It was May 2007. Earlier in the week, Epsilon Refinery Group had received notification from one of its major suppliers that the price of a key raw material, hydrofluoric acid (HF), would increase at the end of the year-in just seven months. This action was in accordance with an environmental clause in the contract with Cornwell Performance Products (CPP), a division of the multinational chemical manufacturer, Cornwell, Inc. Also in accordance with the contract, action would be required within the next 60 days. Preliminary discussions within Epsilon focused on three primary alternatives. These limited options and the very high stakes involved made the pending discussions with CPP among the most important in recent Epsilon history.
Swot Analysis of "Epsilon Refinery Group" written by Sherman C. Frey Jr., Paul Bacon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Epsilon Cpp facing as an external strategic factors. Some of the topics covered in Epsilon Refinery Group case study are - Strategic Management Strategies, Negotiations and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Epsilon Refinery Group casestudy better are - – increasing household debt because of falling income levels, increasing commodity prices, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, there is backlash against globalization,
increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, etc
Introduction to SWOT Analysis of Epsilon Refinery Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Epsilon Refinery Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Epsilon Cpp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Epsilon Cpp 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 Epsilon Refinery Group can be done for the following purposes –
1. Strategic planning using facts provided in Epsilon Refinery Group case study
2. Improving business portfolio management of Epsilon Cpp
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 Epsilon Cpp
Strengths Epsilon Refinery Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Epsilon Cpp in Epsilon Refinery Group Harvard Business Review case study are -
Organizational Resilience of Epsilon Cpp
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Epsilon Cpp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Epsilon Cpp has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Epsilon Cpp 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 brand equity
– Epsilon Cpp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Epsilon Cpp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Epsilon Cpp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Epsilon Cpp are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Epsilon Refinery Group firm has clearly differentiated products in the market place. This has enabled Epsilon Cpp to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Epsilon Cpp to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Epsilon Cpp 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.
Analytics focus
– Epsilon Cpp 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 Sherman C. Frey Jr., Paul Bacon 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Epsilon Cpp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Epsilon Cpp 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.
Low bargaining power of suppliers
– Suppliers of Epsilon Cpp in the sector have low bargaining power. Epsilon Refinery Group has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Epsilon Cpp to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Epsilon Cpp 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 Epsilon Refinery Group - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Epsilon Cpp 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 Epsilon Refinery Group HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Epsilon Refinery Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Epsilon Refinery Group are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Epsilon Refinery Group 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 Epsilon Cpp has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Epsilon Refinery Group, it seems that the employees of Epsilon Cpp 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.
No frontier risks strategy
– After analyzing the HBR case study Epsilon Refinery Group, 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.
Lack of clear differentiation of Epsilon Cpp products
– To increase the profitability and margins on the products, Epsilon Cpp needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Epsilon Cpp 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.
Increasing silos among functional specialists
– The organizational structure of Epsilon Cpp is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Epsilon Cpp needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Epsilon Cpp to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Epsilon Cpp 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.
Slow to strategic competitive environment developments
– As Epsilon Refinery Group HBR case study mentions - Epsilon Cpp 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Epsilon Refinery Group, in the dynamic environment Epsilon Cpp has struggled to respond to the nimble upstart competition. Epsilon Cpp has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Epsilon Cpp, firm in the HBR case study Epsilon Refinery Group needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Epsilon Cpp 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. Epsilon Cpp 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 Epsilon Refinery Group | 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 Epsilon Refinery Group are -
Learning at scale
– Online learning technologies has now opened space for Epsilon Cpp 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.
Better consumer reach
– The expansion of the 5G network will help Epsilon Cpp to increase its market reach. Epsilon Cpp will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Epsilon Cpp 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Epsilon Cpp is facing challenges because of the dominance of functional experts in the organization. Epsilon Refinery Group 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.
Using analytics as competitive advantage
– Epsilon Cpp 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 Epsilon Refinery Group - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Epsilon Cpp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Epsilon Cpp has opened avenues for new revenue streams for the organization in the industry. This can help Epsilon Cpp to build a more holistic ecosystem as suggested in the Epsilon Refinery Group case study. Epsilon Cpp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Epsilon Cpp 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, Epsilon Refinery Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Epsilon Cpp 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.
Loyalty marketing
– Epsilon Cpp 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Epsilon Cpp 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
– Epsilon Cpp can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Epsilon Refinery Group 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Epsilon Cpp 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 Epsilon Cpp to hire the very best people irrespective of their geographical location.
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. Epsilon Cpp can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Epsilon Refinery Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Epsilon Refinery Group are -
Increasing wage structure of Epsilon Cpp
– 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 Epsilon Cpp.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Epsilon Refinery Group, Epsilon Cpp 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 .
Stagnating economy with rate increase
– Epsilon Cpp 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.
Shortening product life cycle
– it is one of the major threat that Epsilon Cpp is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Epsilon Cpp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Epsilon Cpp 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.
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 Epsilon Cpp.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Epsilon Cpp 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 Epsilon Refinery Group .
Regulatory challenges
– Epsilon Cpp 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 Innovation & Entrepreneurship industry regulations.
Environmental challenges
– Epsilon Cpp 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. Epsilon Cpp can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Epsilon Cpp needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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. Epsilon Cpp 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 Epsilon Cpp business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Epsilon Refinery Group 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 Epsilon Refinery Group 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 Epsilon Refinery Group 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 Epsilon Refinery Group 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 Epsilon Refinery Group 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 Epsilon Cpp needs to make to build a sustainable competitive advantage.
