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 - – wage bills are increasing, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, geopolitical disruptions,
technology disruption, 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 -
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.
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.
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.
Analytics focus
– Nigerian Nnpc 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 Michael Moffett, Olufemi A. Babarinde 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.
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.
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.
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.
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.
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.
Learning organization
- Nigerian Nnpc 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 Nigerian Nnpc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Reforming Nigerian National Petroleum Corporation Harvard Business Review case study emphasize – knowledge, initiative, 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.
Operational resilience
– The operational resilience strategy in the Reforming Nigerian National Petroleum Corporation 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.
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 -
High operating costs
– Compare to the competitors, firm in the HBR case study Reforming Nigerian National Petroleum Corporation 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 Nigerian Nnpc 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Nigerian Nnpc needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow decision making process
– As mentioned earlier in the report, Nigerian Nnpc 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. Nigerian Nnpc even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Moffett, Olufemi A. Babarinde suggests that, Nigerian Nnpc 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 Reforming Nigerian National Petroleum Corporation, 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.
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.
Products dominated business model
– Even though Nigerian Nnpc 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 - Reforming Nigerian National Petroleum Corporation should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Reforming Nigerian National Petroleum Corporation, is just above the industry average. Nigerian Nnpc 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 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 -
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nigerian Nnpc is facing challenges because of the dominance of functional experts in the organization. Reforming Nigerian National Petroleum Corporation 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, Nigerian Nnpc 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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Nigerian Nnpc to increase its market reach. Nigerian Nnpc 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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nigerian Nnpc 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, Reforming Nigerian National Petroleum Corporation, 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 Nigerian Nnpc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 -
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.
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.
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.
Consumer confidence and its impact on Nigerian Nnpc 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.
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.
Increasing wage structure of Nigerian Nnpc
– 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 Nigerian Nnpc.
Regulatory challenges
– Nigerian Nnpc needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nigerian Nnpc 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 Reforming Nigerian National Petroleum Corporation .
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Reforming Nigerian National Petroleum Corporation, Nigerian Nnpc 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 .
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.