After conducting thorough research, two young entrepreneurs in Rwanda realize they have the opportunity to target the international budget tourists commonly referred to as "backpackers." Only one European-style backpacker hostel currently exists in the capital city of Kigali, and the low-budget tourism industry remains significantly underdeveloped throughout the country. The partners have seen how successful this type of tourism has become in neighbouring countries and desire to replicate it in their homeland. One of them has inherited a piece of land in a quiet nature area by a lake only five minutes' drive from a major international bus terminal. Although they have very few financial resources between them, they realize that a hospitality business providing tent accommodation and basic services will be cheap to operate and will attract budget-conscious travelers. Now, in order to start construction, they must not only raise $19,000 within the next six months before Rwanda's high tourist season begins but design a successful marketing plan to attract customers once the business opens.
Authors :: Nicole R.D. Haggerty, Dan Hernden, Annika Wang
Swot Analysis of "Rwanda Backpackers" written by Nicole R.D. Haggerty, Dan Hernden, Annika Wang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Backpackers Rwanda facing as an external strategic factors. Some of the topics covered in Rwanda Backpackers case study are - Strategic Management Strategies, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Rwanda Backpackers casestudy better are - – challanges to central banks by blockchain based private currencies, technology disruption, increasing energy prices, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Rwanda Backpackers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Rwanda Backpackers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Backpackers Rwanda, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Backpackers Rwanda 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 Rwanda Backpackers can be done for the following purposes –
1. Strategic planning using facts provided in Rwanda Backpackers case study
2. Improving business portfolio management of Backpackers Rwanda
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Backpackers Rwanda
Strengths Rwanda Backpackers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Backpackers Rwanda in Rwanda Backpackers Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Backpackers Rwanda 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 Sales & Marketing segment
- digital transformation varies from industry to industry. For Backpackers Rwanda digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Backpackers Rwanda 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.
Organizational Resilience of Backpackers Rwanda
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Backpackers Rwanda does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Backpackers Rwanda is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Backpackers Rwanda in the sector have low bargaining power. Rwanda Backpackers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Backpackers Rwanda to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Backpackers Rwanda has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Rwanda Backpackers 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.
Analytics focus
– Backpackers Rwanda 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 Nicole R.D. Haggerty, Dan Hernden, Annika Wang 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.
Successful track record of launching new products
– Backpackers Rwanda has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Backpackers Rwanda 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.
Innovation driven organization
– Backpackers Rwanda is one of the most innovative firm in sector. Manager in Rwanda Backpackers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Backpackers Rwanda is present in almost all the verticals within the industry. This has provided firm in Rwanda Backpackers 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.
Effective Research and Development (R&D)
– Backpackers Rwanda 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 Rwanda Backpackers - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Sales & Marketing industry
– Rwanda Backpackers firm has clearly differentiated products in the market place. This has enabled Backpackers Rwanda to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Backpackers Rwanda to invest into research and development (R&D) and innovation.
Weaknesses Rwanda Backpackers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Rwanda Backpackers are -
No frontier risks strategy
– After analyzing the HBR case study Rwanda Backpackers, it seems that company is thinking about the frontier risks that can impact Sales & Marketing 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.
Aligning sales with marketing
– It come across in the case study Rwanda Backpackers that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Rwanda Backpackers can leverage the sales team experience to cultivate customer relationships as Backpackers Rwanda is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Backpackers Rwanda 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Rwanda Backpackers, is just above the industry average. Backpackers Rwanda 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.
Capital Spending Reduction
– Even during the low interest decade, Backpackers Rwanda 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 Backpackers Rwanda products
– To increase the profitability and margins on the products, Backpackers Rwanda needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Backpackers Rwanda is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Rwanda Backpackers can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Backpackers Rwanda 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 Rwanda Backpackers, it seems that the employees of Backpackers Rwanda don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Backpackers Rwanda is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Backpackers Rwanda needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Backpackers Rwanda to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Backpackers Rwanda, firm in the HBR case study Rwanda Backpackers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Rwanda Backpackers | 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 Rwanda Backpackers are -
Learning at scale
– Online learning technologies has now opened space for Backpackers Rwanda 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Backpackers Rwanda can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Backpackers Rwanda 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.
Leveraging digital technologies
– Backpackers Rwanda 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Backpackers Rwanda can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Backpackers Rwanda 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
– Backpackers Rwanda can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Rwanda Backpackers 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Backpackers Rwanda 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 Backpackers Rwanda to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Backpackers Rwanda can use these opportunities to build new business models that can help the communities that Backpackers Rwanda operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Better consumer reach
– The expansion of the 5G network will help Backpackers Rwanda to increase its market reach. Backpackers Rwanda 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
– Backpackers Rwanda can develop new processes and procedures in Sales & Marketing 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.
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. Backpackers Rwanda can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Backpackers Rwanda can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Threats Rwanda Backpackers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Rwanda Backpackers are -
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.
Increasing wage structure of Backpackers Rwanda
– 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 Backpackers Rwanda.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Backpackers Rwanda with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Backpackers Rwanda 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Backpackers Rwanda 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 Rwanda Backpackers .
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Backpackers Rwanda 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
– Backpackers Rwanda 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.
Technology acceleration in Forth Industrial Revolution
– Backpackers Rwanda has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Backpackers Rwanda needs to keep up with the evolution of technology in the Sales & Marketing 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Backpackers Rwanda in the Sales & Marketing industry. The Sales & Marketing 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.
Environmental challenges
– Backpackers Rwanda 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. Backpackers Rwanda can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Rwanda Backpackers, Backpackers Rwanda may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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. Backpackers Rwanda needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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. Backpackers Rwanda 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.
Weighted SWOT Analysis of Rwanda Backpackers 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 Rwanda Backpackers 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 Rwanda Backpackers 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 Rwanda Backpackers 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 Rwanda Backpackers 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 Backpackers Rwanda needs to make to build a sustainable competitive advantage.