ABC Energy Limited: Culture and Formalization SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of ABC Energy Limited: Culture and Formalization
AWARD WINNING CASE: Adjudged third best case at the ISB Case Competition 2010 held in partnership with the Richard Ivey School of Business and the Association of Indian Management Schools and sponsored by the Chartered Institute of Management Accountants.ABC Energy Limited (ABCEL) was created in March 2007 by ABC Infra Private Limited and XYG Private Limited. In September 2007, MNP Finance Limited joined ABCEL as an equity partner. In 2010, ABCEL operated in power generation and had plans to diversify into transmission and distribution. It aspired to be a world-class energy company with operations in India and neighbouring countries. Over the last few years, ABCEL had grown by investing in greenfield projects and by acquiring existing operations. The promoters of ABCEL had set a target of achieving a project portfolio of 30,000 MW by 2015, with the current portfolio being 8,655 MW. The chief executive officer of ABCEL wanted to discuss the following issues at the board meeting on July 31, 2010, with regard to the opportunities and challenges in the growing market: 1) the key organizational needs ABCEL might face in achieving its target by 2015 2) the present culture of ABCEL 3) the relationship between the culture and extent of formalization and hence the ramp-up of formalization ABCEL might require, and 4) the method of introducing this formalization.
Authors :: Pavitra Mishra, Rajen Gupta
Topics :: Innovation & Entrepreneurship
Tags :: Growth strategy, Human resource management, International business, Organizational culture, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "ABC Energy Limited: Culture and Formalization" written by Pavitra Mishra, Rajen Gupta includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Abcel Formalization facing as an external strategic factors. Some of the topics covered in ABC Energy Limited: Culture and Formalization case study are - Strategic Management Strategies, Growth strategy, Human resource management, International business, Organizational culture and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the ABC Energy Limited: Culture and Formalization casestudy better are - – increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, there is backlash against globalization,
technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of ABC Energy Limited: Culture and Formalization
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ABC Energy Limited: Culture and Formalization case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Abcel Formalization, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Abcel Formalization 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 ABC Energy Limited: Culture and Formalization can be done for the following purposes –
1. Strategic planning using facts provided in ABC Energy Limited: Culture and Formalization case study
2. Improving business portfolio management of Abcel Formalization
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Abcel Formalization
Strengths ABC Energy Limited: Culture and Formalization | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Abcel Formalization in ABC Energy Limited: Culture and Formalization Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Abcel Formalization in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Abcel Formalization is present in almost all the verticals within the industry. This has provided firm in ABC Energy Limited: Culture and Formalization case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Abcel Formalization 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.
Successful track record of launching new products
– Abcel Formalization has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Abcel Formalization 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.
Innovation driven organization
– Abcel Formalization is one of the most innovative firm in sector. Manager in ABC Energy Limited: Culture and Formalization Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Abcel Formalization digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Abcel Formalization 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.
Ability to lead change in Innovation & Entrepreneurship field
– Abcel Formalization is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Abcel Formalization in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Abcel Formalization 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.
Organizational Resilience of Abcel Formalization
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Abcel Formalization does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Abcel Formalization has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in ABC Energy Limited: Culture and Formalization 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.
Low bargaining power of suppliers
– Suppliers of Abcel Formalization in the sector have low bargaining power. ABC Energy Limited: Culture and Formalization has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Abcel Formalization to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Abcel Formalization is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses ABC Energy Limited: Culture and Formalization | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ABC Energy Limited: Culture and Formalization are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ABC Energy Limited: Culture and Formalization, is just above the industry average. Abcel Formalization 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.
Low market penetration in new markets
– Outside its home market of Abcel Formalization, firm in the HBR case study ABC Energy Limited: Culture and Formalization needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study ABC Energy Limited: Culture and Formalization, in the dynamic environment Abcel Formalization has struggled to respond to the nimble upstart competition. Abcel Formalization has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Abcel Formalization 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 decision making process
– As mentioned earlier in the report, Abcel Formalization has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Abcel Formalization even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ABC Energy Limited: Culture and Formalization 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 Abcel Formalization has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Abcel Formalization 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.
No frontier risks strategy
– After analyzing the HBR case study ABC Energy Limited: Culture and Formalization, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Pavitra Mishra, Rajen Gupta suggests that, Abcel Formalization 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.
Slow to strategic competitive environment developments
– As ABC Energy Limited: Culture and Formalization HBR case study mentions - Abcel Formalization 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.
High operating costs
– Compare to the competitors, firm in the HBR case study ABC Energy Limited: Culture and Formalization 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 Abcel Formalization 's lucrative customers.
Opportunities ABC Energy Limited: Culture and Formalization | 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 ABC Energy Limited: Culture and Formalization 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. Abcel Formalization can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Abcel Formalization can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Loyalty marketing
– Abcel Formalization 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Abcel Formalization 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. Abcel Formalization 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.
Using analytics as competitive advantage
– Abcel Formalization 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 ABC Energy Limited: Culture and Formalization - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Abcel Formalization to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Abcel Formalization 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 Innovation & Entrepreneurship segment.
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 Abcel Formalization 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Abcel Formalization can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Abcel Formalization has opened avenues for new revenue streams for the organization in the industry. This can help Abcel Formalization to build a more holistic ecosystem as suggested in the ABC Energy Limited: Culture and Formalization case study. Abcel Formalization can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Abcel Formalization to increase its market reach. Abcel Formalization 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, Abcel Formalization can use these opportunities to build new business models that can help the communities that Abcel Formalization operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Buying journey improvements
– Abcel Formalization can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ABC Energy Limited: Culture and Formalization 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Abcel Formalization can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats ABC Energy Limited: Culture and Formalization External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ABC Energy Limited: Culture and Formalization are -
Consumer confidence and its impact on Abcel Formalization 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.
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. Abcel Formalization 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.
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 Abcel Formalization in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ABC Energy Limited: Culture and Formalization, Abcel Formalization may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Shortening product life cycle
– it is one of the major threat that Abcel Formalization is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Abcel Formalization business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Abcel Formalization can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Abcel Formalization 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 Innovation & Entrepreneurship industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Abcel Formalization 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 ABC Energy Limited: Culture and Formalization .
Increasing wage structure of Abcel Formalization
– 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 Abcel Formalization.
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 Abcel Formalization.
Stagnating economy with rate increase
– Abcel Formalization 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.
Weighted SWOT Analysis of ABC Energy Limited: Culture and Formalization 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 ABC Energy Limited: Culture and Formalization 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 ABC Energy Limited: Culture and Formalization 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 ABC Energy Limited: Culture and Formalization 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 ABC Energy Limited: Culture and Formalization 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 Abcel Formalization needs to make to build a sustainable competitive advantage.
