"Cementos Lima: Laying the Foundations of Social Responsibility" SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of "Cementos Lima: Laying the Foundations of Social Responsibility"
Cementos Lima S.A, is a leading organization in the Peruvian cement sector, with 44% of the national market share and a growing presence in certain international markets. Parallel to the growth of the company, population centers have grown up in the areas adjacent to the cement plant. As time goes by, the neighboring communities have come to literally surround Cementos Lima S.A. and have developed a complex relationship with the company. On one hand, the residents in these areas are directly affected by the company's industrial operations, which produce negative effects on the environment. On the other hand, these same individuals benefit from the company's social initiatives over time. As the organization's social actions began to evolve, from disarticulated and basically philanthropic practices towards an attempt at more formal and effective projects in the community, a "breaking point" is produced in the company's management focus. This situation is generated by the company's plans for export growth, which implies physical expansion of their activities, and as a result a larger impact on the surrounding community due to the necessary increase in the transportation flow of primary materials and finished products. To meet its new transportation needs, the company has planned two major projects. Both projects require the approval of the neighboring community, as part of the authorization process established by municipal authorities. In the face of observed reluctance among the neighboring communities to approve these projects, company officials have begun to reexamine the way they have been managing community relations and the importance that these relationships have in achieving their strategic objectives.
Authors :: Felipe Portocarrero, Cynthia Sanborn, Elsa Del Castillo, Martha Chavez
Swot Analysis of ""Cementos Lima: Laying the Foundations of Social Responsibility"" written by Felipe Portocarrero, Cynthia Sanborn, Elsa Del Castillo, Martha Chavez includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cementos Lima facing as an external strategic factors. Some of the topics covered in "Cementos Lima: Laying the Foundations of Social Responsibility" case study are - Strategic Management Strategies, Organizational structure, Social responsibility and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the "Cementos Lima: Laying the Foundations of Social Responsibility" casestudy better are - – technology disruption, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of "Cementos Lima: Laying the Foundations of Social Responsibility"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in "Cementos Lima: Laying the Foundations of Social Responsibility" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cementos Lima, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cementos Lima 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 "Cementos Lima: Laying the Foundations of Social Responsibility" can be done for the following purposes –
1. Strategic planning using facts provided in "Cementos Lima: Laying the Foundations of Social Responsibility" case study
2. Improving business portfolio management of Cementos Lima
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 Cementos Lima
Strengths "Cementos Lima: Laying the Foundations of Social Responsibility" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cementos Lima in "Cementos Lima: Laying the Foundations of Social Responsibility" Harvard Business Review case study are -
High switching costs
– The high switching costs that Cementos Lima 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.
Cross disciplinary teams
– Horizontal connected teams at the Cementos Lima 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.
Ability to recruit top talent
– Cementos Lima is one of the leading recruiters in the industry. Managers in the "Cementos Lima: Laying the Foundations of Social Responsibility" are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Cementos Lima is one of the most innovative firm in sector. Manager in "Cementos Lima: Laying the Foundations of Social Responsibility" Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Cementos Lima is present in almost all the verticals within the industry. This has provided firm in "Cementos Lima: Laying the Foundations of Social Responsibility" 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.
Effective Research and Development (R&D)
– Cementos Lima 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 "Cementos Lima: Laying the Foundations of Social Responsibility" - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– "Cementos Lima: Laying the Foundations of Social Responsibility" firm has clearly differentiated products in the market place. This has enabled Cementos Lima to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Cementos Lima to invest into research and development (R&D) and innovation.
Organizational Resilience of Cementos Lima
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cementos Lima does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Cementos Lima is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Cementos Lima digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cementos Lima 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 Cementos Lima in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Cementos Lima 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 Felipe Portocarrero, Cynthia Sanborn, Elsa Del Castillo, Martha Chavez 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 "Cementos Lima: Laying the Foundations of Social Responsibility" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of "Cementos Lima: Laying the Foundations of Social Responsibility" are -
Interest costs
– Compare to the competition, Cementos Lima 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Felipe Portocarrero, Cynthia Sanborn, Elsa Del Castillo, Martha Chavez suggests that, Cementos Lima 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study "Cementos Lima: Laying the Foundations of Social Responsibility", in the dynamic environment Cementos Lima has struggled to respond to the nimble upstart competition. Cementos Lima has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study "Cementos Lima: Laying the Foundations of Social Responsibility", is just above the industry average. Cementos Lima 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.
High operating costs
– Compare to the competitors, firm in the HBR case study "Cementos Lima: Laying the Foundations of Social Responsibility" 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 Cementos Lima 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study "Cementos Lima: Laying the Foundations of Social Responsibility", 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.
Slow decision making process
– As mentioned earlier in the report, Cementos Lima 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. Cementos Lima 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.
Increasing silos among functional specialists
– The organizational structure of Cementos Lima is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Cementos Lima needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cementos Lima to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As "Cementos Lima: Laying the Foundations of Social Responsibility" HBR case study mentions - Cementos Lima 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.
Need for greater diversity
– Cementos Lima has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Cementos Lima 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 - "Cementos Lima: Laying the Foundations of Social Responsibility" should strive to include more intangible value offerings along with its core products and services.
Opportunities "Cementos Lima: Laying the Foundations of Social Responsibility" | 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 "Cementos Lima: Laying the Foundations of Social Responsibility" are -
Developing new processes and practices
– Cementos Lima can develop new processes and procedures in Innovation & Entrepreneurship 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cementos Lima in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Manufacturing automation
– Cementos Lima 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.
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. Cementos Lima 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. Cementos Lima 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.
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. Cementos Lima can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Cementos Lima 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cementos Lima can use these opportunities to build new business models that can help the communities that Cementos Lima operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Using analytics as competitive advantage
– Cementos Lima 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 "Cementos Lima: Laying the Foundations of Social Responsibility" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cementos Lima to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Cementos Lima 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.
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 Cementos Lima in the consumer business. Now Cementos Lima can target international markets with far fewer capital restrictions requirements than the existing system.
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. Cementos Lima can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cementos Lima 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cementos Lima is facing challenges because of the dominance of functional experts in the organization. "Cementos Lima: Laying the Foundations of Social Responsibility" 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.
Threats "Cementos Lima: Laying the Foundations of Social Responsibility" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study "Cementos Lima: Laying the Foundations of Social Responsibility" are -
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 Cementos Lima 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 Cementos Lima.
Shortening product life cycle
– it is one of the major threat that Cementos Lima 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
– Cementos Lima 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.
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. Cementos Lima needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study "Cementos Lima: Laying the Foundations of Social Responsibility", Cementos Lima 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 .
Increasing wage structure of Cementos Lima
– 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 Cementos Lima.
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.
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. Cementos Lima 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.
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 Cementos Lima business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cementos Lima with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cementos Lima 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 "Cementos Lima: Laying the Foundations of Social Responsibility" .
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 "Cementos Lima: Laying the Foundations of Social Responsibility" 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 "Cementos Lima: Laying the Foundations of Social Responsibility" 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 "Cementos Lima: Laying the Foundations of Social Responsibility" 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 "Cementos Lima: Laying the Foundations of Social Responsibility" 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 "Cementos Lima: Laying the Foundations of Social Responsibility" 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 Cementos Lima needs to make to build a sustainable competitive advantage.
