Managing Talent at Bertelsmann AG (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Managing Talent at Bertelsmann AG (A)
Bertelsmann's EVP HR Immanuel Hermreck and his team were focused on four key HR issues. Three of these were somewhat discreet: improving Bertelsmann's employer brand; managing Bertelsmann talent across the firm's decentralized businesses; and ensuring early identification and appropriate development of Bertelsmann's top 100 high potential managers (hi-pos) to better seed the company's future top management. The fourth issue-recruitment and retention-played an integral role across all three challenges and had to be strengthened and made consistent across the firm, not an easy prospect given Bertelsmann's highly decentralized structure. Hermreck knew navigating these issues would pose significant challenges, but getting them right was critical to Bertelsmann's competitive advantage and survival as a robust media company. He had some good results in from his early efforts, but as he looked forward, what should his action plan set out to do?
Authors :: Boris Groysberg, Nitin Nohria, Mark C. Maletz, Kerry Herman
Swot Analysis of "Managing Talent at Bertelsmann AG (A)" written by Boris Groysberg, Nitin Nohria, Mark C. Maletz, Kerry Herman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bertelsmann's Hermreck facing as an external strategic factors. Some of the topics covered in Managing Talent at Bertelsmann AG (A) case study are - Strategic Management Strategies, Diversity, Strategy, Talent management and Organizational Development.
Some of the macro environment factors that can be used to understand the Managing Talent at Bertelsmann AG (A) casestudy better are - – increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, increasing transportation and logistics costs, geopolitical disruptions, talent flight as more people leaving formal jobs,
increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Managing Talent at Bertelsmann AG (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Managing Talent at Bertelsmann AG (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bertelsmann's Hermreck, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bertelsmann's Hermreck 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 Managing Talent at Bertelsmann AG (A) can be done for the following purposes –
1. Strategic planning using facts provided in Managing Talent at Bertelsmann AG (A) case study
2. Improving business portfolio management of Bertelsmann's Hermreck
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 Bertelsmann's Hermreck
Strengths Managing Talent at Bertelsmann AG (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bertelsmann's Hermreck in Managing Talent at Bertelsmann AG (A) Harvard Business Review case study are -
Diverse revenue streams
– Bertelsmann's Hermreck is present in almost all the verticals within the industry. This has provided firm in Managing Talent at Bertelsmann AG (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Bertelsmann's Hermreck 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 Managing Talent at Bertelsmann AG (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Bertelsmann's Hermreck in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Bertelsmann's Hermreck 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.
Innovation driven organization
– Bertelsmann's Hermreck is one of the most innovative firm in sector. Manager in Managing Talent at Bertelsmann AG (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Organizational Development field
– Bertelsmann's Hermreck 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 Bertelsmann's Hermreck in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Bertelsmann's Hermreck
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bertelsmann's Hermreck does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Bertelsmann's Hermreck has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bertelsmann's Hermreck 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.
Low bargaining power of suppliers
– Suppliers of Bertelsmann's Hermreck in the sector have low bargaining power. Managing Talent at Bertelsmann AG (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bertelsmann's Hermreck to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Bertelsmann's Hermreck 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 Bertelsmann's Hermreck is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Managing Talent at Bertelsmann AG (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Organizational Development industry
– Managing Talent at Bertelsmann AG (A) firm has clearly differentiated products in the market place. This has enabled Bertelsmann's Hermreck to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Bertelsmann's Hermreck to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Bertelsmann's Hermreck 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 Managing Talent at Bertelsmann AG (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Managing Talent at Bertelsmann AG (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Managing Talent at Bertelsmann AG (A) are -
Lack of clear differentiation of Bertelsmann's Hermreck products
– To increase the profitability and margins on the products, Bertelsmann's Hermreck needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Bertelsmann's Hermreck 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.
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 Bertelsmann's Hermreck supply chain. Even after few cautionary changes mentioned in the HBR case study - Managing Talent at Bertelsmann AG (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bertelsmann's Hermreck vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Managing Talent at Bertelsmann AG (A) HBR case study mentions - Bertelsmann's Hermreck takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Bertelsmann's Hermreck has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bertelsmann's Hermreck is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Managing Talent at Bertelsmann AG (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 bargaining power of channel partners
– Because of the regulatory requirements, Boris Groysberg, Nitin Nohria, Mark C. Maletz, Kerry Herman suggests that, Bertelsmann's Hermreck 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.
Need for greater diversity
– Bertelsmann's Hermreck 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Managing Talent at Bertelsmann AG (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 Bertelsmann's Hermreck has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Managing Talent at Bertelsmann AG (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 Bertelsmann's Hermreck 's lucrative customers.
Interest costs
– Compare to the competition, Bertelsmann's Hermreck 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 Managing Talent at Bertelsmann AG (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 Managing Talent at Bertelsmann AG (A) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Bertelsmann's Hermreck can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bertelsmann's Hermreck 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, Managing Talent at Bertelsmann AG (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.
Loyalty marketing
– Bertelsmann's Hermreck 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, Bertelsmann's Hermreck is facing challenges because of the dominance of functional experts in the organization. Managing Talent at Bertelsmann AG (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.
Buying journey improvements
– Bertelsmann's Hermreck can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Managing Talent at Bertelsmann AG (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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bertelsmann's Hermreck can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Bertelsmann's Hermreck in the consumer business. Now Bertelsmann's Hermreck can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Bertelsmann's Hermreck can develop new processes and procedures in Organizational Development 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.
Manufacturing automation
– Bertelsmann's Hermreck can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Bertelsmann's Hermreck to increase its market reach. Bertelsmann's Hermreck 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bertelsmann's Hermreck 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.
Building a culture of innovation
– managers at Bertelsmann's Hermreck 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.
Learning at scale
– Online learning technologies has now opened space for Bertelsmann's Hermreck 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.
Threats Managing Talent at Bertelsmann AG (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Managing Talent at Bertelsmann AG (A) are -
Consumer confidence and its impact on Bertelsmann's Hermreck 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.
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. Bertelsmann's Hermreck needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bertelsmann's Hermreck 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 Managing Talent at Bertelsmann AG (A) .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bertelsmann's Hermreck with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Bertelsmann's Hermreck can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Bertelsmann's Hermreck in the Organizational Development sector and impact the bottomline of the organization.
Environmental challenges
– Bertelsmann's Hermreck 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. Bertelsmann's Hermreck can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bertelsmann's Hermreck 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.
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. Bertelsmann's Hermreck 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.
Regulatory challenges
– Bertelsmann's Hermreck 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 Organizational Development industry regulations.
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 Bertelsmann's Hermreck.
Stagnating economy with rate increase
– Bertelsmann's Hermreck can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Managing Talent at Bertelsmann AG (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 Managing Talent at Bertelsmann AG (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 Managing Talent at Bertelsmann AG (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 Managing Talent at Bertelsmann AG (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 Managing Talent at Bertelsmann AG (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 Bertelsmann's Hermreck needs to make to build a sustainable competitive advantage.