Case Study Description of GM and Cerberus: Unusual Partners
This case explores how and why GM became a major user of private equity and hedge fund capital, as well as the risks and rewards of these new relationships. The Cerberus transaction, audacious in both its size and complexity, is explored in detail. What were the alternatives for GM, and what risks and opportunities lay ahead for both parties? This case investigates the benefits, disadvantages, and potential conflicts of interest that evolved as GM's many suppliers increasingly embraced low-cost, nontraditional financing from hedge funds.
Swot Analysis of "GM and Cerberus: Unusual Partners" written by David P. Stowell, Jeremy Hartman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gm Cerberus facing as an external strategic factors. Some of the topics covered in GM and Cerberus: Unusual Partners case study are - Strategic Management Strategies, Financial management, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the GM and Cerberus: Unusual Partners casestudy better are - – increasing commodity prices, increasing household debt because of falling income levels, geopolitical disruptions, talent flight as more people leaving formal jobs, wage bills are increasing, increasing energy prices, there is increasing trade war between United States & China,
there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of GM and Cerberus: Unusual Partners
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GM and Cerberus: Unusual Partners case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gm Cerberus, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gm Cerberus 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 GM and Cerberus: Unusual Partners can be done for the following purposes –
1. Strategic planning using facts provided in GM and Cerberus: Unusual Partners case study
2. Improving business portfolio management of Gm Cerberus
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 Gm Cerberus
Strengths GM and Cerberus: Unusual Partners | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gm Cerberus in GM and Cerberus: Unusual Partners Harvard Business Review case study are -
Ability to recruit top talent
– Gm Cerberus is one of the leading recruiters in the industry. Managers in the GM and Cerberus: Unusual Partners are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Gm Cerberus 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 GM and Cerberus: Unusual Partners - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Gm Cerberus in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Gm Cerberus digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gm Cerberus 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.
Sustainable margins compare to other players in Finance & Accounting industry
– GM and Cerberus: Unusual Partners firm has clearly differentiated products in the market place. This has enabled Gm Cerberus to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Gm Cerberus to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Gm Cerberus has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gm Cerberus 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.
High brand equity
– Gm Cerberus has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gm Cerberus to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Gm Cerberus is one of the most innovative firm in sector. Manager in GM and Cerberus: Unusual Partners Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Gm Cerberus has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in GM and Cerberus: Unusual Partners 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.
Operational resilience
– The operational resilience strategy in the GM and Cerberus: Unusual Partners 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.
Learning organization
- Gm Cerberus 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 Gm Cerberus is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in GM and Cerberus: Unusual Partners Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Gm Cerberus in the sector have low bargaining power. GM and Cerberus: Unusual Partners has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Gm Cerberus to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses GM and Cerberus: Unusual Partners | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GM and Cerberus: Unusual Partners are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study GM and Cerberus: Unusual Partners, is just above the industry average. Gm Cerberus 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.
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 Gm Cerberus supply chain. Even after few cautionary changes mentioned in the HBR case study - GM and Cerberus: Unusual Partners, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Gm Cerberus vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study GM and Cerberus: Unusual Partners, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Increasing silos among functional specialists
– The organizational structure of Gm Cerberus is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Gm Cerberus needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Gm Cerberus to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study GM and Cerberus: Unusual Partners, in the dynamic environment Gm Cerberus has struggled to respond to the nimble upstart competition. Gm Cerberus has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study GM and Cerberus: Unusual Partners 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 GM and Cerberus: Unusual Partners can leverage the sales team experience to cultivate customer relationships as Gm Cerberus is planning to shift buying processes online.
Products dominated business model
– Even though Gm Cerberus 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 - GM and Cerberus: Unusual Partners should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Gm Cerberus has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Gm Cerberus 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. Gm Cerberus 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.
Need for greater diversity
– Gm Cerberus 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.
Capital Spending Reduction
– Even during the low interest decade, Gm Cerberus 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 GM and Cerberus: Unusual Partners | 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 GM and Cerberus: Unusual Partners are -
Loyalty marketing
– Gm Cerberus has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Gm Cerberus can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
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. Gm Cerberus can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Gm Cerberus can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. GM and Cerberus: Unusual Partners suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Gm Cerberus 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.
Building a culture of innovation
– managers at Gm Cerberus 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, Gm Cerberus 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Gm Cerberus 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.
Creating value in data economy
– The success of analytics program of Gm Cerberus has opened avenues for new revenue streams for the organization in the industry. This can help Gm Cerberus to build a more holistic ecosystem as suggested in the GM and Cerberus: Unusual Partners case study. Gm Cerberus can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Gm Cerberus 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 GM and Cerberus: Unusual Partners - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Gm Cerberus to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Gm Cerberus 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.
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. Gm Cerberus 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. Gm Cerberus 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.
Leveraging digital technologies
– Gm Cerberus 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.
Threats GM and Cerberus: Unusual Partners External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GM and Cerberus: Unusual Partners are -
Shortening product life cycle
– it is one of the major threat that Gm Cerberus is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Gm Cerberus 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. Gm Cerberus can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Gm Cerberus needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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. Gm Cerberus 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gm Cerberus 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.
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 Gm Cerberus in the Finance & Accounting sector and impact the bottomline 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 GM and Cerberus: Unusual Partners, Gm Cerberus 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 .
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.
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.
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 Gm Cerberus.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Gm Cerberus 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 GM and Cerberus: Unusual Partners .
Regulatory challenges
– Gm Cerberus 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.
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 Gm Cerberus business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of GM and Cerberus: Unusual Partners 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 GM and Cerberus: Unusual Partners 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 GM and Cerberus: Unusual Partners 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 GM and Cerberus: Unusual Partners 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 GM and Cerberus: Unusual Partners 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 Gm Cerberus needs to make to build a sustainable competitive advantage.
