Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT
In March and April 2000, a series of unusual decisions, involving billions of U.S. dollars, were made by some of the biggest international companies and banks operating in Hong Kong. All those decisions centered on one 10-month-old, Internet-based business called Pacific Century CyberWorks Ltd (PCCW), which had no long-term track record and little cash. PCCW's most important asset seemed to be its charismatic executive chairman, Richard Li Tzar-kai, son of legendary tycoon Li Ka-shing. Nevertheless, London-based Cable & Wireless plc. (C&W) decided to sell Hong Kong's biggest telecommunications provider, Cable & Wireless HKT Ltd. (C&W HKT or HKT), to PCCW instead of rival bidder Singapore Telecommunications Ltd. (SingTel). It was one of the biggest corporate mergers in Asia's history. Four top international banks were willing to underwrite the U.S. $12 billion loan that PCCW needed for the takeover, making it the biggest syndicated loan ever in Asia. The four banks had also rallied about 30 enthusiastic banks to syndicate the loan. But the high expectations for PCCW were shattered within months. PCCW's share price was almost decimated in the 12 months after it reached a peak in early 2000. The company was deep in debt and suffered huge losses in 2000. In hindsight, PCCW did not appear to be suitable to run a huge telecommunications company. SingTel had much more experience and capital. So why did the board of C&W choose PCCW? And why did the banks decide to lend it U.S. $12 billion?
Authors :: Gilbert Wong, Heather McGregor, Vincent Mak, Pauline Ng
Swot Analysis of "Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT" written by Gilbert Wong, Heather McGregor, Vincent Mak, Pauline Ng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pccw Hkt facing as an external strategic factors. Some of the topics covered in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT case study are - Strategic Management Strategies, International business, Mergers & acquisitions, Networking and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, technology disruption, geopolitical disruptions, increasing energy prices, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models,
increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pccw Hkt, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pccw Hkt 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT can be done for the following purposes –
1. Strategic planning using facts provided in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT case study
2. Improving business portfolio management of Pccw Hkt
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pccw Hkt
Strengths Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pccw Hkt in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT firm has clearly differentiated products in the market place. This has enabled Pccw Hkt to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Pccw Hkt to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Pccw Hkt 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Pccw Hkt is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Pccw Hkt is present in almost all the verticals within the industry. This has provided firm in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Finance & Accounting field
– Pccw Hkt 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 Pccw Hkt 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 Pccw Hkt 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.
Analytics focus
– Pccw Hkt 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 Gilbert Wong, Heather McGregor, Vincent Mak, Pauline Ng 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.
Learning organization
- Pccw Hkt 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 Pccw Hkt is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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.
Successful track record of launching new products
– Pccw Hkt has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pccw Hkt 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.
High switching costs
– The high switching costs that Pccw Hkt 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.
Low bargaining power of suppliers
– Suppliers of Pccw Hkt in the sector have low bargaining power. Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pccw Hkt to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT, is just above the industry average. Pccw Hkt 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.
Increasing silos among functional specialists
– The organizational structure of Pccw Hkt is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Pccw Hkt needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pccw Hkt to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT, it seems that the employees of Pccw Hkt 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Pccw Hkt has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Pccw Hkt 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Pccw Hkt needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Gilbert Wong, Heather McGregor, Vincent Mak, Pauline Ng suggests that, Pccw Hkt 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Pccw Hkt 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT, in the dynamic environment Pccw Hkt has struggled to respond to the nimble upstart competition. Pccw Hkt has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Pccw Hkt 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.
Slow decision making process
– As mentioned earlier in the report, Pccw Hkt 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. Pccw Hkt 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.
Opportunities Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT | 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Pccw Hkt 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
– Pccw Hkt 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.
Using analytics as competitive advantage
– Pccw Hkt 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pccw Hkt 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 Pccw Hkt 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.
Creating value in data economy
– The success of analytics program of Pccw Hkt has opened avenues for new revenue streams for the organization in the industry. This can help Pccw Hkt to build a more holistic ecosystem as suggested in the Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT case study. Pccw Hkt can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pccw Hkt 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. Pccw Hkt can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pccw Hkt 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, Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Pccw Hkt can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pccw Hkt in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pccw Hkt can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Pccw Hkt 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 Finance & Accounting segment.
Manufacturing automation
– Pccw Hkt can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Leveraging digital technologies
– Pccw Hkt can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT are -
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pccw Hkt in the Finance & Accounting industry. The Finance & Accounting 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.
Increasing wage structure of Pccw Hkt
– 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 Pccw Hkt.
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 Pccw Hkt.
Environmental challenges
– Pccw Hkt 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. Pccw Hkt can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Shortening product life cycle
– it is one of the major threat that Pccw Hkt is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pccw Hkt 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT .
Technology acceleration in Forth Industrial Revolution
– Pccw Hkt has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Pccw Hkt needs to keep up with the evolution of technology in the Finance & Accounting 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pccw Hkt can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Pccw Hkt 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.
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.
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. Pccw Hkt 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.
Stagnating economy with rate increase
– Pccw Hkt 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Pccw Hkt needs to make to build a sustainable competitive advantage.