Indian Oil Corporation: Vertical Specialization to Vertical Integration SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Indian Oil Corporation: Vertical Specialization to Vertical Integration
Indian Oil Corporation Limited was a large public sector company operating in the downstream segment of the highly regulated oil and natural gas industry in India. It made large investments in the segment-specific assets in refining and distributing petroleum products. In fiscal year 2014/15, the annual turnover of Indian Oil Corporation Limited was a??4,507 billion (US$73.7 billion), and its net profit was a??52 billion. The strategic positioning of the company was heavily influenced by its social agenda and supported by the Indian government. After the liberalization of the Indian economy, the company was faced with serious competition from the private sector, and had limited access to the upstream segment. In 2015, Indian Oil Corporation Limited attempted to vertically integrate in order to become an integrated energy company. The senior management team evaluated the challenges and strategic choices available to Indian Oil Corporation Limited in terms of integration and exploration, brownfield investment in the petrochemicals sector, and modernization of refineries. The key question before the team was how to distribute Indian Oil Corporation Limited's resources among these three strategic choices. Sushil Kumar is affiliated with Indian Institute of Management Raipur. Satyasiba Das is affiliated with Indian Institute of Management Raipur.
Swot Analysis of "Indian Oil Corporation: Vertical Specialization to Vertical Integration" written by Sushil Kumar, Satyasiba Das includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Indian Oil facing as an external strategic factors. Some of the topics covered in Indian Oil Corporation: Vertical Specialization to Vertical Integration case study are - Strategic Management Strategies, Mergers & acquisitions and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Indian Oil Corporation: Vertical Specialization to Vertical Integration casestudy better are - – increasing transportation and logistics costs, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy,
competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, etc
Introduction to SWOT Analysis of Indian Oil Corporation: Vertical Specialization to Vertical Integration
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Indian Oil Corporation: Vertical Specialization to Vertical Integration case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Indian Oil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Indian Oil 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration can be done for the following purposes –
1. Strategic planning using facts provided in Indian Oil Corporation: Vertical Specialization to Vertical Integration case study
2. Improving business portfolio management of Indian Oil
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Indian Oil
Strengths Indian Oil Corporation: Vertical Specialization to Vertical Integration | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Indian Oil in Indian Oil Corporation: Vertical Specialization to Vertical Integration Harvard Business Review case study are -
Innovation driven organization
– Indian Oil is one of the most innovative firm in sector. Manager in Indian Oil Corporation: Vertical Specialization to Vertical Integration Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Indian Oil 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Leadership & Managing People field
– Indian Oil 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 Indian Oil in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Indian Oil in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Indian Oil digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Indian Oil 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.
Organizational Resilience of Indian Oil
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Indian Oil does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Indian Oil has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Indian Oil Corporation: Vertical Specialization to Vertical Integration 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.
Strong track record of project management
– Indian Oil is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Indian Oil is present in almost all the verticals within the industry. This has provided firm in Indian Oil Corporation: Vertical Specialization to Vertical Integration 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
– Indian Oil has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Indian Oil to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Leadership & Managing People industry
– Indian Oil Corporation: Vertical Specialization to Vertical Integration firm has clearly differentiated products in the market place. This has enabled Indian Oil to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Indian Oil to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Indian Oil 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration - 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indian Oil Corporation: Vertical Specialization to Vertical Integration are -
Slow decision making process
– As mentioned earlier in the report, Indian Oil 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. Indian Oil 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Indian Oil Corporation: Vertical Specialization to Vertical Integration has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Indian Oil 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Indian Oil Corporation: Vertical Specialization to Vertical Integration, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration can leverage the sales team experience to cultivate customer relationships as Indian Oil is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Indian Oil Corporation: Vertical Specialization to Vertical Integration, in the dynamic environment Indian Oil has struggled to respond to the nimble upstart competition. Indian Oil has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Sushil Kumar, Satyasiba Das suggests that, Indian Oil 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Indian Oil Corporation: Vertical Specialization to Vertical Integration, it seems that the employees of Indian Oil 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Indian Oil is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Indian Oil Corporation: Vertical Specialization to Vertical Integration can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Indian Oil products
– To increase the profitability and margins on the products, Indian Oil needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil has relatively successful track record of launching new products.
Need for greater diversity
– Indian Oil 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.
Opportunities Indian Oil Corporation: Vertical Specialization to Vertical Integration | 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration are -
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. Indian Oil can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Indian Oil can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Indian Oil can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Indian Oil 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.
Using analytics as competitive advantage
– Indian Oil 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Indian Oil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Indian Oil to increase its market reach. Indian Oil 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.
Loyalty marketing
– Indian Oil 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Indian Oil 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. Indian Oil 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.
Creating value in data economy
– The success of analytics program of Indian Oil has opened avenues for new revenue streams for the organization in the industry. This can help Indian Oil to build a more holistic ecosystem as suggested in the Indian Oil Corporation: Vertical Specialization to Vertical Integration case study. Indian Oil can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Indian Oil can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Indian Oil can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Indian Oil Corporation: Vertical Specialization to Vertical Integration 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Indian Oil in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Indian Oil can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Threats Indian Oil Corporation: Vertical Specialization to Vertical Integration External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Indian Oil Corporation: Vertical Specialization to Vertical Integration are -
Technology acceleration in Forth Industrial Revolution
– Indian Oil has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Indian Oil needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
Increasing wage structure of Indian Oil
– 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 Indian Oil.
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 Indian Oil.
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 Indian Oil business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Indian Oil 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.
Consumer confidence and its impact on Indian Oil 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 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Indian Oil in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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 Indian Oil in the Leadership & Managing People sector and impact the bottomline of the organization.
Environmental challenges
– Indian Oil 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. Indian Oil can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Indian Oil 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Indian Oil Corporation: Vertical Specialization to Vertical Integration, Indian Oil may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Weighted SWOT Analysis of Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil Corporation: Vertical Specialization to Vertical Integration 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 Indian Oil needs to make to build a sustainable competitive advantage.