Ayala Corporation: One Family's Contribution to Nation Building SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ayala Corporation: One Family's Contribution to Nation Building
MAY 21, 2014, MANILA. For the first time, the World Economic Forum (WEF) had come to the Philippines. Ayala Corporation, one of the nation's oldest and most successful conglomerates, hosted an evening reception that brought together the "Who's Who" of the Philippines. Jaime Augusto and Fernando Zobel de Ayala, the seventh generation chairman and president, respectively, of the Ayala Corporation, were inspiring and natural ambassadors, promoting the Philippines as an up-and-coming market to global investors and potential business partners, investing time and effort in nation-building activities. Just after the East Asia Forum, Ayala's biannual executive strategy meeting was held, with some eighth generation family members attending for the first time. Among the topics discussed were how to strategically allocate resources to grow the corporation inside and/or beyond the Philippines and how to venture beyond the traditional business models. The next generation had to consider fundamental questions. What were the keys to Ayala's success over the past 180 years? Would they still be relevant in the future? Would inclusion and nation building continue to serve as reliable pillars for the business? Finally, how should they best prepare themselves to become the next generation of responsible stewards?
Swot Analysis of "Ayala Corporation: One Family's Contribution to Nation Building" written by Benoit Leleux, Anne Catrin Glemser includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ayala Philippines facing as an external strategic factors. Some of the topics covered in Ayala Corporation: One Family's Contribution to Nation Building case study are - Strategic Management Strategies, Emerging markets, Entrepreneurship, Generational issues, Succession planning, Sustainability and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Ayala Corporation: One Family's Contribution to Nation Building casestudy better are - – talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, there is backlash against globalization,
increasing energy prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Ayala Corporation: One Family's Contribution to Nation Building
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ayala Corporation: One Family's Contribution to Nation Building case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ayala Philippines, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ayala Philippines 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 Ayala Corporation: One Family's Contribution to Nation Building can be done for the following purposes –
1. Strategic planning using facts provided in Ayala Corporation: One Family's Contribution to Nation Building case study
2. Improving business portfolio management of Ayala Philippines
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 Ayala Philippines
Strengths Ayala Corporation: One Family's Contribution to Nation Building | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ayala Philippines in Ayala Corporation: One Family's Contribution to Nation Building Harvard Business Review case study are -
Strong track record of project management
– Ayala Philippines is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Ayala Philippines 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 Ayala Corporation: One Family's Contribution to Nation Building - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Ayala Philippines is one of the leading recruiters in the industry. Managers in the Ayala Corporation: One Family's Contribution to Nation Building are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Ayala Philippines is one of the most innovative firm in sector. Manager in Ayala Corporation: One Family's Contribution to Nation Building Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Leadership & Managing People industry
– Ayala Corporation: One Family's Contribution to Nation Building firm has clearly differentiated products in the market place. This has enabled Ayala Philippines to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Ayala Philippines to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Ayala Philippines in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Leadership & Managing People field
– Ayala Philippines 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 Ayala Philippines in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Ayala Philippines in the sector have low bargaining power. Ayala Corporation: One Family's Contribution to Nation Building has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ayala Philippines to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Ayala Philippines is present in almost all the verticals within the industry. This has provided firm in Ayala Corporation: One Family's Contribution to Nation Building 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.
Cross disciplinary teams
– Horizontal connected teams at the Ayala Philippines 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.
Training and development
– Ayala Philippines has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ayala Corporation: One Family's Contribution to Nation Building 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.
Analytics focus
– Ayala Philippines 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 Benoit Leleux, Anne Catrin Glemser 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.
Weaknesses Ayala Corporation: One Family's Contribution to Nation Building | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ayala Corporation: One Family's Contribution to Nation Building are -
Capital Spending Reduction
– Even during the low interest decade, Ayala Philippines has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ayala Philippines is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ayala Corporation: One Family's Contribution to Nation Building can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Ayala Corporation: One Family's Contribution to Nation Building, 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ayala Corporation: One Family's Contribution to Nation Building, in the dynamic environment Ayala Philippines has struggled to respond to the nimble upstart competition. Ayala Philippines has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Ayala Philippines 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 - Ayala Corporation: One Family's Contribution to Nation Building should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Philippines 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Corporation: One Family's Contribution to Nation Building can leverage the sales team experience to cultivate customer relationships as Ayala Philippines is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Ayala Philippines is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Ayala Philippines needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ayala Philippines to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Philippines has relatively successful track record of launching new products.
Lack of clear differentiation of Ayala Philippines products
– To increase the profitability and margins on the products, Ayala Philippines needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ayala Corporation: One Family's Contribution to Nation Building, is just above the industry average. Ayala Philippines 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.
Opportunities Ayala Corporation: One Family's Contribution to Nation Building | 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 Ayala Corporation: One Family's Contribution to Nation Building are -
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. Ayala Philippines can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Ayala Philippines has opened avenues for new revenue streams for the organization in the industry. This can help Ayala Philippines to build a more holistic ecosystem as suggested in the Ayala Corporation: One Family's Contribution to Nation Building case study. Ayala Philippines can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Ayala Philippines 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ayala Philippines is facing challenges because of the dominance of functional experts in the organization. Ayala Corporation: One Family's Contribution to Nation Building 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ayala Philippines 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.
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 Ayala Philippines in the consumer business. Now Ayala Philippines can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Ayala Philippines 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ayala Philippines to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ayala Philippines 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 Ayala Philippines to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Ayala Philippines 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ayala Philippines 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, Ayala Corporation: One Family's Contribution to Nation Building, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ayala Philippines can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Ayala Philippines can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ayala Corporation: One Family's Contribution to Nation Building 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.
Threats Ayala Corporation: One Family's Contribution to Nation Building External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ayala Corporation: One Family's Contribution to Nation Building are -
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. Ayala Philippines 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 Ayala Philippines
– 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 Ayala Philippines.
Consumer confidence and its impact on Ayala Philippines 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.
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. Ayala Philippines can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Ayala Philippines is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Ayala Philippines 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. Ayala Philippines can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Ayala Philippines 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.
Technology acceleration in Forth Industrial Revolution
– Ayala Philippines has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Ayala Philippines 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.
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 Ayala Philippines business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Ayala Philippines 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.
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 Ayala Philippines.
Weighted SWOT Analysis of Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Corporation: One Family's Contribution to Nation Building 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 Ayala Philippines needs to make to build a sustainable competitive advantage.
