Case Study Description of Merging Esso Iceland and Bilanaust (C)
By December 2006, Hermann Gudmundsson (the chief executive officer of both Esso Iceland and Bilanaust) had spent the past 10 months evaluating the strengths and weaknesses of both organizations, and determined that the best approach going forward would be to, "consider creating a new organization with a new structure and a new brand name." He weighed the advantages, disadvantages and costs of either retaining two separate companies and their associated brand-image, or merging into one new organization. Gudmundsson was facing resistance from both the board of directors and three different advertising agencies to forgo the Esso brand; but with an ultimate mandate to increase shareholder value he needed to figure out the best method, from a branding perspective, to achieve that objective.
Swot Analysis of "Merging Esso Iceland and Bilanaust (C)" written by Ken Mark, Gerard Seijts includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Esso Bilanaust facing as an external strategic factors. Some of the topics covered in Merging Esso Iceland and Bilanaust (C) case study are - Strategic Management Strategies, Communication, Human resource management, International business, Leadership, Mergers & acquisitions, Recession, Strategic planning and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Merging Esso Iceland and Bilanaust (C) casestudy better are - – there is increasing trade war between United States & China, supply chains are disrupted by pandemic , technology disruption, increasing transportation and logistics costs, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices,
digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Merging Esso Iceland and Bilanaust (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merging Esso Iceland and Bilanaust (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Esso Bilanaust, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Esso Bilanaust 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 Merging Esso Iceland and Bilanaust (C) can be done for the following purposes –
1. Strategic planning using facts provided in Merging Esso Iceland and Bilanaust (C) case study
2. Improving business portfolio management of Esso Bilanaust
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 Esso Bilanaust
Strengths Merging Esso Iceland and Bilanaust (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Esso Bilanaust in Merging Esso Iceland and Bilanaust (C) Harvard Business Review case study are -
Highly skilled collaborators
– Esso Bilanaust 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 Merging Esso Iceland and Bilanaust (C) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Esso Bilanaust is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Esso Bilanaust has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Merging Esso Iceland and Bilanaust (C) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Esso Bilanaust is one of the leading recruiters in the industry. Managers in the Merging Esso Iceland and Bilanaust (C) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Esso Bilanaust has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merging Esso Iceland and Bilanaust (C) 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.
High brand equity
– Esso Bilanaust has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Esso Bilanaust to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Esso Bilanaust digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Esso Bilanaust 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.
Diverse revenue streams
– Esso Bilanaust is present in almost all the verticals within the industry. This has provided firm in Merging Esso Iceland and Bilanaust (C) 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.
Cross disciplinary teams
– Horizontal connected teams at the Esso Bilanaust 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Merging Esso Iceland and Bilanaust (C) firm has clearly differentiated products in the market place. This has enabled Esso Bilanaust to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Esso Bilanaust to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Esso Bilanaust in the sector have low bargaining power. Merging Esso Iceland and Bilanaust (C) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Esso Bilanaust to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Esso Bilanaust is one of the most innovative firm in sector. Manager in Merging Esso Iceland and Bilanaust (C) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Merging Esso Iceland and Bilanaust (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merging Esso Iceland and Bilanaust (C) are -
Lack of clear differentiation of Esso Bilanaust products
– To increase the profitability and margins on the products, Esso Bilanaust needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Esso Bilanaust 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.
Slow to strategic competitive environment developments
– As Merging Esso Iceland and Bilanaust (C) HBR case study mentions - Esso Bilanaust 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Merging Esso Iceland and Bilanaust (C), in the dynamic environment Esso Bilanaust has struggled to respond to the nimble upstart competition. Esso Bilanaust has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Esso Bilanaust 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merging Esso Iceland and Bilanaust (C), it seems that the employees of Esso Bilanaust 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.
Need for greater diversity
– Esso Bilanaust 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ken Mark, Gerard Seijts suggests that, Esso Bilanaust is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Aligning sales with marketing
– It come across in the case study Merging Esso Iceland and Bilanaust (C) 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 Merging Esso Iceland and Bilanaust (C) can leverage the sales team experience to cultivate customer relationships as Esso Bilanaust is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Esso Bilanaust is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Merging Esso Iceland and Bilanaust (C) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Merging Esso Iceland and Bilanaust (C) 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 Esso Bilanaust 's lucrative customers.
Opportunities Merging Esso Iceland and Bilanaust (C) | 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 Merging Esso Iceland and Bilanaust (C) are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Esso Bilanaust 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.
Loyalty marketing
– Esso Bilanaust 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.
Building a culture of innovation
– managers at Esso Bilanaust 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Esso Bilanaust 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, Merging Esso Iceland and Bilanaust (C), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Esso Bilanaust can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Esso Bilanaust can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Merging Esso Iceland and Bilanaust (C) 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.
Leveraging digital technologies
– Esso Bilanaust 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.
Better consumer reach
– The expansion of the 5G network will help Esso Bilanaust to increase its market reach. Esso Bilanaust 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Esso Bilanaust can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Esso Bilanaust 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 Merging Esso Iceland and Bilanaust (C) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Esso Bilanaust to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Esso Bilanaust can use these opportunities to build new business models that can help the communities that Esso Bilanaust operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Learning at scale
– Online learning technologies has now opened space for Esso Bilanaust 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.
Creating value in data economy
– The success of analytics program of Esso Bilanaust has opened avenues for new revenue streams for the organization in the industry. This can help Esso Bilanaust to build a more holistic ecosystem as suggested in the Merging Esso Iceland and Bilanaust (C) case study. Esso Bilanaust can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Merging Esso Iceland and Bilanaust (C) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merging Esso Iceland and Bilanaust (C) are -
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. Esso Bilanaust can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Esso Bilanaust 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. Esso Bilanaust can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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 Esso Bilanaust in the Leadership & Managing People sector and impact the bottomline of the organization.
Regulatory challenges
– Esso Bilanaust 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Esso Bilanaust 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 Merging Esso Iceland and Bilanaust (C) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Esso Bilanaust 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.
High dependence on third party suppliers
– Esso Bilanaust 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.
Increasing wage structure of Esso Bilanaust
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Esso Bilanaust.
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. Esso Bilanaust 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 Esso Bilanaust business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Esso Bilanaust is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Esso Bilanaust with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Esso Bilanaust 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.
Weighted SWOT Analysis of Merging Esso Iceland and Bilanaust (C) 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 Merging Esso Iceland and Bilanaust (C) 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 Merging Esso Iceland and Bilanaust (C) 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 Merging Esso Iceland and Bilanaust (C) 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 Merging Esso Iceland and Bilanaust (C) 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 Esso Bilanaust needs to make to build a sustainable competitive advantage.