Case Study Description of VerticalNet (www.verticalnet.com)
VerticalNet, a leading creator of targeted business-to-business vertical trade communities on the Internet, is trying to expand its model to facilitate e-commerce. Mark Walsh, the CEO of VerticalNet, has to decide how far he can extend the firm's business model without negatively affecting his current franchise.
Swot Analysis of "VerticalNet (www.verticalnet.com)" written by Das Narayandas includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Verticalnet Www.verticalnet.com facing as an external strategic factors. Some of the topics covered in VerticalNet (www.verticalnet.com) case study are - Strategic Management Strategies, Internet and Sales & Marketing.
Some of the macro environment factors that can be used to understand the VerticalNet (www.verticalnet.com) casestudy better are - – digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing commodity prices, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing transportation and logistics costs,
technology disruption, wage bills are increasing, etc
Introduction to SWOT Analysis of VerticalNet (www.verticalnet.com)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in VerticalNet (www.verticalnet.com) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Verticalnet Www.verticalnet.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Verticalnet Www.verticalnet.com 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 VerticalNet (www.verticalnet.com) can be done for the following purposes –
1. Strategic planning using facts provided in VerticalNet (www.verticalnet.com) case study
2. Improving business portfolio management of Verticalnet Www.verticalnet.com
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 Verticalnet Www.verticalnet.com
Strengths VerticalNet (www.verticalnet.com) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Verticalnet Www.verticalnet.com in VerticalNet (www.verticalnet.com) Harvard Business Review case study are -
Successful track record of launching new products
– Verticalnet Www.verticalnet.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Verticalnet Www.verticalnet.com 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.
Highly skilled collaborators
– Verticalnet Www.verticalnet.com 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 VerticalNet (www.verticalnet.com) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Sales & Marketing field
– Verticalnet Www.verticalnet.com 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 Verticalnet Www.verticalnet.com in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Verticalnet Www.verticalnet.com is one of the most innovative firm in sector. Manager in VerticalNet (www.verticalnet.com) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Verticalnet Www.verticalnet.com has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in VerticalNet (www.verticalnet.com) 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.
Ability to recruit top talent
– Verticalnet Www.verticalnet.com is one of the leading recruiters in the industry. Managers in the VerticalNet (www.verticalnet.com) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the VerticalNet (www.verticalnet.com) 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.
Low bargaining power of suppliers
– Suppliers of Verticalnet Www.verticalnet.com in the sector have low bargaining power. VerticalNet (www.verticalnet.com) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Verticalnet Www.verticalnet.com to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Verticalnet Www.verticalnet.com is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Verticalnet Www.verticalnet.com 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.
High switching costs
– The high switching costs that Verticalnet Www.verticalnet.com 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.
Organizational Resilience of Verticalnet Www.verticalnet.com
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Verticalnet Www.verticalnet.com does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses VerticalNet (www.verticalnet.com) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of VerticalNet (www.verticalnet.com) are -
Products dominated business model
– Even though Verticalnet Www.verticalnet.com 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 - VerticalNet (www.verticalnet.com) should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Verticalnet Www.verticalnet.com is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study VerticalNet (www.verticalnet.com) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As VerticalNet (www.verticalnet.com) HBR case study mentions - Verticalnet Www.verticalnet.com 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.
Interest costs
– Compare to the competition, Verticalnet Www.verticalnet.com 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.
Slow decision making process
– As mentioned earlier in the report, Verticalnet Www.verticalnet.com 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. Verticalnet Www.verticalnet.com 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.
Lack of clear differentiation of Verticalnet Www.verticalnet.com products
– To increase the profitability and margins on the products, Verticalnet Www.verticalnet.com needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Verticalnet Www.verticalnet.com supply chain. Even after few cautionary changes mentioned in the HBR case study - VerticalNet (www.verticalnet.com), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Verticalnet Www.verticalnet.com vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study VerticalNet (www.verticalnet.com) 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 VerticalNet (www.verticalnet.com) can leverage the sales team experience to cultivate customer relationships as Verticalnet Www.verticalnet.com is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Verticalnet Www.verticalnet.com is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Verticalnet Www.verticalnet.com needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Verticalnet Www.verticalnet.com to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Verticalnet Www.verticalnet.com, firm in the HBR case study VerticalNet (www.verticalnet.com) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Das Narayandas suggests that, Verticalnet Www.verticalnet.com 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.
Opportunities VerticalNet (www.verticalnet.com) | 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 VerticalNet (www.verticalnet.com) are -
Creating value in data economy
– The success of analytics program of Verticalnet Www.verticalnet.com has opened avenues for new revenue streams for the organization in the industry. This can help Verticalnet Www.verticalnet.com to build a more holistic ecosystem as suggested in the VerticalNet (www.verticalnet.com) case study. Verticalnet Www.verticalnet.com 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, Verticalnet Www.verticalnet.com is facing challenges because of the dominance of functional experts in the organization. VerticalNet (www.verticalnet.com) 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Verticalnet Www.verticalnet.com 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
– Verticalnet Www.verticalnet.com 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Verticalnet Www.verticalnet.com 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 Verticalnet Www.verticalnet.com to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Verticalnet Www.verticalnet.com in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Verticalnet Www.verticalnet.com to increase its market reach. Verticalnet Www.verticalnet.com 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 Verticalnet Www.verticalnet.com 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.
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 Verticalnet Www.verticalnet.com in the consumer business. Now Verticalnet Www.verticalnet.com can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Verticalnet Www.verticalnet.com 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.
Building a culture of innovation
– managers at Verticalnet Www.verticalnet.com 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 Sales & Marketing segment.
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. Verticalnet Www.verticalnet.com can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Verticalnet Www.verticalnet.com 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.
Threats VerticalNet (www.verticalnet.com) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study VerticalNet (www.verticalnet.com) are -
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 Verticalnet Www.verticalnet.com is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Verticalnet Www.verticalnet.com needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Regulatory challenges
– Verticalnet Www.verticalnet.com 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 Sales & Marketing industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Verticalnet Www.verticalnet.com with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Verticalnet Www.verticalnet.com 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.
Consumer confidence and its impact on Verticalnet Www.verticalnet.com 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.
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. Verticalnet Www.verticalnet.com 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.
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. Verticalnet Www.verticalnet.com 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
– Verticalnet Www.verticalnet.com 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 Verticalnet Www.verticalnet.com business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Verticalnet Www.verticalnet.com 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. Verticalnet Www.verticalnet.com can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of VerticalNet (www.verticalnet.com) 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 VerticalNet (www.verticalnet.com) 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 VerticalNet (www.verticalnet.com) 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 VerticalNet (www.verticalnet.com) 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 VerticalNet (www.verticalnet.com) 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 Verticalnet Www.verticalnet.com needs to make to build a sustainable competitive advantage.
