Case Study Description of Gotong Royong: Toward Sustainable Palm Oil
In late 2015, Jeff Seabright, Chief Sustainability Officer at Unilever, had to report to Unilever CEO Paul Polman on the effort to transform the cultivation of oil palm. Historically, palm oil was produced using unsustainable methods that included burning large tracts of forest land which destroyed wildlife habitats, displaced native populations, and emitted greenhouse gases into the atmosphere. Global demand for palm oil was increasing which made the situation worse. Unilever was the largest single buyer of palm oil, purchasing about 3% of global production, and had been an active promoter of sustainable palm oil production. In 2015, 60% of globally traded palm oil was covered by sustainability commitments, up from 5% in 2008, but there was more to be done. Palm oil-driven deforestation and different kinds of social issues continued across the world, especially in Indonesia and Malaysia, which produced 80% of palm oil. The case discusses the sustainability strategy implemented by Unilever across time with regards to palm oil, together with the efforts implemented by other organizations such as the Consumer Goods Forum, the Roundtable On Sustainable Palm Oil, social and environmental NGOs, Unilever's competitors and the local governments in Southeast Asia. What more could Unilever do to advance the diffusion of sustainable palm oil?
Swot Analysis of "Gotong Royong: Toward Sustainable Palm Oil" written by Rebecca Henderson, Hann-Shuin Yew, Monica Baraldi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Palm Oil facing as an external strategic factors. Some of the topics covered in Gotong Royong: Toward Sustainable Palm Oil case study are - Strategic Management Strategies, Corporate communications, Ethics, Sustainability and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Gotong Royong: Toward Sustainable Palm Oil casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing energy prices, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion,
there is backlash against globalization, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Gotong Royong: Toward Sustainable Palm Oil
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gotong Royong: Toward Sustainable Palm Oil case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Palm Oil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Palm 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 Gotong Royong: Toward Sustainable Palm Oil can be done for the following purposes –
1. Strategic planning using facts provided in Gotong Royong: Toward Sustainable Palm Oil case study
2. Improving business portfolio management of Palm 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 Palm Oil
Strengths Gotong Royong: Toward Sustainable Palm Oil | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Palm Oil in Gotong Royong: Toward Sustainable Palm Oil Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Palm 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 Palm Oil in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Palm Oil digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Palm 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.
Successful track record of launching new products
– Palm Oil has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Palm Oil 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Gotong Royong: Toward Sustainable Palm Oil firm has clearly differentiated products in the market place. This has enabled Palm Oil to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Palm Oil to invest into research and development (R&D) and innovation.
Analytics focus
– Palm Oil 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 Rebecca Henderson, Hann-Shuin Yew, Monica Baraldi 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.
Cross disciplinary teams
– Horizontal connected teams at the Palm Oil 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.
Superior customer experience
– The customer experience strategy of Palm Oil in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Palm Oil 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 Palm Oil is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gotong Royong: Toward Sustainable Palm Oil Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Palm 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.
Low bargaining power of suppliers
– Suppliers of Palm Oil in the sector have low bargaining power. Gotong Royong: Toward Sustainable Palm Oil has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Palm Oil to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Palm Oil 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.
Diverse revenue streams
– Palm Oil is present in almost all the verticals within the industry. This has provided firm in Gotong Royong: Toward Sustainable Palm Oil 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.
Weaknesses Gotong Royong: Toward Sustainable Palm Oil | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gotong Royong: Toward Sustainable Palm Oil are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Gotong Royong: Toward Sustainable Palm Oil, is just above the industry average. Palm Oil 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 cash cycle compare to competitors
Palm Oil 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.
Capital Spending Reduction
– Even during the low interest decade, Palm Oil 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Palm Oil 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Gotong Royong: Toward Sustainable Palm Oil 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 Palm Oil 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gotong Royong: Toward Sustainable Palm Oil, in the dynamic environment Palm Oil has struggled to respond to the nimble upstart competition. Palm Oil has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Palm Oil, firm in the HBR case study Gotong Royong: Toward Sustainable Palm Oil needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Gotong Royong: Toward Sustainable Palm Oil 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 Palm Oil has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Gotong Royong: Toward Sustainable Palm Oil HBR case study mentions - Palm Oil 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.
Skills based hiring
– The stress on hiring functional specialists at Palm Oil has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Palm Oil is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Gotong Royong: Toward Sustainable Palm Oil can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Gotong Royong: Toward Sustainable Palm Oil | 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 Gotong Royong: Toward Sustainable Palm Oil are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Palm Oil can use these opportunities to build new business models that can help the communities that Palm Oil operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Loyalty marketing
– Palm 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.
Creating value in data economy
– The success of analytics program of Palm Oil has opened avenues for new revenue streams for the organization in the industry. This can help Palm Oil to build a more holistic ecosystem as suggested in the Gotong Royong: Toward Sustainable Palm Oil case study. Palm Oil can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Palm Oil can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Palm 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Palm Oil 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, Gotong Royong: Toward Sustainable Palm Oil, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Palm Oil 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 Palm 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Palm Oil 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 Palm Oil to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Palm 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
– Palm Oil can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Gotong Royong: Toward Sustainable Palm Oil 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Palm Oil 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.
Using analytics as competitive advantage
– Palm 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 Gotong Royong: Toward Sustainable Palm Oil - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Palm Oil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Gotong Royong: Toward Sustainable Palm Oil External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gotong Royong: Toward Sustainable Palm Oil are -
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 Palm Oil business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Palm 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. Palm Oil can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
Technology acceleration in Forth Industrial Revolution
– Palm 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, Palm 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Palm Oil can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Palm Oil 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Palm Oil with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Palm 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 Gotong Royong: Toward Sustainable Palm Oil .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Gotong Royong: Toward Sustainable Palm Oil, Palm 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Palm 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 Palm Oil in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Palm Oil 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.
Weighted SWOT Analysis of Gotong Royong: Toward Sustainable Palm Oil 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 Gotong Royong: Toward Sustainable Palm Oil 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 Gotong Royong: Toward Sustainable Palm Oil 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 Gotong Royong: Toward Sustainable Palm Oil 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 Gotong Royong: Toward Sustainable Palm Oil 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 Palm Oil needs to make to build a sustainable competitive advantage.
