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 - – there is backlash against globalization, geopolitical disruptions, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs,
talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, 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 -
Learning organization
- Abcel Formalization 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 Abcel Formalization is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ABC Energy Limited: Culture and Formalization Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
High brand equity
– Abcel Formalization has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Abcel Formalization to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Abcel Formalization 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 ABC Energy Limited: Culture and Formalization - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Abcel Formalization is one of the leading recruiters in the industry. Managers in the ABC Energy Limited: Culture and Formalization are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Abcel Formalization 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 ABC Energy Limited: Culture and Formalization HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– ABC Energy Limited: Culture and Formalization firm has clearly differentiated products in the market place. This has enabled Abcel Formalization to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Abcel Formalization to invest into research and development (R&D) and innovation.
Analytics focus
– Abcel Formalization 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 Pavitra Mishra, Rajen Gupta 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.
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 -
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.
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.
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.
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 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.
Lack of clear differentiation of Abcel Formalization products
– To increase the profitability and margins on the products, Abcel Formalization needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Abcel Formalization supply chain. Even after few cautionary changes mentioned in the HBR case study - ABC Energy Limited: Culture and Formalization, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Abcel Formalization vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ABC Energy Limited: Culture and Formalization, it seems that the employees of Abcel Formalization 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.
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.
Need for greater diversity
– Abcel Formalization 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.
Capital Spending Reduction
– Even during the low interest decade, Abcel Formalization has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Abcel Formalization 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, ABC Energy Limited: Culture and Formalization, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Abcel Formalization is facing challenges because of the dominance of functional experts in the organization. ABC Energy Limited: Culture and Formalization 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.
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 Abcel Formalization in the consumer business. Now Abcel Formalization can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Abcel Formalization to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Abcel Formalization to hire the very best people irrespective of their geographical location.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Abcel Formalization 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.
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.
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 -
Technology acceleration in Forth Industrial Revolution
– Abcel Formalization has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Abcel Formalization needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
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.
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.
High dependence on third party suppliers
– Abcel Formalization 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.
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.
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.
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.
Environmental challenges
– Abcel Formalization 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. Abcel Formalization can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Abcel Formalization with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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 .
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.