Case Study Description of Reforming Nigerian National Petroleum Corporation
Nigeria's oil industry was in decline. Nigerian crude was having trouble finding customers, fuel shortages plagued the domestic economy, and power plant outages were rising. NNPC had failed to develop one of the world's largest reserves of natural gas, Nigeria's four refineries were operating at a fraction of capacity, and the company was considered inefficient and corrupt. Many voices were now calling on President Muhammadu Buhari, newly elected in May 2015, to reform Nigerian National Petroleum Corporation (NNPC) or sell off the national treasure for an estimated $75 billion.
Swot Analysis of "Reforming Nigerian National Petroleum Corporation" written by Michael Moffett, Olufemi A. Babarinde includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nigerian Nnpc facing as an external strategic factors. Some of the topics covered in Reforming Nigerian National Petroleum Corporation case study are - Strategic Management Strategies, Ethics and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Reforming Nigerian National Petroleum Corporation casestudy better are - – technology disruption, geopolitical disruptions, increasing household debt because of falling income levels, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing energy prices,
cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Reforming Nigerian National Petroleum Corporation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Reforming Nigerian National Petroleum Corporation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nigerian Nnpc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nigerian Nnpc 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 Reforming Nigerian National Petroleum Corporation can be done for the following purposes –
1. Strategic planning using facts provided in Reforming Nigerian National Petroleum Corporation case study
2. Improving business portfolio management of Nigerian Nnpc
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 Nigerian Nnpc
Strengths Reforming Nigerian National Petroleum Corporation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nigerian Nnpc in Reforming Nigerian National Petroleum Corporation Harvard Business Review case study are -
High switching costs
– The high switching costs that Nigerian Nnpc 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Reforming Nigerian National Petroleum Corporation firm has clearly differentiated products in the market place. This has enabled Nigerian Nnpc to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Nigerian Nnpc to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Nigerian Nnpc 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.
Successful track record of launching new products
– Nigerian Nnpc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nigerian Nnpc 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.
Low bargaining power of suppliers
– Suppliers of Nigerian Nnpc in the sector have low bargaining power. Reforming Nigerian National Petroleum Corporation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nigerian Nnpc to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Nigerian Nnpc is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Nigerian Nnpc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nigerian Nnpc 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.
Superior customer experience
– The customer experience strategy of Nigerian Nnpc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Nigerian Nnpc is present in almost all the verticals within the industry. This has provided firm in Reforming Nigerian National Petroleum Corporation 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.
Training and development
– Nigerian Nnpc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Reforming Nigerian National Petroleum Corporation 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.
Organizational Resilience of Nigerian Nnpc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nigerian Nnpc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Nigerian Nnpc 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 Reforming Nigerian National Petroleum Corporation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Reforming Nigerian National Petroleum Corporation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reforming Nigerian National Petroleum Corporation are -
Capital Spending Reduction
– Even during the low interest decade, Nigerian Nnpc 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.
Lack of clear differentiation of Nigerian Nnpc products
– To increase the profitability and margins on the products, Nigerian Nnpc needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Reforming Nigerian National Petroleum Corporation HBR case study mentions - Nigerian Nnpc 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 Nigerian Nnpc, firm in the HBR case study Reforming Nigerian National Petroleum Corporation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Reforming Nigerian National Petroleum Corporation, it seems that the employees of Nigerian Nnpc 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.
High cash cycle compare to competitors
Nigerian Nnpc 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Reforming Nigerian National Petroleum Corporation 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 Nigerian Nnpc has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Nigerian Nnpc has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Reforming Nigerian National Petroleum Corporation 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 Reforming Nigerian National Petroleum Corporation can leverage the sales team experience to cultivate customer relationships as Nigerian Nnpc is planning to shift buying processes online.
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 Nigerian Nnpc supply chain. Even after few cautionary changes mentioned in the HBR case study - Reforming Nigerian National Petroleum Corporation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nigerian Nnpc vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Reforming Nigerian National Petroleum Corporation, in the dynamic environment Nigerian Nnpc has struggled to respond to the nimble upstart competition. Nigerian Nnpc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Reforming Nigerian National Petroleum Corporation | 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 Reforming Nigerian National Petroleum Corporation are -
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. Nigerian Nnpc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Nigerian Nnpc 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.
Learning at scale
– Online learning technologies has now opened space for Nigerian Nnpc 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.
Loyalty marketing
– Nigerian Nnpc 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.
Manufacturing automation
– Nigerian Nnpc 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nigerian Nnpc 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 Nigerian Nnpc to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nigerian Nnpc can use these opportunities to build new business models that can help the communities that Nigerian Nnpc operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nigerian Nnpc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Nigerian Nnpc 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 Reforming Nigerian National Petroleum Corporation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nigerian Nnpc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Nigerian Nnpc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Nigerian Nnpc 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.
Buying journey improvements
– Nigerian Nnpc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Reforming Nigerian National Petroleum Corporation 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.
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 Nigerian Nnpc 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.
Threats Reforming Nigerian National Petroleum Corporation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Reforming Nigerian National Petroleum Corporation are -
Technology acceleration in Forth Industrial Revolution
– Nigerian Nnpc has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Nigerian Nnpc 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.
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. Nigerian Nnpc needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Nigerian Nnpc 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.
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 Nigerian Nnpc in the Leadership & Managing People sector and impact the bottomline of the organization.
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 Nigerian Nnpc business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Nigerian Nnpc 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. Nigerian Nnpc can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Shortening product life cycle
– it is one of the major threat that Nigerian Nnpc is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Nigerian Nnpc 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nigerian Nnpc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Nigerian Nnpc 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.
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. Nigerian Nnpc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Nigerian Nnpc.
Weighted SWOT Analysis of Reforming Nigerian National Petroleum Corporation 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 Reforming Nigerian National Petroleum Corporation 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 Reforming Nigerian National Petroleum Corporation 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 Reforming Nigerian National Petroleum Corporation 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 Reforming Nigerian National Petroleum Corporation 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 Nigerian Nnpc needs to make to build a sustainable competitive advantage.
