The Agnellis and Fiat: Family Business Governance in a Crisis (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Agnellis and Fiat: Family Business Governance in a Crisis (A)
After the death of Umberto Agnelli in 2004, the Agnelli family, led by John Elkann, needs to decide whether to keep Fiat CEO Giuseppe Morchio. The Fiat Group is in a delicate financial position and John Elkann, the new family leader, is untested in this role. The stakes of this decision are high for both the family and the family business. The case describes the leadership and governance of the Fiat Group and raises questions on who should be involved in such decisions.
Authors :: John A. Davis, Bernardo Bertoldi, Roberto Quaglia
Swot Analysis of "The Agnellis and Fiat: Family Business Governance in a Crisis (A)" written by John A. Davis, Bernardo Bertoldi, Roberto Quaglia includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fiat Elkann facing as an external strategic factors. Some of the topics covered in The Agnellis and Fiat: Family Business Governance in a Crisis (A) case study are - Strategic Management Strategies, Leadership, Succession planning and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the The Agnellis and Fiat: Family Business Governance in a Crisis (A) casestudy better are - – increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, talent flight as more people leaving formal jobs,
there is backlash against globalization, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of The Agnellis and Fiat: Family Business Governance in a Crisis (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Agnellis and Fiat: Family Business Governance in a Crisis (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fiat Elkann, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fiat Elkann 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) can be done for the following purposes –
1. Strategic planning using facts provided in The Agnellis and Fiat: Family Business Governance in a Crisis (A) case study
2. Improving business portfolio management of Fiat Elkann
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 Fiat Elkann
Strengths The Agnellis and Fiat: Family Business Governance in a Crisis (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fiat Elkann in The Agnellis and Fiat: Family Business Governance in a Crisis (A) Harvard Business Review case study are -
High brand equity
– Fiat Elkann has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fiat Elkann to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the The Agnellis and Fiat: Family Business Governance in a Crisis (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- Fiat Elkann 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 Fiat Elkann is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Agnellis and Fiat: Family Business Governance in a Crisis (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Fiat Elkann 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Fiat Elkann digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fiat Elkann 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
– Fiat Elkann is one of the most innovative firm in sector. Manager in The Agnellis and Fiat: Family Business Governance in a Crisis (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Leadership & Managing People industry
– The Agnellis and Fiat: Family Business Governance in a Crisis (A) firm has clearly differentiated products in the market place. This has enabled Fiat Elkann to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Fiat Elkann to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Fiat Elkann in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Fiat Elkann is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Fiat Elkann 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 John A. Davis, Bernardo Bertoldi, Roberto Quaglia 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.
Ability to lead change in Leadership & Managing People field
– Fiat Elkann 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 Fiat Elkann in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Fiat Elkann has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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.
Weaknesses The Agnellis and Fiat: Family Business Governance in a Crisis (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Agnellis and Fiat: Family Business Governance in a Crisis (A) are -
High cash cycle compare to competitors
Fiat Elkann 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.
Interest costs
– Compare to the competition, Fiat Elkann 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.
Low market penetration in new markets
– Outside its home market of Fiat Elkann, firm in the HBR case study The Agnellis and Fiat: Family Business Governance in a Crisis (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Fiat Elkann 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.
Aligning sales with marketing
– It come across in the case study The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) can leverage the sales team experience to cultivate customer relationships as Fiat Elkann is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Fiat Elkann 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 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 Fiat Elkann supply chain. Even after few cautionary changes mentioned in the HBR case study - The Agnellis and Fiat: Family Business Governance in a Crisis (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fiat Elkann vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Agnellis and Fiat: Family Business Governance in a Crisis (A), it seems that the employees of Fiat Elkann 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.
Increasing silos among functional specialists
– The organizational structure of Fiat Elkann is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Fiat Elkann needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fiat Elkann to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fiat Elkann is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Agnellis and Fiat: Family Business Governance in a Crisis (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Agnellis and Fiat: Family Business Governance in a Crisis (A), in the dynamic environment Fiat Elkann has struggled to respond to the nimble upstart competition. Fiat Elkann has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities The Agnellis and Fiat: Family Business Governance in a Crisis (A) | 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) are -
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 Fiat Elkann in the consumer business. Now Fiat Elkann can target international markets with far fewer capital restrictions requirements than the existing system.
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 Fiat Elkann 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fiat Elkann is facing challenges because of the dominance of functional experts in the organization. The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fiat Elkann 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.
Buying journey improvements
– Fiat Elkann can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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.
Creating value in data economy
– The success of analytics program of Fiat Elkann has opened avenues for new revenue streams for the organization in the industry. This can help Fiat Elkann to build a more holistic ecosystem as suggested in the The Agnellis and Fiat: Family Business Governance in a Crisis (A) case study. Fiat Elkann 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
– Fiat Elkann 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.
Loyalty marketing
– Fiat Elkann 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.
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. Fiat Elkann can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Fiat Elkann 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fiat Elkann can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Fiat Elkann 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 Fiat Elkann 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.
Threats The Agnellis and Fiat: Family Business Governance in a Crisis (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Agnellis and Fiat: Family Business Governance in a Crisis (A) are -
Regulatory challenges
– Fiat Elkann 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Agnellis and Fiat: Family Business Governance in a Crisis (A), Fiat Elkann 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fiat Elkann 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fiat Elkann 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.
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.
High dependence on third party suppliers
– Fiat Elkann 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.
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. Fiat Elkann can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Fiat Elkann.
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.
Environmental challenges
– Fiat Elkann 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. Fiat Elkann can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Fiat Elkann needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Fiat Elkann business can come under increasing regulations regarding data privacy, data security, etc.
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 Fiat Elkann in the Leadership & Managing People sector and impact the bottomline of the organization.
Weighted SWOT Analysis of The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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 The Agnellis and Fiat: Family Business Governance in a Crisis (A) 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 Fiat Elkann needs to make to build a sustainable competitive advantage.
