CARLYLE GROUP AND THE AZ-EM BUYOUT (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of CARLYLE GROUP AND THE AZ-EM BUYOUT (A)
"It was late morning on January 21, 2004 and Dr Robert Easton was enjoying the beautiful sunshine and crisp mountain air on the ski slopes of Davos, Switzerland when his mobile phone rang. It was a call from Ken Greatbatch, the former CFO of Vantico, with very interesting news: Clariant's attempt to auction off its operating division, AZ Electronic Materials (AZ-EM), had failed. There was now a great chance of an exclusive deal for Carlyle to acquire the company. Clariant needed to make the deal happen, and fast; it had promised shareholders and analysts during the summer of 2003 that it would reduce its debt level by almost a??800 million. Six months had passed and the company had very little to show for its efforts. To dispose of its division, Clariant had initially engineered an auction among AZ-EM's closest competitors, but had not succeeded in finding a suitable buyer. Faced with the failed auction, increased pressure from shareholders and a clear need to raise cash rapidly, Clariant resorted to its second-best option - a negotiated sale with a qualified private equity buyer. The Carlyle Group immediately voiced an interest and offered to expedite due diligence if a deal could be negotiated rapidly. Speed was now of the essence for Clariant's top management team, who were very keen to figure out how quickly Easton and his team could move. Learning objectives: Buyout, due diligence, managing transition, turnaround management, leverage, incentives, restructuring."
Authors :: Benoit Leleux, Bala Chakravarthy, Jonathan Lachowitz
Swot Analysis of "CARLYLE GROUP AND THE AZ-EM BUYOUT (A)" written by Benoit Leleux, Bala Chakravarthy, Jonathan Lachowitz includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Az Clariant facing as an external strategic factors. Some of the topics covered in CARLYLE GROUP AND THE AZ-EM BUYOUT (A) case study are - Strategic Management Strategies, Entrepreneurial finance and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the CARLYLE GROUP AND THE AZ-EM BUYOUT (A) casestudy better are - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, increasing commodity prices, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , there is increasing trade war between United States & China,
technology disruption, geopolitical disruptions, etc
Introduction to SWOT Analysis of CARLYLE GROUP AND THE AZ-EM BUYOUT (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CARLYLE GROUP AND THE AZ-EM BUYOUT (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Az Clariant, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Az Clariant 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 CARLYLE GROUP AND THE AZ-EM BUYOUT (A) can be done for the following purposes –
1. Strategic planning using facts provided in CARLYLE GROUP AND THE AZ-EM BUYOUT (A) case study
2. Improving business portfolio management of Az Clariant
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 Az Clariant
Strengths CARLYLE GROUP AND THE AZ-EM BUYOUT (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Az Clariant in CARLYLE GROUP AND THE AZ-EM BUYOUT (A) Harvard Business Review case study are -
Ability to recruit top talent
– Az Clariant is one of the leading recruiters in the industry. Managers in the CARLYLE GROUP AND THE AZ-EM BUYOUT (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Az Clariant 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.
Low bargaining power of suppliers
– Suppliers of Az Clariant in the sector have low bargaining power. CARLYLE GROUP AND THE AZ-EM BUYOUT (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Az Clariant to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Az Clariant is present in almost all the verticals within the industry. This has provided firm in CARLYLE GROUP AND THE AZ-EM BUYOUT (A) 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.
Superior customer experience
– The customer experience strategy of Az Clariant in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Az Clariant 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.
Analytics focus
– Az Clariant 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 Benoit Leleux, Bala Chakravarthy, Jonathan Lachowitz 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.
Training and development
– Az Clariant has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CARLYLE GROUP AND THE AZ-EM BUYOUT (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.
Highly skilled collaborators
– Az Clariant 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 CARLYLE GROUP AND THE AZ-EM BUYOUT (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Az Clariant has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Az Clariant to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Az Clariant
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Az Clariant does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Az Clariant is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses CARLYLE GROUP AND THE AZ-EM BUYOUT (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CARLYLE GROUP AND THE AZ-EM BUYOUT (A) are -
Slow to strategic competitive environment developments
– As CARLYLE GROUP AND THE AZ-EM BUYOUT (A) HBR case study mentions - Az Clariant takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Az Clariant 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Az Clariant is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study CARLYLE GROUP AND THE AZ-EM BUYOUT (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.
Lack of clear differentiation of Az Clariant products
– To increase the profitability and margins on the products, Az Clariant needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study CARLYLE GROUP AND THE AZ-EM BUYOUT (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 CARLYLE GROUP AND THE AZ-EM BUYOUT (A) can leverage the sales team experience to cultivate customer relationships as Az Clariant is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Az Clariant 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.
Increasing silos among functional specialists
– The organizational structure of Az Clariant is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Az Clariant needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Az Clariant to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Az Clariant 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CARLYLE GROUP AND THE AZ-EM BUYOUT (A), is just above the industry average. Az Clariant needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Az Clariant has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - CARLYLE GROUP AND THE AZ-EM BUYOUT (A) should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the CARLYLE GROUP AND THE AZ-EM BUYOUT (A) 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 Az Clariant has relatively successful track record of launching new products.
Opportunities CARLYLE GROUP AND THE AZ-EM BUYOUT (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 CARLYLE GROUP AND THE AZ-EM BUYOUT (A) are -
Developing new processes and practices
– Az Clariant 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.
Learning at scale
– Online learning technologies has now opened space for Az Clariant 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.
Building a culture of innovation
– managers at Az Clariant 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Az Clariant 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Az Clariant can use these opportunities to build new business models that can help the communities that Az Clariant operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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 Az Clariant in the consumer business. Now Az Clariant can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Az Clariant to increase its market reach. Az Clariant 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Az Clariant is facing challenges because of the dominance of functional experts in the organization. CARLYLE GROUP AND THE AZ-EM BUYOUT (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.
Leveraging digital technologies
– Az Clariant 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Az Clariant 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Az Clariant can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Az Clariant can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CARLYLE GROUP AND THE AZ-EM BUYOUT (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.
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 Az Clariant 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.
Threats CARLYLE GROUP AND THE AZ-EM BUYOUT (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CARLYLE GROUP AND THE AZ-EM BUYOUT (A) are -
High dependence on third party suppliers
– Az Clariant 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 Az Clariant is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Az Clariant in the Leadership & Managing People sector and impact the bottomline 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. Az Clariant 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 Az Clariant with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Az Clariant 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.
Consumer confidence and its impact on Az Clariant 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.
Environmental challenges
– Az Clariant 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. Az Clariant can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CARLYLE GROUP AND THE AZ-EM BUYOUT (A), Az Clariant 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 .
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.
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. Az Clariant can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Az Clariant needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Regulatory challenges
– Az Clariant 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.
Weighted SWOT Analysis of CARLYLE GROUP AND THE AZ-EM BUYOUT (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 CARLYLE GROUP AND THE AZ-EM BUYOUT (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 CARLYLE GROUP AND THE AZ-EM BUYOUT (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 CARLYLE GROUP AND THE AZ-EM BUYOUT (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 CARLYLE GROUP AND THE AZ-EM BUYOUT (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 Az Clariant needs to make to build a sustainable competitive advantage.
