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 - – cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing energy prices, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs,
technology disruption, supply chains are disrupted by pandemic , 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 -
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.
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.
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.
High brand equity
– Cloud Foundry has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cloud Foundry to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
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.
Learning organization
- Cloud Foundry 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 Cloud Foundry is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in VMWare Cloud Foundry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Cloud Foundry has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cloud Foundry 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.
Diverse revenue streams
– Cloud Foundry is present in almost all the verticals within the industry. This has provided firm in VMWare Cloud Foundry 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.
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 -
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.
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.
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.
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.
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.
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.
No frontier risks strategy
– After analyzing the HBR case study VMWare Cloud Foundry, 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.
High operating costs
– Compare to the competitors, firm in the HBR case study VMWare Cloud Foundry 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 Cloud Foundry 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Cloud Foundry 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study VMWare Cloud Foundry, in the dynamic environment Cloud Foundry has struggled to respond to the nimble upstart competition. Cloud Foundry has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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 -
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.
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.
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. Cloud Foundry can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cloud Foundry can use these opportunities to build new business models that can help the communities that Cloud Foundry operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cloud Foundry is facing challenges because of the dominance of functional experts in the organization. VMWare Cloud Foundry 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.
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.
Buying journey improvements
– Cloud Foundry can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. VMWare Cloud Foundry 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.
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.
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 Cloud Foundry 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.
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. Cloud Foundry can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cloud Foundry 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.
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 -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study VMWare Cloud Foundry, Cloud Foundry 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 .
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.
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.
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.
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 .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in 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.
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.
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.
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.
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.
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.
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.
