Luis Giusti and the Transformation of Petroleos de Venezuela S.A. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Luis Giusti and the Transformation of Petroleos de Venezuela S.A.
Set in Venezuela in 1997, this case describes the massive change effort and leadership required to transform the state-owned oil company from a bureaucratic behemoth into a surefooted competitor in the global marketplace. Even before 1994, when he was appointed by Venezuela's president to lead the company, Luis Giusti was actively creating an agenda for change, as he was building a team and a network of relationships. By mid-1997, he had been successful in radically reshaping national policy, forging alliances with major world companies, and creating significant momentum for internal change. The case chronicles these activities and asks the question, "Where does he go from here?"
Swot Analysis of "Luis Giusti and the Transformation of Petroleos de Venezuela S.A." written by Anne Donnellon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Giusti Luis facing as an external strategic factors. Some of the topics covered in Luis Giusti and the Transformation of Petroleos de Venezuela S.A. case study are - Strategic Management Strategies, Leadership and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Luis Giusti and the Transformation of Petroleos de Venezuela S.A. casestudy better are - – challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, technology disruption, 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,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Luis Giusti and the Transformation of Petroleos de Venezuela S.A.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Luis Giusti and the Transformation of Petroleos de Venezuela S.A. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Giusti Luis, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Giusti Luis 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 Luis Giusti and the Transformation of Petroleos de Venezuela S.A. can be done for the following purposes –
1. Strategic planning using facts provided in Luis Giusti and the Transformation of Petroleos de Venezuela S.A. case study
2. Improving business portfolio management of Giusti Luis
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Giusti Luis
Strengths Luis Giusti and the Transformation of Petroleos de Venezuela S.A. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Giusti Luis in Luis Giusti and the Transformation of Petroleos de Venezuela S.A. Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Giusti Luis 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 Giusti Luis in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Leadership & Managing People industry
– Luis Giusti and the Transformation of Petroleos de Venezuela S.A. firm has clearly differentiated products in the market place. This has enabled Giusti Luis to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Giusti Luis to invest into research and development (R&D) and innovation.
Strong track record of project management
– Giusti Luis is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Giusti Luis is one of the leading recruiters in the industry. Managers in the Luis Giusti and the Transformation of Petroleos de Venezuela S.A. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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.
Analytics focus
– Giusti Luis 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 Anne Donnellon 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.
Diverse revenue streams
– Giusti Luis is present in almost all the verticals within the industry. This has provided firm in Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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.
Superior customer experience
– The customer experience strategy of Giusti Luis in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Giusti Luis digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Giusti Luis 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
– Giusti Luis has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Giusti Luis 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 Giusti Luis 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.
High brand equity
– Giusti Luis has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Giusti Luis to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Luis Giusti and the Transformation of Petroleos de Venezuela S.A. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Luis Giusti and the Transformation of Petroleos de Venezuela S.A. are -
Slow decision making process
– As mentioned earlier in the report, Giusti Luis 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. Giusti Luis 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 cash cycle compare to competitors
Giusti Luis 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A., is just above the industry average. Giusti Luis 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 Giusti Luis is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Giusti Luis needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Giusti Luis to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A., in the dynamic environment Giusti Luis has struggled to respond to the nimble upstart competition. Giusti Luis 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
– Giusti Luis 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.
Lack of clear differentiation of Giusti Luis products
– To increase the profitability and margins on the products, Giusti Luis needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A., it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to strategic competitive environment developments
– As Luis Giusti and the Transformation of Petroleos de Venezuela S.A. HBR case study mentions - Giusti Luis 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.
Low market penetration in new markets
– Outside its home market of Giusti Luis, firm in the HBR case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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 Giusti Luis 's lucrative customers.
Opportunities Luis Giusti and the Transformation of Petroleos de Venezuela S.A. | 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 Luis Giusti and the Transformation of Petroleos de Venezuela S.A. are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Giusti Luis 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. Giusti Luis 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.
Developing new processes and practices
– Giusti Luis can develop new processes and procedures in Leadership & Managing People 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.
Learning at scale
– Online learning technologies has now opened space for Giusti Luis 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 Giusti Luis in the consumer business. Now Giusti Luis can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Giusti Luis can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Giusti Luis 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, Luis Giusti and the Transformation of Petroleos de Venezuela S.A., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Giusti Luis to increase its market reach. Giusti Luis 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Giusti Luis can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Giusti Luis 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 Leadership & Managing People segment.
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. Giusti Luis can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Giusti Luis 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 Giusti Luis to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Giusti Luis can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Giusti Luis is facing challenges because of the dominance of functional experts in the organization. Luis Giusti and the Transformation of Petroleos de Venezuela S.A. case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Luis Giusti and the Transformation of Petroleos de Venezuela S.A. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A. are -
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 Giusti Luis business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Giusti Luis
– 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 Giusti Luis.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Giusti Luis in the Leadership & Managing People industry. The Leadership & Managing People 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.
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. Giusti Luis 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.
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.
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 Giusti Luis.
Stagnating economy with rate increase
– Giusti Luis 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Luis Giusti and the Transformation of Petroleos de Venezuela S.A., Giusti Luis may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Giusti Luis with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Giusti Luis 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
– Giusti Luis 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.
Consumer confidence and its impact on Giusti Luis 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.
Weighted SWOT Analysis of Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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 Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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 Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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 Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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 Luis Giusti and the Transformation of Petroleos de Venezuela S.A. 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 Giusti Luis needs to make to build a sustainable competitive advantage.
