Sun Hydraulics: Leading in Tough Times (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Sun Hydraulics: Leading in Tough Times (A)
This case is accompanied by a Video Short that can be shown in class or included in a digital coursepack. Instructors should consider the timing of making the video available to students, as it may reveal key case details.Sun Hydraulics, 32-year-old global hydraulics engineering and manufacturing company headquartered in Sarasota, Florida, confronts tough choices due to the economic downturn in 2001. The company leadership debates how to maintain profitability and reduce labor costs without destroying the company's innovative culture, which is based on the idea of horizontal management and has no defined corporate hierarchy. This case includes an overview of the company's history, from its founding in 1970 to its IPO in 1997, and asks students to step into the shoes of Allen Carlson, Sun's president and CEO, to recommend specific cost-cutting actions.
Swot Analysis of "Sun Hydraulics: Leading in Tough Times (A)" written by Linda A. Hill, Jennifer M. Suesse includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hydraulics Tough facing as an external strategic factors. Some of the topics covered in Sun Hydraulics: Leading in Tough Times (A) case study are - Strategic Management Strategies, Downsizing, Economy, Innovation, Leadership, Managing people, Manufacturing, Organizational culture, Organizational structure and Organizational Development.
Some of the macro environment factors that can be used to understand the Sun Hydraulics: Leading in Tough Times (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, increasing commodity prices, there is backlash against globalization, increasing household debt because of falling income levels, there is increasing trade war between United States & China,
central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Sun Hydraulics: Leading in Tough Times (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sun Hydraulics: Leading in Tough Times (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hydraulics Tough, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hydraulics Tough 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 Sun Hydraulics: Leading in Tough Times (A) can be done for the following purposes –
1. Strategic planning using facts provided in Sun Hydraulics: Leading in Tough Times (A) case study
2. Improving business portfolio management of Hydraulics Tough
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hydraulics Tough
Strengths Sun Hydraulics: Leading in Tough Times (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hydraulics Tough in Sun Hydraulics: Leading in Tough Times (A) Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Hydraulics Tough in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Hydraulics Tough has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sun Hydraulics: Leading in Tough Times (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.
Ability to lead change in Organizational Development field
– Hydraulics Tough 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 Hydraulics Tough in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Hydraulics Tough 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 Linda A. Hill, Jennifer M. Suesse can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Hydraulics Tough is one of the leading recruiters in the industry. Managers in the Sun Hydraulics: Leading in Tough Times (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.
Operational resilience
– The operational resilience strategy in the Sun Hydraulics: Leading in Tough Times (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Organizational Development industry
– Sun Hydraulics: Leading in Tough Times (A) firm has clearly differentiated products in the market place. This has enabled Hydraulics Tough to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Hydraulics Tough to invest into research and development (R&D) and innovation.
High brand equity
– Hydraulics Tough has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hydraulics Tough to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Hydraulics Tough digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hydraulics Tough has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Hydraulics Tough is one of the most innovative firm in sector. Manager in Sun Hydraulics: Leading in Tough Times (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Hydraulics Tough 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.
Organizational Resilience of Hydraulics Tough
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hydraulics Tough does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Sun Hydraulics: Leading in Tough Times (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sun Hydraulics: Leading in Tough Times (A) are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sun Hydraulics: Leading in Tough Times (A), it seems that the employees of Hydraulics Tough don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Hydraulics Tough is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Hydraulics Tough needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hydraulics Tough to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sun Hydraulics: Leading in Tough Times (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 Hydraulics Tough has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Hydraulics Tough needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Hydraulics Tough 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.
Skills based hiring
– The stress on hiring functional specialists at Hydraulics Tough 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.
Lack of clear differentiation of Hydraulics Tough products
– To increase the profitability and margins on the products, Hydraulics Tough needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Hydraulics Tough 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hydraulics Tough is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sun Hydraulics: Leading in Tough Times (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.
High operating costs
– Compare to the competitors, firm in the HBR case study Sun Hydraulics: Leading in Tough Times (A) 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 Hydraulics Tough 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Linda A. Hill, Jennifer M. Suesse suggests that, Hydraulics Tough 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.
Opportunities Sun Hydraulics: Leading in Tough Times (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 Sun Hydraulics: Leading in Tough Times (A) are -
Building a culture of innovation
– managers at Hydraulics Tough 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 Organizational Development segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hydraulics Tough 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
– Hydraulics Tough can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sun Hydraulics: Leading in Tough Times (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.
Using analytics as competitive advantage
– Hydraulics Tough 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 Sun Hydraulics: Leading in Tough Times (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hydraulics Tough to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Hydraulics Tough has opened avenues for new revenue streams for the organization in the industry. This can help Hydraulics Tough to build a more holistic ecosystem as suggested in the Sun Hydraulics: Leading in Tough Times (A) case study. Hydraulics Tough can build new products and services such as - 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. Hydraulics Tough can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hydraulics Tough 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. Hydraulics Tough 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.
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 Hydraulics Tough 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.
Learning at scale
– Online learning technologies has now opened space for Hydraulics Tough 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hydraulics Tough is facing challenges because of the dominance of functional experts in the organization. Sun Hydraulics: Leading in Tough Times (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.
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 Hydraulics Tough in the consumer business. Now Hydraulics Tough 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 Hydraulics Tough to increase its market reach. Hydraulics Tough 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hydraulics Tough 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, Sun Hydraulics: Leading in Tough Times (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Sun Hydraulics: Leading in Tough Times (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sun Hydraulics: Leading in Tough Times (A) are -
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 Hydraulics Tough business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sun Hydraulics: Leading in Tough Times (A), Hydraulics Tough may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hydraulics Tough 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 Sun Hydraulics: Leading in Tough Times (A) .
Technology acceleration in Forth Industrial Revolution
– Hydraulics Tough has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Hydraulics Tough needs to keep up with the evolution of technology in the Organizational Development 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.
High dependence on third party suppliers
– Hydraulics Tough 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.
Consumer confidence and its impact on Hydraulics Tough 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.
Increasing wage structure of Hydraulics Tough
– 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 Hydraulics Tough.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hydraulics Tough can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Shortening product life cycle
– it is one of the major threat that Hydraulics Tough is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Hydraulics Tough needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hydraulics Tough in the Organizational Development industry. The Organizational Development 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 Hydraulics Tough.
Weighted SWOT Analysis of Sun Hydraulics: Leading in Tough Times (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 Sun Hydraulics: Leading in Tough Times (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 Sun Hydraulics: Leading in Tough Times (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 Sun Hydraulics: Leading in Tough Times (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 Sun Hydraulics: Leading in Tough Times (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 Hydraulics Tough needs to make to build a sustainable competitive advantage.
