Kvadrat: Leading for Innovation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Kvadrat: Leading for Innovation

In 2013, Anders Byriel, CEO of the family-owned Danish textiles company, Kvadrat, considered the firm's strategic plan. In 2000, Byriel and Mette Bendix, Kvadrat's Product Director, had taken over management of the company from their fathers, who had founded Kvadrat in the 1960s. Byriel and Bendix had joined Kvadrat in 1992, and since that time, Kvadrat had grown from a??19 million in annual sales to over a??86 million. It had expanded its focus on selling textiles to European architects and furniture manufactures, becoming a global company with a wide product range and a broad customer base. Kvadrat's internal organization had grown and transformed to support this larger business. Now Kvadrat's management team was focused on a number of key initiatives: expansion into Asia; improved sales trends in its curtain and Soft Cells businesses; development of Kvadrat's retail sales operations; the implementation of new Human Resources practices; and the execution of a new organizational design. Was such an extensive growth, turnaround and internal development agenda feasible? And, were the initiatives being considered the right ones for Kvadrat?

Authors :: Boris Groysberg, Sarah L. Abbott

Topics :: Organizational Development

Tags :: Business processes, Collaboration, Growth strategy, Human resource management, Leadership, Organizational culture, Social responsibility, Strategy execution, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Kvadrat: Leading for Innovation" written by Boris Groysberg, Sarah L. Abbott includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kvadrat Kvadrat's facing as an external strategic factors. Some of the topics covered in Kvadrat: Leading for Innovation case study are - Strategic Management Strategies, Business processes, Collaboration, Growth strategy, Human resource management, Leadership, Organizational culture, Social responsibility, Strategy execution and Organizational Development.

Some of the macro environment factors that can be used to understand the Kvadrat: Leading for Innovation casestudy better are - – wage bills are increasing, increasing commodity prices, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, technology disruption, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, there is backlash against globalization, increasing transportation and logistics costs, etc

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Introduction to SWOT Analysis of Kvadrat: Leading for Innovation

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kvadrat: Leading for Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kvadrat Kvadrat's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kvadrat Kvadrat's 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Kvadrat: Leading for Innovation can be done for the following purposes –
1. Strategic planning using facts provided in Kvadrat: Leading for Innovation case study
2. Improving business portfolio management of Kvadrat Kvadrat's
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 Kvadrat Kvadrat's

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Strengths Kvadrat: Leading for Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Kvadrat Kvadrat's in Kvadrat: Leading for Innovation Harvard Business Review case study are -

Ability to recruit top talent

– Kvadrat Kvadrat's is one of the leading recruiters in the industry. Managers in the Kvadrat: Leading for Innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Highly skilled collaborators

– Kvadrat Kvadrat's 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 Kvadrat: Leading for Innovation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Strong track record of project management

– Kvadrat Kvadrat's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Sustainable margins compare to other players in Organizational Development industry

– Kvadrat: Leading for Innovation firm has clearly differentiated products in the market place. This has enabled Kvadrat Kvadrat's to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Kvadrat Kvadrat's to invest into research and development (R&D) and innovation.

Operational resilience

– The operational resilience strategy in the Kvadrat: Leading for Innovation 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.

Training and development

– Kvadrat Kvadrat's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Kvadrat: Leading for Innovation 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.

Learning organization

- Kvadrat Kvadrat's 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 Kvadrat Kvadrat's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kvadrat: Leading for Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Cross disciplinary teams

– Horizontal connected teams at the Kvadrat Kvadrat's 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.

Digital Transformation in Organizational Development segment

- digital transformation varies from industry to industry. For Kvadrat Kvadrat's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kvadrat Kvadrat's 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.

Analytics focus

– Kvadrat Kvadrat's 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 Boris Groysberg, Sarah L. Abbott 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.

High switching costs

– The high switching costs that Kvadrat Kvadrat's 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.

Successful track record of launching new products

– Kvadrat Kvadrat's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kvadrat Kvadrat's 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.

