Amorim: The Future of Natural Cork SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Amorim: The Future of Natural Cork
In 2015, Corticeira Amorim, S.G.P.S., S.A. (Amorim), the world's largest cork manufacturer, was facing multiple strategic dilemmas. After enjoying a near-monopoly in the wine stopper market for over 300 years, cork's reputation had been damaged in the 20th century by concerns over "cork taint," and the cork industry had been challenged by the resulting disruptive technologies of screw caps and synthetic corks. Amorim needed to rethink its core assumptions, including product design and supply chain strategy. The company had taken a new direction in the previous 15 years, and appeared to have regained a secure niche for the foreseeable future. The family-owned business was now emerging from its comeback and reviewing various strategic options to secure a sustainable future. Should Amorim rely more or less heavily on its wine stopper business in the future? Which form of competition should Amorim confront most directly? Should the company compete primarily based on cost or value? Chris Laszlo is affiliated with Case Western Reserve University - Fowler Center. Katherine Gullett is affiliated with Case Western Reserve University.
Authors :: Katherine Gullett, Chris Laszlo, Tim Krueger
Swot Analysis of "Amorim: The Future of Natural Cork" written by Katherine Gullett, Chris Laszlo, Tim Krueger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amorim Cork facing as an external strategic factors. Some of the topics covered in Amorim: The Future of Natural Cork case study are - Strategic Management Strategies, Marketing, Mergers & acquisitions, Sustainability and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Amorim: The Future of Natural Cork casestudy better are - – increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing commodity prices,
challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Amorim: The Future of Natural Cork
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Amorim: The Future of Natural Cork case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amorim Cork, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amorim Cork 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 Amorim: The Future of Natural Cork can be done for the following purposes –
1. Strategic planning using facts provided in Amorim: The Future of Natural Cork case study
2. Improving business portfolio management of Amorim Cork
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 Amorim Cork
Strengths Amorim: The Future of Natural Cork | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amorim Cork in Amorim: The Future of Natural Cork Harvard Business Review case study are -
Training and development
– Amorim Cork has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Amorim: The Future of Natural Cork 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.
Ability to lead change in Leadership & Managing People field
– Amorim Cork 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 Amorim Cork in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Amorim Cork 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 Amorim: The Future of Natural Cork - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Amorim: The Future of Natural Cork 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.
Successful track record of launching new products
– Amorim Cork has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amorim Cork 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.
Highly skilled collaborators
– Amorim Cork 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 Amorim: The Future of Natural Cork HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Amorim Cork has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Amorim Cork to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Amorim Cork are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Amorim Cork is one of the most innovative firm in sector. Manager in Amorim: The Future of Natural Cork Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Amorim Cork is present in almost all the verticals within the industry. This has provided firm in Amorim: The Future of Natural Cork 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.
Learning organization
- Amorim Cork 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 Amorim Cork is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Amorim: The Future of Natural Cork Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Amorim Cork in the sector have low bargaining power. Amorim: The Future of Natural Cork has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Amorim Cork to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Amorim: The Future of Natural Cork | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Amorim: The Future of Natural Cork are -
Lack of clear differentiation of Amorim Cork products
– To increase the profitability and margins on the products, Amorim Cork needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Amorim Cork 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.
No frontier risks strategy
– After analyzing the HBR case study Amorim: The Future of Natural Cork, 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.
High cash cycle compare to competitors
Amorim Cork 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Amorim: The Future of Natural Cork, it seems that the employees of Amorim Cork 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Katherine Gullett, Chris Laszlo, Tim Krueger suggests that, Amorim Cork 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.
Aligning sales with marketing
– It come across in the case study Amorim: The Future of Natural Cork 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 Amorim: The Future of Natural Cork can leverage the sales team experience to cultivate customer relationships as Amorim Cork is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Amorim: The Future of Natural Cork 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 Amorim Cork 's lucrative customers.
Need for greater diversity
– Amorim Cork 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Amorim: The Future of Natural Cork, in the dynamic environment Amorim Cork has struggled to respond to the nimble upstart competition. Amorim Cork 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, Amorim Cork 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.
Opportunities Amorim: The Future of Natural Cork | 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 Amorim: The Future of Natural Cork are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Amorim Cork is facing challenges because of the dominance of functional experts in the organization. Amorim: The Future of Natural Cork 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.
Better consumer reach
– The expansion of the 5G network will help Amorim Cork to increase its market reach. Amorim Cork 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.
Leveraging digital technologies
– Amorim Cork 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.
Buying journey improvements
– Amorim Cork can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Amorim: The Future of Natural Cork 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.
Learning at scale
– Online learning technologies has now opened space for Amorim Cork to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Amorim Cork can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amorim Cork can use these opportunities to build new business models that can help the communities that Amorim Cork operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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. Amorim Cork 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. Amorim Cork 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Amorim Cork 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 Amorim Cork 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.
Manufacturing automation
– Amorim Cork 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amorim Cork can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amorim Cork 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 Amorim Cork to hire the very best people irrespective of their geographical location.
Threats Amorim: The Future of Natural Cork External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Amorim: The Future of Natural Cork are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amorim Cork with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Amorim Cork 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.
Increasing wage structure of Amorim Cork
– 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 Amorim Cork.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amorim Cork 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 Amorim: The Future of Natural Cork .
Technology acceleration in Forth Industrial Revolution
– Amorim Cork has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Amorim Cork 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.
Consumer confidence and its impact on Amorim Cork 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.
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 Amorim Cork.
High dependence on third party suppliers
– Amorim Cork 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.
Shortening product life cycle
– it is one of the major threat that Amorim Cork is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Amorim Cork needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Regulatory challenges
– Amorim Cork 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 Leadership & Managing People industry regulations.
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.
Stagnating economy with rate increase
– Amorim Cork 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.
Weighted SWOT Analysis of Amorim: The Future of Natural Cork 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 Amorim: The Future of Natural Cork 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 Amorim: The Future of Natural Cork 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 Amorim: The Future of Natural Cork 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 Amorim: The Future of Natural Cork 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 Amorim Cork needs to make to build a sustainable competitive advantage.