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 - – central banks are concerned over increasing inflation, increasing energy prices, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, talent flight as more people leaving formal jobs,
technology disruption, 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 -
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.
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.
Sustainable margins compare to other players in Finance & Accounting industry
– Bangkok's Second Stage Expressway firm has clearly differentiated products in the market place. This has enabled Expressway Kumagai to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Expressway Kumagai to invest into research and development (R&D) and innovation.
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.
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.
Diverse revenue streams
– Expressway Kumagai is present in almost all the verticals within the industry. This has provided firm in Bangkok's Second Stage Expressway 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.
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.
Operational resilience
– The operational resilience strategy in the Bangkok's Second Stage Expressway 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.
High switching costs
– The high switching costs that Expressway Kumagai 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.
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.
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 -
High bargaining power of channel partners
– Because of the regulatory requirements, Jose Gomez-Ibanez suggests that, Expressway Kumagai 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.
Low market penetration in new markets
– Outside its home market of Expressway Kumagai, firm in the HBR case study Bangkok's Second Stage Expressway needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bangkok's Second Stage Expressway 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 Expressway Kumagai has relatively successful track record of launching new products.
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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Expressway Kumagai 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. Expressway Kumagai 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.
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.
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 -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Expressway Kumagai is facing challenges because of the dominance of functional experts in the organization. Bangkok's Second Stage Expressway 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Expressway Kumagai can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Expressway Kumagai 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. Expressway Kumagai 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Expressway Kumagai 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 Expressway Kumagai to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
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.
Developing new processes and practices
– Expressway Kumagai can develop new processes and procedures in Finance & Accounting 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.
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 -
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.
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Expressway Kumagai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
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 Expressway Kumagai business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Expressway Kumagai
– 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 Expressway Kumagai.
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.
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 .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Expressway Kumagai 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.
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.