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Weaknesses Kvadrat: Leading for Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Kvadrat: Leading for Innovation are -

Products dominated business model

– Even though Kvadrat Kvadrat's 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 - Kvadrat: Leading for Innovation should strive to include more intangible value offerings along with its core products and services.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the Kvadrat: Leading for Innovation 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 Kvadrat Kvadrat's has relatively successful track record of launching new products.

Low market penetration in new markets

– Outside its home market of Kvadrat Kvadrat's, firm in the HBR case study Kvadrat: Leading for Innovation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Slow decision making process

– As mentioned earlier in the report, Kvadrat Kvadrat's 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. Kvadrat Kvadrat's 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.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Kvadrat: Leading for Innovation, it seems that the employees of Kvadrat Kvadrat's 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.

Capital Spending Reduction

– Even during the low interest decade, Kvadrat Kvadrat's 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.

High cash cycle compare to competitors

Kvadrat Kvadrat's 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 strategic competitive environment developments

– As Kvadrat: Leading for Innovation HBR case study mentions - Kvadrat Kvadrat's 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.

Increasing silos among functional specialists

– The organizational structure of Kvadrat Kvadrat's is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Kvadrat Kvadrat's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kvadrat Kvadrat's to focus more on services rather than just following the product oriented approach.

High operating costs

– Compare to the competitors, firm in the HBR case study Kvadrat: Leading for Innovation 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 Kvadrat Kvadrat's 's lucrative customers.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kvadrat Kvadrat's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kvadrat: Leading for Innovation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

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Opportunities Kvadrat: Leading for Innovation | 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 Kvadrat: Leading for Innovation are -

Creating value in data economy

– The success of analytics program of Kvadrat Kvadrat's has opened avenues for new revenue streams for the organization in the industry. This can help Kvadrat Kvadrat's to build a more holistic ecosystem as suggested in the Kvadrat: Leading for Innovation case study. Kvadrat Kvadrat's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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. Kvadrat Kvadrat's 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. Kvadrat Kvadrat's 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.

Better consumer reach

– The expansion of the 5G network will help Kvadrat Kvadrat's to increase its market reach. Kvadrat Kvadrat's 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.

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 Kvadrat Kvadrat's 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.

Buying journey improvements

– Kvadrat Kvadrat's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kvadrat: Leading for Innovation 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kvadrat Kvadrat's can use these opportunities to build new business models that can help the communities that Kvadrat Kvadrat's operates in. Secondly it can use opportunities from government spending in Organizational Development sector.

Low interest rates

– Even though inflation is raising its head in most developed economies, Kvadrat Kvadrat's 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Kvadrat Kvadrat's 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, Kvadrat: Leading for Innovation, 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

– Kvadrat Kvadrat's 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.

Leveraging digital technologies

– Kvadrat Kvadrat's 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.

Using analytics as competitive advantage

– Kvadrat Kvadrat's 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 Kvadrat: Leading for Innovation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kvadrat Kvadrat's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Loyalty marketing

– Kvadrat Kvadrat's 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.

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. Kvadrat Kvadrat's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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Threats Kvadrat: Leading for Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Kvadrat: Leading for Innovation are -

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Kvadrat Kvadrat's 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.

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.

Technology acceleration in Forth Industrial Revolution

– Kvadrat Kvadrat's has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Kvadrat Kvadrat's 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Kvadrat: Leading for Innovation, Kvadrat Kvadrat's 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 .

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. Kvadrat Kvadrat's 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.

High dependence on third party suppliers

– Kvadrat Kvadrat's 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.

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 Kvadrat Kvadrat's business can come under increasing regulations regarding data privacy, data security, etc.

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. Kvadrat Kvadrat's 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 Kvadrat Kvadrat's

– 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 Kvadrat Kvadrat's.

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.

Consumer confidence and its impact on Kvadrat Kvadrat's 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.

Regulatory challenges

– Kvadrat Kvadrat's 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 Kvadrat Kvadrat's.

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Weighted SWOT Analysis of Kvadrat: Leading for Innovation 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 Kvadrat: Leading for Innovation 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 Kvadrat: Leading for Innovation 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 Kvadrat: Leading for Innovation 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 Kvadrat: Leading for Innovation 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 Kvadrat Kvadrat's needs to make to build a sustainable competitive advantage.

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