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 - – wage bills are increasing, increasing commodity prices, supply chains are disrupted by pandemic , geopolitical disruptions, increasing transportation and logistics costs, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, 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 -
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Pccw Hkt digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pccw Hkt 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.
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.
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.
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.
Training and development
– Pccw Hkt has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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.
Superior customer experience
– The customer experience strategy of Pccw Hkt in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
Organizational Resilience of Pccw Hkt
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pccw Hkt does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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 -
Products dominated business model
– Even though Pccw Hkt 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 - Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT 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 Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT can leverage the sales team experience to cultivate customer relationships as Pccw Hkt is planning to shift buying processes online.
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.
Lack of clear differentiation of Pccw Hkt products
– To increase the profitability and margins on the products, Pccw Hkt 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 Pccw Hkt supply chain. Even after few cautionary changes mentioned in the HBR case study - Social Capital at Work in PCCW's Acquisition of Cable & Wireless HKT, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pccw Hkt vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Pccw Hkt has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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.
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 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.
Skills based hiring
– The stress on hiring functional specialists at Pccw Hkt 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.
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 -
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.
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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pccw Hkt 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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pccw Hkt 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 Pccw Hkt to hire the very best people irrespective of their geographical location.
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.
Learning at scale
– Online learning technologies has now opened space for Pccw Hkt 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.
Developing new processes and practices
– Pccw Hkt can develop new processes and procedures in Finance & Accounting 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.
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 -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pccw Hkt with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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.
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.
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.
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.
Regulatory challenges
– Pccw Hkt needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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 .
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 Pccw Hkt business can come under increasing regulations regarding data privacy, data security, etc.
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.
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. 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.
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.
