FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B)
Grupo Ferrovial from Spain acquired BAA PLC, the UK airport operator, in June 2006 following one of the most interesting battles for control in recent years in Europe.BAA was an extremely successful and profitable company, managing Heathrow and Gatwick airports in London, among others.The A case, Financial Strategy at BAA PLC, discusses the structure of the target company and specifically its capital structure. BAA's asset base was very stable, low risk and very well protected from competition. The firm had been generating substantial cash flows over the past few years and had completed some acquisitions at home and abroad. Yet, it was underleveraged, not only according to the simple capital structure theory but also compared to its peers. Therefore, Grupo Ferrovial (and Goldman Sachs, which was competing to acquire BAA) found a great value opportunity by leveraging up BAA's assets. The B case, Ferrovial Conquers the UK, guides us through the acquisition process and in particular through the financing aspects of the deal. The BAA-Ferrovial Acquisition received the Finance Package of the Year Award by Acquisitions Monthly Magazine. The deal was the largest infrastructure acquisition financing ever undertaken in the debt markets; it contained the largest second lien tranche ever, which maximized liquidity, tapping interest among both banks and fund investors; and had a groundbreaking structure designed potentially to survive a whole-business securitization. Learning objectives: The case can be used with a broad range of audiences and provides opportunities to discuss the basics of capital structure and financial policy; to describe the functioning of debt markets; to follow a complex acquisition that went from hostile to friendly; to discuss syndication in the credit markets; and to analyze the challenges that CFOs face in order to balance the threat of acquisitions with the need for a conservative capital structure. It can be used in a basic finance course to introduce capital structure and debt financing. It can also be used with finance teams and with executives in general as a way to discuss the complex terms of the transaction.
Swot Analysis of "FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B)" written by Arturo Bris, Sophie Coughlan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ferrovial Baa facing as an external strategic factors. Some of the topics covered in FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) case study are - Strategic Management Strategies, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) casestudy better are - – wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing commodity prices, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google,
there is backlash against globalization, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ferrovial Baa, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ferrovial Baa 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) can be done for the following purposes –
1. Strategic planning using facts provided in FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) case study
2. Improving business portfolio management of Ferrovial Baa
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 Ferrovial Baa
Strengths FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ferrovial Baa in FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Ferrovial Baa 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.
Organizational Resilience of Ferrovial Baa
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ferrovial Baa does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Ferrovial Baa is one of the most innovative firm in sector. Manager in FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) 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
– FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) firm has clearly differentiated products in the market place. This has enabled Ferrovial Baa to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Ferrovial Baa to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Ferrovial Baa is one of the leading recruiters in the industry. Managers in the FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Ferrovial Baa in the sector have low bargaining power. FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ferrovial Baa to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Ferrovial Baa 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 Ferrovial Baa is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Ferrovial Baa is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Ferrovial Baa has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ferrovial Baa 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.
Superior customer experience
– The customer experience strategy of Ferrovial Baa 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
– Ferrovial Baa 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 Ferrovial Baa in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Ferrovial Baa has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ferrovial Baa is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Ferrovial Baa 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 to strategic competitive environment developments
– As FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) HBR case study mentions - Ferrovial Baa 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.
No frontier risks strategy
– After analyzing the HBR case study FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B), 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.
Capital Spending Reduction
– Even during the low interest decade, Ferrovial Baa 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 decision making process
– As mentioned earlier in the report, Ferrovial Baa 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. Ferrovial Baa 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.
Skills based hiring
– The stress on hiring functional specialists at Ferrovial Baa 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.
Interest costs
– Compare to the competition, Ferrovial Baa 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.
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 Ferrovial Baa supply chain. Even after few cautionary changes mentioned in the HBR case study - FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ferrovial Baa vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Ferrovial Baa, firm in the HBR case study FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B), is just above the industry average. Ferrovial Baa 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) | 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) are -
Loyalty marketing
– Ferrovial Baa 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 Ferrovial Baa 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.
Leveraging digital technologies
– Ferrovial Baa 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ferrovial Baa 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. Ferrovial Baa can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Ferrovial Baa 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ferrovial Baa to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ferrovial Baa 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, FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Ferrovial Baa 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
– Ferrovial Baa 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.
Creating value in data economy
– The success of analytics program of Ferrovial Baa has opened avenues for new revenue streams for the organization in the industry. This can help Ferrovial Baa to build a more holistic ecosystem as suggested in the FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) case study. Ferrovial Baa can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Ferrovial Baa 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ferrovial Baa can use these opportunities to build new business models that can help the communities that Ferrovial Baa 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. Ferrovial Baa 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. Ferrovial Baa 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.
Threats FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) are -
Stagnating economy with rate increase
– Ferrovial Baa 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 acceleration in Forth Industrial Revolution
– Ferrovial Baa has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Ferrovial Baa 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ferrovial Baa 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.
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 Ferrovial Baa.
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. Ferrovial Baa can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ferrovial Baa 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B), Ferrovial Baa 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 .
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.
Shortening product life cycle
– it is one of the major threat that Ferrovial Baa is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ferrovial Baa with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ferrovial Baa in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Ferrovial Baa 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.
Weighted SWOT Analysis of FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) 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 FERROVIAL CONQUERS THE UK: FOLLOWING IN THE STEPS OF PHILIP II (B) 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 Ferrovial Baa needs to make to build a sustainable competitive advantage.
