"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 - – supply chains are disrupted by pandemic , wage bills are increasing, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, increasing commodity prices, there is backlash against globalization,
cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
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.
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.
Learning organization
- Cementos Lima 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 Cementos Lima is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in "Cementos Lima: Laying the Foundations of Social Responsibility" Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Operational resilience
– The operational resilience strategy in the "Cementos Lima: Laying the Foundations of Social Responsibility" Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Cementos Lima has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cementos Lima to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Successful track record of launching new products
– Cementos Lima has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cementos Lima 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.
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.
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.
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 -
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.
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.
Aligning sales with marketing
– It come across in the case study "Cementos Lima: Laying the Foundations of Social Responsibility" 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 "Cementos Lima: Laying the Foundations of Social Responsibility" can leverage the sales team experience to cultivate customer relationships as Cementos Lima is planning to shift buying processes online.
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the "Cementos Lima: Laying the Foundations of Social Responsibility" 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 Cementos Lima has relatively successful track record of launching new products.
Lack of clear differentiation of Cementos Lima products
– To increase the profitability and margins on the products, Cementos Lima needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study "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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study "Cementos Lima: Laying the Foundations of Social Responsibility", it seems that the employees of Cementos Lima 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.
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.
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.
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 -
Building a culture of innovation
– managers at Cementos Lima 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.
Learning at scale
– Online learning technologies has now opened space for Cementos Lima to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
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.
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cementos Lima can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Buying journey improvements
– Cementos Lima can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. "Cementos Lima: Laying the Foundations of Social Responsibility" 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.
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.
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 -
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.
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.
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" .
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.
Consumer confidence and its impact on Cementos Lima 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.
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 .
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.
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 acceleration in Forth Industrial Revolution
– Cementos Lima has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Cementos Lima 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cementos Lima in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Environmental challenges
– Cementos Lima 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. Cementos Lima can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Stagnating economy with rate increase
– Cementos Lima 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.
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. Cementos Lima can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.