Sullivan Container operated both new industrial steel barrel production and the reconditioning of industrial steel drum and plastic containers in several plant locations in the United States. The firm operated in an industry with a checkered past, characterized by periods of price fixing and environmental problems. A new management team acquired the firm in 2007 and began revamping manufacturing practices and focusing on environmentally sustainable practices. Faced with the severe economic crisis in 2009, the firm continued to pursue sustainable practices, but now faces a critical question as investment costs in sustainable practices increase. The key question we explore is: Given the industry history, will build sustainable practices into their business model drive a customer's Willingness to Pay? The case allows students to explore the challenges of creating a Willingness to Pay for aspects of value creation that may have no immediate positive effect on their customer's internal operations.
Swot Analysis of "Sullivan Container" written by Michael Cummings, Robert Brewster includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Practices Sullivan facing as an external strategic factors. Some of the topics covered in Sullivan Container case study are - Strategic Management Strategies, Strategic planning and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Sullivan Container casestudy better are - – central banks are concerned over increasing inflation, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, technology disruption, increasing government debt because of Covid-19 spendings,
geopolitical disruptions, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Sullivan Container
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sullivan Container case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Practices Sullivan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Practices Sullivan 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 Sullivan Container can be done for the following purposes –
1. Strategic planning using facts provided in Sullivan Container case study
2. Improving business portfolio management of Practices Sullivan
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 Practices Sullivan
Strengths Sullivan Container | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Practices Sullivan in Sullivan Container Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Practices Sullivan 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.
Highly skilled collaborators
– Practices Sullivan 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 Sullivan Container HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Practices Sullivan 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 Practices Sullivan is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sullivan Container Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Practices Sullivan is present in almost all the verticals within the industry. This has provided firm in Sullivan Container 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Sullivan Container firm has clearly differentiated products in the market place. This has enabled Practices Sullivan to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Practices Sullivan to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Practices Sullivan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Practices Sullivan 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.
Ability to lead change in Leadership & Managing People field
– Practices Sullivan 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 Practices Sullivan in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Sullivan Container 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.
Ability to recruit top talent
– Practices Sullivan is one of the leading recruiters in the industry. Managers in the Sullivan Container 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 brand equity
– Practices Sullivan has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Practices Sullivan to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Practices Sullivan 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.
Organizational Resilience of Practices Sullivan
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Practices Sullivan does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Sullivan Container | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sullivan Container are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sullivan Container, is just above the industry average. Practices Sullivan 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.
Increasing silos among functional specialists
– The organizational structure of Practices Sullivan is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Practices Sullivan needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Practices Sullivan to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Practices Sullivan 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.
Lack of clear differentiation of Practices Sullivan products
– To increase the profitability and margins on the products, Practices Sullivan needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Cummings, Robert Brewster suggests that, Practices Sullivan is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sullivan Container, it seems that the employees of Practices Sullivan 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.
Capital Spending Reduction
– Even during the low interest decade, Practices Sullivan 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.
Low market penetration in new markets
– Outside its home market of Practices Sullivan, firm in the HBR case study Sullivan Container needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Practices Sullivan supply chain. Even after few cautionary changes mentioned in the HBR case study - Sullivan Container, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Practices Sullivan vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sullivan Container 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 Practices Sullivan has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Practices Sullivan 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.
Opportunities Sullivan Container | 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 Sullivan Container are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Practices Sullivan 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.
Better consumer reach
– The expansion of the 5G network will help Practices Sullivan to increase its market reach. Practices Sullivan will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– Practices Sullivan 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. Practices Sullivan can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Practices Sullivan is facing challenges because of the dominance of functional experts in the organization. Sullivan Container 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Practices Sullivan can use these opportunities to build new business models that can help the communities that Practices Sullivan operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Building a culture of innovation
– managers at Practices Sullivan 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 Practices Sullivan can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Practices Sullivan 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Practices Sullivan 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 Practices Sullivan to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Practices Sullivan 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.
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 Practices Sullivan in the consumer business. Now Practices Sullivan 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 Practices Sullivan 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 Sullivan Container External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sullivan Container are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Practices Sullivan 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.
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 Practices Sullivan.
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. Practices Sullivan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Practices Sullivan 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 Sullivan Container .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Practices Sullivan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Practices Sullivan needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Practices Sullivan in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Practices Sullivan has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Practices Sullivan 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.
Shortening product life cycle
– it is one of the major threat that Practices Sullivan is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Practices Sullivan demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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 Practices Sullivan business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Practices Sullivan 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. Practices Sullivan can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Weighted SWOT Analysis of Sullivan Container 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 Sullivan Container 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 Sullivan Container 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 Sullivan Container 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 Sullivan Container 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 Practices Sullivan needs to make to build a sustainable competitive advantage.