Case Study Description of AES Corporation (A): Global Sourcing Initiative
This case is a good fit for courses in operations management and business communications. It examines the procurement strategy of a global energy company by describing the overall change program led by the new chief procurement officer as well as specific information regarding the commodity for electric meters. See also the B case (UV3548).
Swot Analysis of "AES Corporation (A): Global Sourcing Initiative" written by Timothy M. Laseter, Rajiv Ranjan, Amena Syeda, Arnon Katz includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Procurement Uv3548 facing as an external strategic factors. Some of the topics covered in AES Corporation (A): Global Sourcing Initiative case study are - Strategic Management Strategies, Communication and Communication.
Some of the macro environment factors that can be used to understand the AES Corporation (A): Global Sourcing Initiative casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, technology disruption, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , increasing transportation and logistics costs, wage bills are increasing,
increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of AES Corporation (A): Global Sourcing Initiative
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AES Corporation (A): Global Sourcing Initiative case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Procurement Uv3548, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Procurement Uv3548 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 AES Corporation (A): Global Sourcing Initiative can be done for the following purposes –
1. Strategic planning using facts provided in AES Corporation (A): Global Sourcing Initiative case study
2. Improving business portfolio management of Procurement Uv3548
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Procurement Uv3548
Strengths AES Corporation (A): Global Sourcing Initiative | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Procurement Uv3548 in AES Corporation (A): Global Sourcing Initiative Harvard Business Review case study are -
Highly skilled collaborators
– Procurement Uv3548 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 AES Corporation (A): Global Sourcing Initiative HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Procurement Uv3548 in the sector have low bargaining power. AES Corporation (A): Global Sourcing Initiative has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Procurement Uv3548 to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Procurement Uv3548 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.
Learning organization
- Procurement Uv3548 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 Procurement Uv3548 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AES Corporation (A): Global Sourcing Initiative Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Procurement Uv3548 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AES Corporation (A): Global Sourcing Initiative 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.
Innovation driven organization
– Procurement Uv3548 is one of the most innovative firm in sector. Manager in AES Corporation (A): Global Sourcing Initiative Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Procurement Uv3548 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 lead change in Communication field
– Procurement Uv3548 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 Procurement Uv3548 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Procurement Uv3548
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Procurement Uv3548 does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the AES Corporation (A): Global Sourcing Initiative 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
– Procurement Uv3548 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Procurement Uv3548 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 Procurement Uv3548 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.
Weaknesses AES Corporation (A): Global Sourcing Initiative | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AES Corporation (A): Global Sourcing Initiative are -
Low market penetration in new markets
– Outside its home market of Procurement Uv3548, firm in the HBR case study AES Corporation (A): Global Sourcing Initiative needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study AES Corporation (A): Global Sourcing Initiative 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 AES Corporation (A): Global Sourcing Initiative can leverage the sales team experience to cultivate customer relationships as Procurement Uv3548 is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AES Corporation (A): Global Sourcing Initiative, in the dynamic environment Procurement Uv3548 has struggled to respond to the nimble upstart competition. Procurement Uv3548 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Procurement Uv3548 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. Procurement Uv3548 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AES Corporation (A): Global Sourcing Initiative, is just above the industry average. Procurement Uv3548 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 Procurement Uv3548 is dominated by functional specialists. It is not different from other players in the Communication segment. Procurement Uv3548 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Procurement Uv3548 to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Procurement Uv3548 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Timothy M. Laseter, Rajiv Ranjan, Amena Syeda, Arnon Katz suggests that, Procurement Uv3548 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.
No frontier risks strategy
– After analyzing the HBR case study AES Corporation (A): Global Sourcing Initiative, it seems that company is thinking about the frontier risks that can impact Communication 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 Procurement Uv3548 products
– To increase the profitability and margins on the products, Procurement Uv3548 needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AES Corporation (A): Global Sourcing Initiative, it seems that the employees of Procurement Uv3548 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.
Opportunities AES Corporation (A): Global Sourcing Initiative | 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 AES Corporation (A): Global Sourcing Initiative are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Procurement Uv3548 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Procurement Uv3548 can use these opportunities to build new business models that can help the communities that Procurement Uv3548 operates in. Secondly it can use opportunities from government spending in Communication sector.
Leveraging digital technologies
– Procurement Uv3548 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.
Manufacturing automation
– Procurement Uv3548 can use the latest technology developments to improve its manufacturing and designing process in Communication 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Procurement Uv3548 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Communication segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Procurement Uv3548 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 AES Corporation (A): Global Sourcing Initiative - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Procurement Uv3548 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Communication industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Procurement Uv3548 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. Procurement Uv3548 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.
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. Procurement Uv3548 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Procurement Uv3548 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 Communication segment.
Buying journey improvements
– Procurement Uv3548 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AES Corporation (A): Global Sourcing Initiative 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 Procurement Uv3548 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 Procurement Uv3548 to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Procurement Uv3548 can develop new processes and procedures in Communication 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.
Creating value in data economy
– The success of analytics program of Procurement Uv3548 has opened avenues for new revenue streams for the organization in the industry. This can help Procurement Uv3548 to build a more holistic ecosystem as suggested in the AES Corporation (A): Global Sourcing Initiative case study. Procurement Uv3548 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats AES Corporation (A): Global Sourcing Initiative External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AES Corporation (A): Global Sourcing Initiative 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 Procurement Uv3548 business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Procurement Uv3548 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. Procurement Uv3548 can take advantage of this fund but it will also bring new competitors in the Communication industry.
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 Procurement Uv3548.
Easy access to finance
– Easy access to finance in Communication field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Procurement Uv3548 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Procurement Uv3548 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.
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.
Technology acceleration in Forth Industrial Revolution
– Procurement Uv3548 has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Procurement Uv3548 needs to keep up with the evolution of technology in the Communication 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.
Shortening product life cycle
– it is one of the major threat that Procurement Uv3548 is facing in Communication 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, Procurement Uv3548 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 AES Corporation (A): Global Sourcing Initiative .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Procurement Uv3548 in the Communication industry. The Communication 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Procurement Uv3548 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Procurement Uv3548 in the Communication sector and impact the bottomline of the organization.
Increasing wage structure of Procurement Uv3548
– 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 Procurement Uv3548.
Weighted SWOT Analysis of AES Corporation (A): Global Sourcing Initiative 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 AES Corporation (A): Global Sourcing Initiative 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 AES Corporation (A): Global Sourcing Initiative 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 AES Corporation (A): Global Sourcing Initiative 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 AES Corporation (A): Global Sourcing Initiative 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 Procurement Uv3548 needs to make to build a sustainable competitive advantage.