University of California, Berkeley-Haas collection"In April 2011, VMware announced the world's first open Platform-as-a-Service (PaaS) offering, Cloud Foundry. The service provided a platform for building, deploying, and running cloud applications. It offered developers a choice of developer frameworks, infrastructure services, and clouds to which to deploy applications. Cloud Foundry was intended to allow software developers to focus on applications development rather than infrastructure. Jerry Chen, VMware's Vice President of Cloud and Application Services, was responsible for identifying the appropriate business model for Cloud Foundry. He knew that success for the service would be measured both in terms of establishing a vibrant ecosystem and building a successful business on the platform itself. He and his team needed to find the right balance between VMware's own in-house Software-as-a-service (SaaS) offerings and potential partners or acquisitions."
Authors :: Andrew Isaacs, Sam Kanakamdala, Lisa Reed
Swot Analysis of "VMWare Cloud Foundry" written by Andrew Isaacs, Sam Kanakamdala, Lisa Reed includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cloud Foundry facing as an external strategic factors. Some of the topics covered in VMWare Cloud Foundry case study are - Strategic Management Strategies, Marketing, Technology and Sales & Marketing.
Some of the macro environment factors that can be used to understand the VMWare Cloud Foundry casestudy better are - – central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, geopolitical disruptions, increasing household debt because of falling income levels,
supply chains are disrupted by pandemic , increasing energy prices, etc
Introduction to SWOT Analysis of VMWare Cloud Foundry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in VMWare Cloud Foundry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cloud Foundry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cloud Foundry 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 VMWare Cloud Foundry can be done for the following purposes –
1. Strategic planning using facts provided in VMWare Cloud Foundry case study
2. Improving business portfolio management of Cloud Foundry
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 Cloud Foundry
Strengths VMWare Cloud Foundry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cloud Foundry in VMWare Cloud Foundry Harvard Business Review case study are -
Effective Research and Development (R&D)
– Cloud Foundry 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 VMWare Cloud Foundry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Cloud Foundry in the sector have low bargaining power. VMWare Cloud Foundry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cloud Foundry to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Cloud Foundry 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 VMWare Cloud Foundry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Cloud Foundry 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.
Training and development
– Cloud Foundry has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in VMWare Cloud Foundry 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 Cloud Foundry 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.
Operational resilience
– The operational resilience strategy in the VMWare Cloud Foundry 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.
Sustainable margins compare to other players in Sales & Marketing industry
– VMWare Cloud Foundry firm has clearly differentiated products in the market place. This has enabled Cloud Foundry to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Cloud Foundry to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Cloud Foundry is one of the leading recruiters in the industry. Managers in the VMWare Cloud Foundry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Cloud Foundry is one of the most innovative firm in sector. Manager in VMWare Cloud Foundry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Cloud Foundry is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Cloud Foundry
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cloud Foundry does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses VMWare Cloud Foundry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of VMWare Cloud Foundry are -
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew Isaacs, Sam Kanakamdala, Lisa Reed suggests that, Cloud Foundry 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.
Interest costs
– Compare to the competition, Cloud Foundry 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study VMWare Cloud Foundry, is just above the industry average. Cloud Foundry 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.
Low market penetration in new markets
– Outside its home market of Cloud Foundry, firm in the HBR case study VMWare Cloud Foundry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cloud Foundry is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study VMWare Cloud Foundry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Cloud Foundry is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Cloud Foundry needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cloud Foundry to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Cloud Foundry 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.
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 Cloud Foundry supply chain. Even after few cautionary changes mentioned in the HBR case study - VMWare Cloud Foundry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cloud Foundry vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study VMWare Cloud Foundry, it seems that the employees of Cloud Foundry 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.
Products dominated business model
– Even though Cloud Foundry 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 - VMWare Cloud Foundry should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Cloud Foundry products
– To increase the profitability and margins on the products, Cloud Foundry needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities VMWare Cloud Foundry | 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 VMWare Cloud Foundry are -
Using analytics as competitive advantage
– Cloud Foundry 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 VMWare Cloud Foundry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cloud Foundry to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cloud Foundry 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cloud Foundry 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 Cloud Foundry to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Cloud Foundry 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cloud Foundry 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, VMWare Cloud Foundry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cloud Foundry 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. Cloud Foundry 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.
Developing new processes and practices
– Cloud Foundry 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cloud Foundry can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Cloud Foundry 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.
Creating value in data economy
– The success of analytics program of Cloud Foundry has opened avenues for new revenue streams for the organization in the industry. This can help Cloud Foundry to build a more holistic ecosystem as suggested in the VMWare Cloud Foundry case study. Cloud Foundry can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Cloud Foundry 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.
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 Cloud Foundry in the consumer business. Now Cloud Foundry can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Cloud Foundry 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 VMWare Cloud Foundry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study VMWare Cloud Foundry are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cloud Foundry 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 VMWare Cloud Foundry .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Cloud Foundry in the Sales & Marketing sector and impact the bottomline of the organization.
Environmental challenges
– Cloud Foundry 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. Cloud Foundry can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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. Cloud Foundry needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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 Cloud Foundry.
Shortening product life cycle
– it is one of the major threat that Cloud Foundry is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cloud Foundry 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.
Regulatory challenges
– Cloud Foundry 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.
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 Cloud Foundry business can come under increasing regulations regarding data privacy, data security, etc.
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. Cloud Foundry can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Cloud Foundry 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cloud Foundry with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of VMWare Cloud Foundry 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 VMWare Cloud Foundry 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 VMWare Cloud Foundry 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 VMWare Cloud Foundry 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 VMWare Cloud Foundry 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 Cloud Foundry needs to make to build a sustainable competitive advantage.