Case Study Description of Parker Petroleum in Crisis
Parker Petroleum's board has given a special task force 24 hours to come up with solutions to trouble on several fronts. Plans for investing $4 billion in a new petroleum refinery in Jumandia are at risk after local residents rioted, alleging environmental damage. Political pressure is also heating up after Jumandia's opposition candidate claimed Parker's CEO was complicit in a $5 million bribe paid to the country's current regime. At the same time, an activist hedge fund has bought 15% of Parker's stock and is pressuring the company to exit its Jumandian investments. In this case students take on the special task force's challenge to make recommendations on how the board should deal with the crises.
Swot Analysis of "Parker Petroleum in Crisis" written by David Beim includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Parker's Parker facing as an external strategic factors. Some of the topics covered in Parker Petroleum in Crisis case study are - Strategic Management Strategies, Corporate communications, Ethics, Mergers & acquisitions, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Parker Petroleum in Crisis casestudy better are - – central banks are concerned over increasing inflation, there is backlash against globalization, increasing commodity prices, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing transportation and logistics costs,
geopolitical disruptions, increasing energy prices, etc
Introduction to SWOT Analysis of Parker Petroleum in Crisis
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Parker Petroleum in Crisis case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Parker's Parker, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Parker's Parker 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 Parker Petroleum in Crisis can be done for the following purposes –
1. Strategic planning using facts provided in Parker Petroleum in Crisis case study
2. Improving business portfolio management of Parker's Parker
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 Parker's Parker
Strengths Parker Petroleum in Crisis | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Parker's Parker in Parker Petroleum in Crisis Harvard Business Review case study are -
Diverse revenue streams
– Parker's Parker is present in almost all the verticals within the industry. This has provided firm in Parker Petroleum in Crisis case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Leadership & Managing People field
– Parker's Parker 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 Parker's Parker in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Parker's Parker is one of the most innovative firm in sector. Manager in Parker Petroleum in Crisis Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Parker's Parker digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Parker's Parker 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.
Training and development
– Parker's Parker has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Parker Petroleum in Crisis 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.
Operational resilience
– The operational resilience strategy in the Parker Petroleum in Crisis 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.
Low bargaining power of suppliers
– Suppliers of Parker's Parker in the sector have low bargaining power. Parker Petroleum in Crisis has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Parker's Parker to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Parker's Parker 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 Parker's Parker is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Parker Petroleum in Crisis Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Parker's Parker has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Parker's Parker to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Parker's Parker
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Parker's Parker does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Leadership & Managing People industry
– Parker Petroleum in Crisis firm has clearly differentiated products in the market place. This has enabled Parker's Parker to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Parker's Parker to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Parker's Parker is one of the leading recruiters in the industry. Managers in the Parker Petroleum in Crisis are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Parker Petroleum in Crisis | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Parker Petroleum in Crisis are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Parker Petroleum in Crisis, is just above the industry average. Parker's Parker 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.
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 Parker's Parker supply chain. Even after few cautionary changes mentioned in the HBR case study - Parker Petroleum in Crisis, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Parker's Parker vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Parker's Parker 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.
Increasing silos among functional specialists
– The organizational structure of Parker's Parker is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Parker's Parker needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Parker's Parker to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Parker's Parker is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Parker Petroleum in Crisis can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Parker Petroleum in Crisis HBR case study mentions - Parker's Parker 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Parker Petroleum in Crisis 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 Parker's Parker has relatively successful track record of launching new products.
Lack of clear differentiation of Parker's Parker products
– To increase the profitability and margins on the products, Parker's Parker needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, David Beim suggests that, Parker's Parker 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.
Products dominated business model
– Even though Parker's Parker 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 - Parker Petroleum in Crisis should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Parker's Parker 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.
Opportunities Parker Petroleum in Crisis | 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 Parker Petroleum in Crisis are -
Manufacturing automation
– Parker's Parker can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Better consumer reach
– The expansion of the 5G network will help Parker's Parker to increase its market reach. Parker's Parker 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Parker's Parker can use these opportunities to build new business models that can help the communities that Parker's Parker operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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. Parker's Parker 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. Parker's Parker 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.
Loyalty marketing
– Parker's Parker 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.
Building a culture of innovation
– managers at Parker's Parker 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.
Learning at scale
– Online learning technologies has now opened space for Parker's Parker 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Parker's Parker 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 Leadership & Managing People industry, but it has also influenced the consumer preferences. Parker's Parker can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Parker's Parker 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 Parker's Parker to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Parker's Parker has opened avenues for new revenue streams for the organization in the industry. This can help Parker's Parker to build a more holistic ecosystem as suggested in the Parker Petroleum in Crisis case study. Parker's Parker can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Parker's Parker is facing challenges because of the dominance of functional experts in the organization. Parker Petroleum in Crisis 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
– Parker's Parker 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 Parker Petroleum in Crisis - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Parker's Parker to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Parker Petroleum in Crisis External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Parker Petroleum in Crisis are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Parker Petroleum in Crisis, Parker's Parker 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Parker's Parker with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Parker's Parker 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. Parker's Parker can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Parker's Parker 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.
Stagnating economy with rate increase
– Parker's Parker 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.
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.
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. Parker's Parker needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing wage structure of Parker's Parker
– 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 Parker's Parker.
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 Parker's Parker.
Technology acceleration in Forth Industrial Revolution
– Parker's Parker has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Parker's Parker needs to keep up with the evolution of technology in the Leadership & Managing People 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.
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 Parker's Parker in the Leadership & Managing People sector and impact the bottomline of the organization.
Consumer confidence and its impact on Parker's Parker 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.
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.
Weighted SWOT Analysis of Parker Petroleum in Crisis 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 Parker Petroleum in Crisis 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 Parker Petroleum in Crisis 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 Parker Petroleum in Crisis 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 Parker Petroleum in Crisis 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 Parker's Parker needs to make to build a sustainable competitive advantage.
