Fiat: Open Innovation in a Downturn (1993-2003) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Fiat: Open Innovation in a Downturn (1993-2003)
One of the key elements of Fiat's recent resurgence is the superiority of its clean, fuel-efficient engine technologies that were mostly developed during the 1990s by Centro Ricerche Fiat (CRF), the Fiat Group company in charge of R&D and technology development. In the early 1990s, when the Italian carmaker was going through troubling times (along with many other players in the automotive industry), CEO Gian Carlo Michellone radically turned around CRF's organization and innovation strategy, adopting and mastering a strategic approach to innovation that resembles what would become known as the open innovation paradigm. This revolution allowed the Fiat Group to keep its "innovation engine" running, despite the heavy downturn of the industry. The CRF case demonstrates how open innovation can protect the firm's innovation capability from the risk of severe resource rationalizations during periods of crisis while proffering a starting point to replicate innovation capability once the downturn is over. The efforts to streamline the adoption of open innovation need to be targeted at several aspects of a firm's organization, i.e., the structures, organizational roles, the planning and control and performance management systems, corporate values, and individual competencies and attitudes. The role played by the senior executive leadership in promoting the successful implementation of open innovation is critical, especially during tough economic times.
Authors :: Alberto Di Minin, Federico Frattini, Andrea Piccaluga
Swot Analysis of "Fiat: Open Innovation in a Downturn (1993-2003)" written by Alberto Di Minin, Federico Frattini, Andrea Piccaluga includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Innovation Fiat facing as an external strategic factors. Some of the topics covered in Fiat: Open Innovation in a Downturn (1993-2003) case study are - Strategic Management Strategies, Leadership, Leadership development, Organizational structure, Product development, Technology and Organizational Development.
Some of the macro environment factors that can be used to understand the Fiat: Open Innovation in a Downturn (1993-2003) casestudy better are - – technology disruption, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Fiat: Open Innovation in a Downturn (1993-2003)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fiat: Open Innovation in a Downturn (1993-2003) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Innovation Fiat, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Innovation Fiat 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 Fiat: Open Innovation in a Downturn (1993-2003) can be done for the following purposes –
1. Strategic planning using facts provided in Fiat: Open Innovation in a Downturn (1993-2003) case study
2. Improving business portfolio management of Innovation Fiat
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 Innovation Fiat
Strengths Fiat: Open Innovation in a Downturn (1993-2003) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Innovation Fiat in Fiat: Open Innovation in a Downturn (1993-2003) Harvard Business Review case study are -
Ability to recruit top talent
– Innovation Fiat is one of the leading recruiters in the industry. Managers in the Fiat: Open Innovation in a Downturn (1993-2003) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Innovation Fiat in the sector have low bargaining power. Fiat: Open Innovation in a Downturn (1993-2003) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Innovation Fiat to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Innovation Fiat 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 Fiat: Open Innovation in a Downturn (1993-2003) 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 Innovation Fiat in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Organizational Development field
– Innovation Fiat 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 Innovation Fiat in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Fiat: Open Innovation in a Downturn (1993-2003) 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.
High brand equity
– Innovation Fiat has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Innovation Fiat to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Innovation Fiat 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 Fiat: Open Innovation in a Downturn (1993-2003) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Innovation Fiat digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Innovation Fiat 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.
Sustainable margins compare to other players in Organizational Development industry
– Fiat: Open Innovation in a Downturn (1993-2003) firm has clearly differentiated products in the market place. This has enabled Innovation Fiat to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Innovation Fiat to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Innovation Fiat 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 Innovation Fiat
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Innovation Fiat does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Fiat: Open Innovation in a Downturn (1993-2003) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fiat: Open Innovation in a Downturn (1993-2003) are -
Capital Spending Reduction
– Even during the low interest decade, Innovation Fiat has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Innovation Fiat products
– To increase the profitability and margins on the products, Innovation Fiat needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Innovation Fiat is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Innovation Fiat needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Innovation Fiat to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Innovation Fiat 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.
Products dominated business model
– Even though Innovation Fiat has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Fiat: Open Innovation in a Downturn (1993-2003) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Fiat: Open Innovation in a Downturn (1993-2003) HBR case study mentions - Innovation Fiat 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.
Need for greater diversity
– Innovation Fiat 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Innovation Fiat 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Innovation Fiat is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Fiat: Open Innovation in a Downturn (1993-2003) 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 Fiat: Open Innovation in a Downturn (1993-2003) 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 Innovation Fiat 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Innovation Fiat has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Innovation Fiat even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Fiat: Open Innovation in a Downturn (1993-2003) | 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 Fiat: Open Innovation in a Downturn (1993-2003) are -
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. Innovation Fiat can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Innovation Fiat to increase its market reach. Innovation Fiat 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.
Building a culture of innovation
– managers at Innovation Fiat 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.
Developing new processes and practices
– Innovation Fiat 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Innovation Fiat to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Innovation Fiat to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Innovation Fiat can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fiat: Open Innovation in a Downturn (1993-2003) 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Innovation Fiat 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, Fiat: Open Innovation in a Downturn (1993-2003), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Innovation Fiat 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.
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 Innovation Fiat 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.
Loyalty marketing
– Innovation Fiat 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.
Leveraging digital technologies
– Innovation Fiat 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.
Creating value in data economy
– The success of analytics program of Innovation Fiat has opened avenues for new revenue streams for the organization in the industry. This can help Innovation Fiat to build a more holistic ecosystem as suggested in the Fiat: Open Innovation in a Downturn (1993-2003) case study. Innovation Fiat can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Innovation Fiat is facing challenges because of the dominance of functional experts in the organization. Fiat: Open Innovation in a Downturn (1993-2003) 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.
Threats Fiat: Open Innovation in a Downturn (1993-2003) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fiat: Open Innovation in a Downturn (1993-2003) are -
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. Innovation Fiat 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.
Consumer confidence and its impact on Innovation Fiat 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.
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 Innovation Fiat business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Innovation Fiat is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Innovation Fiat 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.
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. Innovation Fiat needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
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. Innovation Fiat can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Innovation Fiat 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fiat: Open Innovation in a Downturn (1993-2003), Innovation Fiat 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 .
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 Innovation Fiat in the Organizational Development sector and impact the bottomline of the organization.
Increasing wage structure of Innovation Fiat
– 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 Innovation Fiat.
Technology acceleration in Forth Industrial Revolution
– Innovation Fiat has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Innovation Fiat 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Innovation Fiat 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 Fiat: Open Innovation in a Downturn (1993-2003) .
Weighted SWOT Analysis of Fiat: Open Innovation in a Downturn (1993-2003) 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 Fiat: Open Innovation in a Downturn (1993-2003) 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 Fiat: Open Innovation in a Downturn (1993-2003) 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 Fiat: Open Innovation in a Downturn (1993-2003) 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 Fiat: Open Innovation in a Downturn (1993-2003) 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 Innovation Fiat needs to make to build a sustainable competitive advantage.