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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, technology disruption, central banks are concerned over increasing inflation,
geopolitical disruptions, increasing transportation and logistics costs, 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 -
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.
Strong track record of project management
– Innovation Fiat is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Training and development
– Innovation Fiat has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fiat: Open Innovation in a Downturn (1993-2003) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Innovation Fiat 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
– Innovation Fiat is one of the most innovative firm in sector. Manager in Fiat: Open Innovation in a Downturn (1993-2003) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
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.
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 -
Interest costs
– Compare to the competition, Innovation Fiat 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.
No frontier risks strategy
– After analyzing the HBR case study Fiat: Open Innovation in a Downturn (1993-2003), it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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 Innovation Fiat supply chain. Even after few cautionary changes mentioned in the HBR case study - Fiat: Open Innovation in a Downturn (1993-2003), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Innovation Fiat vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Fiat: Open Innovation in a Downturn (1993-2003), is just above the industry average. Innovation Fiat needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Alberto Di Minin, Federico Frattini, Andrea Piccaluga suggests that, Innovation Fiat 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
– 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fiat: Open Innovation in a Downturn (1993-2003), it seems that the employees of Innovation Fiat 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.
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.
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.
High cash cycle compare to competitors
Innovation Fiat 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.
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 -
Learning at scale
– Online learning technologies has now opened space for Innovation Fiat 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.
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.
Using analytics as competitive advantage
– Innovation Fiat 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 Fiat: Open Innovation in a Downturn (1993-2003) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Innovation Fiat to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Innovation Fiat 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. Innovation Fiat 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Innovation Fiat in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
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 Innovation Fiat in the consumer business. Now Innovation Fiat can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Innovation Fiat 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.
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Innovation Fiat can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 -
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 .
Stagnating economy with rate increase
– Innovation Fiat 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Innovation Fiat 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.
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.
Environmental challenges
– Innovation Fiat 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. Innovation Fiat can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
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.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
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.
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.
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.
