Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring
In 1998, BAESA, PepsiCo's largest bottler and distributor outside North America, experienced severe financial difficulty and had to restructure its debt and business operations to avoid bankruptcy or liquidation. Based in Argentina, with operations throughout South America, the company had for years been a spectacular success story and media darling, until it undertook an ill-fated expansion in Brazil. The company's debt was owed to banks and financial institutions in South America, Asia, Europe, and the United States. In addition, the company had $60 million of publicly traded bonds, much of them held by U.S. investors. The restructuring was the largest and most complicated undertaking of its kind ever taken in South America. In addition to negotiating with its bankers and making a public exchange offer for its bonds, the company made a massive common stock rights offering to its shareholders, giving them the opportunity to purchase new stock in the company. It also considered filing a "prepackaged" Chapter 11 bankruptcy in the United States to pressure U.S. bondholders to go along with the plan. The negotiations were greatly complicated by differences in the bankruptcy laws of Argentina, Brazil, and the United States.
Swot Analysis of "Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring" written by Stuart C. Gilson, Gustavo A. Herrero includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Baesa South facing as an external strategic factors. Some of the topics covered in Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring case study are - Strategic Management Strategies, Financial management, Mergers & acquisitions, Reorganization and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, there is backlash against globalization, increasing commodity prices, technology disruption, wage bills are increasing, challanges to central banks by blockchain based private currencies,
there is increasing trade war between United States & China, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Baesa South, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Baesa South 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring can be done for the following purposes –
1. Strategic planning using facts provided in Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring case study
2. Improving business portfolio management of Baesa South
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 Baesa South
Strengths Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Baesa South in Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring Harvard Business Review case study are -
Analytics focus
– Baesa South 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 Stuart C. Gilson, Gustavo A. Herrero 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.
Low bargaining power of suppliers
– Suppliers of Baesa South in the sector have low bargaining power. Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Baesa South to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Baesa South
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Baesa South does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Baesa South is present in almost all the verticals within the industry. This has provided firm in Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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.
High brand equity
– Baesa South has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Baesa South to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Baesa South 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Baesa South digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Baesa South 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.
Innovation driven organization
– Baesa South is one of the most innovative firm in sector. Manager in Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Baesa South in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Baesa South has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Baesa South 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)
– Baesa South 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring, in the dynamic environment Baesa South has struggled to respond to the nimble upstart competition. Baesa South has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring HBR case study mentions - Baesa South 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 cash cycle compare to competitors
Baesa South 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.
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 Baesa South supply chain. Even after few cautionary changes mentioned in the HBR case study - Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Baesa South vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Baesa South has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring can leverage the sales team experience to cultivate customer relationships as Baesa South is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring, is just above the industry average. Baesa South 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.
Products dominated business model
– Even though Baesa South 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 - Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Baesa South 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. Baesa South 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Baesa South 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.
Interest costs
– Compare to the competition, Baesa South 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.
Opportunities Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring | 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring are -
Loyalty marketing
– Baesa South 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.
Buying journey improvements
– Baesa South can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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.
Better consumer reach
– The expansion of the 5G network will help Baesa South to increase its market reach. Baesa South 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.
Learning at scale
– Online learning technologies has now opened space for Baesa South 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.
Developing new processes and practices
– Baesa South 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.
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. Baesa South 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
– Baesa South 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Baesa South to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Baesa South 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. Baesa South 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.
Manufacturing automation
– Baesa South 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.
Building a culture of innovation
– managers at Baesa South 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Baesa South in the consumer business. Now Baesa South can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Baesa South can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Baesa South 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, Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring are -
Shortening product life cycle
– it is one of the major threat that Baesa South is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Baesa South.
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. Baesa South 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.
Regulatory challenges
– Baesa South 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.
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. Baesa South needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Consumer confidence and its impact on Baesa South 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Baesa South 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring .
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 Baesa South business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Baesa South 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.
Increasing wage structure of Baesa South
– 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 Baesa South.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Baesa South 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Baesa South with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Baesa South 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. Baesa South can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Buenos Aires Embotelladora S.A. (BAESA): A South American Restructuring 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 Baesa South needs to make to build a sustainable competitive advantage.