Marc Rich and Global Commodity Trading SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Marc Rich and Global Commodity Trading
Examines the career of Marc Rich, the world's leading commodity trader before his criminal indictment in the United States in 1983. The case surveys the historical growth of commodity trading, especially in metals, from the late nineteenth century, and its evolving forms as governments intervened in markets after 1945. Rich joined Philipp Brothers, then the largest commodity trader, in 1954. He formed his own firm two decades later. He was instrumental in the creation of a spot market in petroleum, and assumed a pivotal role in the industry during the 1970s by selling Iranian oil to Israel and South Africa. The case provides a means to explore the rationale and advantages of giant commodity traders, as well as enabling students to debate corporate use of tax havens.
Swot Analysis of "Marc Rich and Global Commodity Trading" written by Geoffrey G. Jones, Espen Storli includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Commodity Rich facing as an external strategic factors. Some of the topics covered in Marc Rich and Global Commodity Trading case study are - Strategic Management Strategies, Competition, Data, Entrepreneurship, Financial markets, International business, Marketing, Sustainability and Global Business.
Some of the macro environment factors that can be used to understand the Marc Rich and Global Commodity Trading casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, technology disruption, there is backlash against globalization, geopolitical disruptions,
supply chains are disrupted by pandemic , wage bills are increasing, etc
Introduction to SWOT Analysis of Marc Rich and Global Commodity Trading
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Marc Rich and Global Commodity Trading case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Commodity Rich, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Commodity Rich 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 Marc Rich and Global Commodity Trading can be done for the following purposes –
1. Strategic planning using facts provided in Marc Rich and Global Commodity Trading case study
2. Improving business portfolio management of Commodity Rich
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 Commodity Rich
Strengths Marc Rich and Global Commodity Trading | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Commodity Rich in Marc Rich and Global Commodity Trading Harvard Business Review case study are -
Learning organization
- Commodity Rich 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 Commodity Rich is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Marc Rich and Global Commodity Trading Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Commodity Rich is present in almost all the verticals within the industry. This has provided firm in Marc Rich and Global Commodity Trading 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.
Ability to recruit top talent
– Commodity Rich is one of the leading recruiters in the industry. Managers in the Marc Rich and Global Commodity Trading are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Commodity Rich
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Commodity Rich does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Commodity Rich is one of the most innovative firm in sector. Manager in Marc Rich and Global Commodity Trading Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Commodity Rich 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 Marc Rich and Global Commodity Trading HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Commodity Rich digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Commodity Rich 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.
Successful track record of launching new products
– Commodity Rich has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Commodity Rich 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.
Strong track record of project management
– Commodity Rich is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Commodity Rich 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 switching costs
– The high switching costs that Commodity Rich 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.
Training and development
– Commodity Rich has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Marc Rich and Global Commodity Trading 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.
Weaknesses Marc Rich and Global Commodity Trading | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Marc Rich and Global Commodity Trading are -
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 Commodity Rich supply chain. Even after few cautionary changes mentioned in the HBR case study - Marc Rich and Global Commodity Trading, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Commodity Rich vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Geoffrey G. Jones, Espen Storli suggests that, Commodity Rich 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.
Lack of clear differentiation of Commodity Rich products
– To increase the profitability and margins on the products, Commodity Rich needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Commodity Rich 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Commodity Rich is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Marc Rich and Global Commodity Trading can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Marc Rich and Global Commodity Trading 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 Marc Rich and Global Commodity Trading can leverage the sales team experience to cultivate customer relationships as Commodity Rich is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Marc Rich and Global Commodity Trading, it seems that the employees of Commodity Rich 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.
Products dominated business model
– Even though Commodity Rich 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 - Marc Rich and Global Commodity Trading should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Marc Rich and Global Commodity Trading, is just above the industry average. Commodity Rich 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Marc Rich and Global Commodity Trading, in the dynamic environment Commodity Rich has struggled to respond to the nimble upstart competition. Commodity Rich has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Marc Rich and Global Commodity Trading 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 Commodity Rich has relatively successful track record of launching new products.
Opportunities Marc Rich and Global Commodity Trading | 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 Marc Rich and Global Commodity Trading are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Commodity Rich 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 Commodity Rich has opened avenues for new revenue streams for the organization in the industry. This can help Commodity Rich to build a more holistic ecosystem as suggested in the Marc Rich and Global Commodity Trading case study. Commodity Rich can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Commodity Rich 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.
Loyalty marketing
– Commodity Rich 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.
Manufacturing automation
– Commodity Rich can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Commodity Rich 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, Commodity Rich is facing challenges because of the dominance of functional experts in the organization. Marc Rich and Global Commodity Trading 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.
Better consumer reach
– The expansion of the 5G network will help Commodity Rich to increase its market reach. Commodity Rich 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.
Buying journey improvements
– Commodity Rich can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Marc Rich and Global Commodity Trading suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 Commodity Rich in the consumer business. Now Commodity Rich can target international markets with far fewer capital restrictions requirements than the existing system.
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. Commodity Rich 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. Commodity Rich 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Commodity Rich 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, Marc Rich and Global Commodity Trading, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Commodity Rich can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Threats Marc Rich and Global Commodity Trading External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Marc Rich and Global Commodity Trading are -
High dependence on third party suppliers
– Commodity Rich 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
– Commodity Rich has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Commodity Rich 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.
Stagnating economy with rate increase
– Commodity Rich 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Commodity Rich with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Commodity Rich 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 Commodity Rich.
Consumer confidence and its impact on Commodity Rich 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.
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. Commodity Rich needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Environmental challenges
– Commodity Rich 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. Commodity Rich can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Regulatory challenges
– Commodity Rich 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.
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. Commodity Rich 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.
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. Commodity Rich can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Marc Rich and Global Commodity Trading 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 Marc Rich and Global Commodity Trading 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 Marc Rich and Global Commodity Trading 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 Marc Rich and Global Commodity Trading 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 Marc Rich and Global Commodity Trading 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 Commodity Rich needs to make to build a sustainable competitive advantage.
