Chesapeake Energy (CHKE34) SWOT Analysis / TOWS Matrix / MBA Resources
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Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Chesapeake Energy (Brazil)
Based on various researches at Oak Spring University , Chesapeake Energy is operating in a macro-environment that has been destablized by – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing commodity prices, geopolitical disruptions, cloud computing is disrupting traditional business models, wage bills are increasing,
increasing energy prices, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Chesapeake Energy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Chesapeake Energy can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chesapeake Energy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chesapeake Energy 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 Chesapeake Energy can be done for the following purposes –
1. Strategic planning of Chesapeake Energy
2. Improving business portfolio management of Chesapeake Energy
3. Assessing feasibility of the new initiative in Brazil
4. Making a NA sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Chesapeake Energy
Strengths of Chesapeake Energy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chesapeake Energy are -
Digital Transformation in NA industry
- digital transformation varies from industry to industry. For Chesapeake Energy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chesapeake Energy 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.
Superior customer experience
– The customer experience strategy of Chesapeake Energy in NA industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Chesapeake Energy 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 Chesapeake Energy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Chesapeake Energy emphasize – knowledge, initiative, and innovation.
Training and development
– Chesapeake Energy has one of the best training and development program in NA industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Chesapeake Energy is present in almost all the verticals within the NA industry. This has provided Chesapeake Energy 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.
Highly skilled collaborators
– Chesapeake Energy has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive NA industry. Secondly the value chain collaborators of Chesapeake Energy have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Chesapeake Energy is one of the most innovative firm in NA sector.
Analytics focus
– Chesapeake Energy 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 NA industry. The technology infrastructure of Brazil is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Chesapeake Energy
– The covid-19 pandemic has put organizational resilience at the centre of everthing Chesapeake Energy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Chesapeake Energy is one of the leading players in the NA industry in Brazil. It is in a position to attract the best talent available in Brazil. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Chesapeake Energy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chesapeake Energy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Chesapeake Energy 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.
Weaknesses of Chesapeake Energy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chesapeake Energy are -
High dependence on Chesapeake Energy ‘s star products
– The top 2 products and services of Chesapeake Energy still accounts for major business revenue. This dependence on star products in NA industry has resulted into insufficient focus on developing new products, even though Chesapeake Energy has relatively successful track record of launching new products.
Employees’ less understanding of Chesapeake Energy strategy
– From the outside it seems that the employees of Chesapeake Energy 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.
Ability to respond to the competition
– As the decision making is very deliberative at Chesapeake Energy, in the dynamic environment of NA industry it has struggled to respond to the nimble upstart competition. Chesapeake Energy has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Chesapeake Energy has some of the most successful models in the NA industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Chesapeake Energy should strive to include more intangible value offerings along with its core products and services.
Skills based hiring in NA industry
– The stress on hiring functional specialists at Chesapeake Energy 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.
Increasing silos among functional specialists
– The organizational structure of Chesapeake Energy is dominated by functional specialists. It is not different from other players in the NA industry, but Chesapeake Energy needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chesapeake Energy to focus more on services in the NA industry rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Chesapeake Energy 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 NA industry using digital technology.
High operating costs
– Compare to the competitors, Chesapeake Energy has high operating costs in the NA industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Chesapeake Energy lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Chesapeake Energy is slow explore the new channels of communication. These new channels of communication can help Chesapeake Energy to provide better information regarding NA products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Chesapeake Energy has a high cash cycle compare to other players in the NA industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Chesapeake Energy products
– To increase the profitability and margins on the products, Chesapeake Energy needs to provide more differentiated products than what it is currently offering in the marketplace.
Chesapeake Energy Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Chesapeake Energy are -
Using analytics as competitive advantage
– Chesapeake Energy has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in NA sector. This continuous investment in analytics has enabled Chesapeake Energy to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chesapeake Energy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Chesapeake Energy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the NA industry, and it will provide faster access to the consumers.
Developing new processes and practices
– Chesapeake Energy can develop new processes and procedures in NA 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.
Building a culture of innovation
– managers at Chesapeake Energy 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 NA industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chesapeake Energy 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the NA industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Chesapeake Energy can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Chesapeake Energy can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Chesapeake Energy can improve the customer journey of consumers in the NA industry by using analytics and artificial intelligence. It 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.
Loyalty marketing
– Chesapeake Energy 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Chesapeake Energy is facing challenges because of the dominance of functional experts in the organization. Chesapeake Energy can utilize new technology in the field of NA industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in NA industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Chesapeake Energy in the NA industry. Now Chesapeake Energy can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chesapeake Energy can use these opportunities to build new business models that can help the communities that Chesapeake Energy operates in. Secondly it can use opportunities from government spending in NA sector.
Creating value in data economy
– The success of analytics program of Chesapeake Energy has opened avenues for new revenue streams for the organization in NA industry. This can help Chesapeake Energy to build a more holistic ecosystem for Chesapeake Energy products in the NA industry by providing – data insight services, data privacy related products, data based consulting services, 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. Chesapeake Energy can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Chesapeake Energy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Chesapeake Energy are -
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.
Increasing wage structure of Chesapeake Energy
– 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 Chesapeake Energy.
High dependence on third party suppliers
– Chesapeake Energy 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.
Technology acceleration in Forth Industrial Revolution
– Chesapeake Energy has witnessed rapid integration of technology during Covid-19 in the NA industry. As one of the leading players in the industry, Chesapeake Energy needs to keep up with the evolution of technology in the NA 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.
Environmental challenges
– Chesapeake Energy 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. Chesapeake Energy can take advantage of this fund but it will also bring new competitors in the NA 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 Chesapeake Energy in the NA sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Chesapeake Energy 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 Chesapeake Energy prominent markets.
Regulatory challenges
– Chesapeake Energy 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 NA industry regulations.
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. Chesapeake Energy needs to understand the core reasons impacting the NA industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Chesapeake Energy is facing in NA sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Chesapeake Energy.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chesapeake Energy in NA industry. The NA 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.
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 Chesapeake Energy business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Chesapeake Energy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Chesapeake Energy 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 Chesapeake Energy 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 Chesapeake Energy 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 Chesapeake Energy 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 Chesapeake Energy needs to make to build a sustainable competitive advantage.
