Case Study Description of Bangkok's Second Stage Expressway
This transport privatization case describes the political complications that can accompany a privately-funded infrastructure project. The case tells the story of a Japanese construction firm and its relationship with the government of Thailand. The firm, Kumagai Gumi, is invited to build US$1 billion, 20-kilometer expressway in Bangkok, and to operate it as a toll road, under a 30-year concession contract. But a 1995 contract dispute prompts the Thai government to force Kumagai Gum first to open the road but then to sell it to Thai investors. The case allows for discussion of both a technical and political nature, focusing on the details of the contracting arrangement but also raising the question of domestic political dimensions in public projects involving non-domestic private investors. HKS Case Number 1401.0
Swot Analysis of "Bangkok's Second Stage Expressway" written by Jose Gomez-Ibanez includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Expressway Kumagai facing as an external strategic factors. Some of the topics covered in Bangkok's Second Stage Expressway case study are - Strategic Management Strategies, Entrepreneurship, Financial management, International business, Joint ventures, Operations management, Project management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Bangkok's Second Stage Expressway casestudy better are - – geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, technology disruption, there is increasing trade war between United States & China,
wage bills are increasing, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Bangkok's Second Stage Expressway
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bangkok's Second Stage Expressway case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Expressway Kumagai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Expressway Kumagai 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 Bangkok's Second Stage Expressway can be done for the following purposes –
1. Strategic planning using facts provided in Bangkok's Second Stage Expressway case study
2. Improving business portfolio management of Expressway Kumagai
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Expressway Kumagai
Strengths Bangkok's Second Stage Expressway | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Expressway Kumagai in Bangkok's Second Stage Expressway Harvard Business Review case study are -
Learning organization
- Expressway Kumagai 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 Expressway Kumagai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bangkok's Second Stage Expressway Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Expressway Kumagai is one of the most innovative firm in sector. Manager in Bangkok's Second Stage Expressway Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Expressway Kumagai in the sector have low bargaining power. Bangkok's Second Stage Expressway has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Expressway Kumagai to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Expressway Kumagai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Expressway Kumagai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Expressway Kumagai 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 Expressway Kumagai in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Expressway Kumagai is one of the leading recruiters in the industry. Managers in the Bangkok's Second Stage Expressway are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Expressway Kumagai digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Expressway Kumagai 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.
Successful track record of launching new products
– Expressway Kumagai has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Expressway Kumagai 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.
Effective Research and Development (R&D)
– Expressway Kumagai 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 Bangkok's Second Stage Expressway - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Expressway Kumagai 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 Jose Gomez-Ibanez 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.
Highly skilled collaborators
– Expressway Kumagai 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 Bangkok's Second Stage Expressway HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Expressway Kumagai is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Bangkok's Second Stage Expressway | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bangkok's Second Stage Expressway are -
Workers concerns about automation
– As automation is fast increasing in the segment, Expressway Kumagai 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 Bangkok's Second Stage Expressway HBR case study mentions - Expressway Kumagai 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.
Need for greater diversity
– Expressway Kumagai has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bangkok's Second Stage Expressway, it seems that the employees of Expressway Kumagai 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Bangkok's Second Stage Expressway, in the dynamic environment Expressway Kumagai has struggled to respond to the nimble upstart competition. Expressway Kumagai has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Expressway Kumagai is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Expressway Kumagai needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Expressway Kumagai to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Expressway Kumagai 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 - Bangkok's Second Stage Expressway should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Expressway Kumagai 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.
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 Expressway Kumagai supply chain. Even after few cautionary changes mentioned in the HBR case study - Bangkok's Second Stage Expressway, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Expressway Kumagai vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Expressway Kumagai 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.
Lack of clear differentiation of Expressway Kumagai products
– To increase the profitability and margins on the products, Expressway Kumagai needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Bangkok's Second Stage Expressway | 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 Bangkok's Second Stage Expressway are -
Loyalty marketing
– Expressway Kumagai 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 Expressway Kumagai 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.
Using analytics as competitive advantage
– Expressway Kumagai 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 Bangkok's Second Stage Expressway - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Expressway Kumagai to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Expressway Kumagai in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Expressway Kumagai 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.
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. Expressway Kumagai can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Expressway Kumagai can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bangkok's Second Stage Expressway 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Expressway Kumagai can use these opportunities to build new business models that can help the communities that Expressway Kumagai operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Building a culture of innovation
– managers at Expressway Kumagai 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 Finance & Accounting segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Expressway Kumagai 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.
Learning at scale
– Online learning technologies has now opened space for Expressway Kumagai 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Expressway Kumagai 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 Expressway Kumagai to increase its market reach. Expressway Kumagai 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.
Threats Bangkok's Second Stage Expressway External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bangkok's Second Stage Expressway are -
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.
Environmental challenges
– Expressway Kumagai 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. Expressway Kumagai can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Stagnating economy with rate increase
– Expressway Kumagai 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Expressway Kumagai in the Finance & Accounting industry. The Finance & Accounting 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.
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. Expressway Kumagai needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Bangkok's Second Stage Expressway, Expressway Kumagai may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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 Expressway Kumagai.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Expressway Kumagai with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Expressway Kumagai 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 Bangkok's Second Stage Expressway .
Consumer confidence and its impact on Expressway Kumagai 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.
Technology acceleration in Forth Industrial Revolution
– Expressway Kumagai has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Expressway Kumagai needs to keep up with the evolution of technology in the Finance & Accounting 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.
Regulatory challenges
– Expressway Kumagai 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 Finance & Accounting industry regulations.
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.
Weighted SWOT Analysis of Bangkok's Second Stage Expressway 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 Bangkok's Second Stage Expressway 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 Bangkok's Second Stage Expressway 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 Bangkok's Second Stage Expressway 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 Bangkok's Second Stage Expressway 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 Expressway Kumagai needs to make to build a sustainable competitive advantage.