage the sales team experience to cultivate customer relationships as Gazprom's Ambitiousness is planning to shift buying processes online.
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.
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.
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 -
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.
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.
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.
Loyalty marketing
– Gazprom's Ambitiousness 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Gazprom's Ambitiousness 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 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gazprom's Ambitiousness can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Gazprom's Ambitiousness has opened avenues for new revenue streams for the organization in the industry. This can help Gazprom's Ambitiousness to build a more holistic ecosystem as suggested in the Gazprom (B): Energy and Strategy in a New Era case study. Gazprom's Ambitiousness can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Gazprom's Ambitiousness can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 -
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. Gazprom's Ambitiousness can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
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.
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 .
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.
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 Gazprom's Ambitiousness in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Gazprom's Ambitiousness 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.
Environmental challenges
– Gazprom's Ambitiousness 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. Gazprom's Ambitiousness can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
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.