Bombardier and Alstom: The Acela Express SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bombardier and Alstom: The Acela Express
This case charts the process of the souring of the Acela Express, a joint venture of Alstom and Bombardier with Amtrak, the US rail passenger service. Alstom and Bombardier won the contract to install high-speed rail service between Boston and Washington. Soon after the Acela's launch, technical problems with the train were severe and Bombardier's relationship with Amtrak became acrimonious. Both sides in the dispute made legal moves and they continue as of the writing of this case. The case examines the histories of the companies involved, the relationship between the respective parties and presents the technological background to the Acela Express. The goal is to highlight key points in the management of relationships for large-scale projects and to explore a number of issues in technology licensing.
Swot Analysis of "Bombardier and Alstom: The Acela Express" written by Nicholas Rowell, David A. Soberman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Acela Alstom facing as an external strategic factors. Some of the topics covered in Bombardier and Alstom: The Acela Express case study are - Strategic Management Strategies, Innovation, Intellectual property, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Bombardier and Alstom: The Acela Express casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , increasing commodity prices,
increasing household debt because of falling income levels, there is backlash against globalization, etc
Introduction to SWOT Analysis of Bombardier and Alstom: The Acela Express
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bombardier and Alstom: The Acela Express case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Acela Alstom, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Acela Alstom 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 Bombardier and Alstom: The Acela Express can be done for the following purposes –
1. Strategic planning using facts provided in Bombardier and Alstom: The Acela Express case study
2. Improving business portfolio management of Acela Alstom
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 Acela Alstom
Strengths Bombardier and Alstom: The Acela Express | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Acela Alstom in Bombardier and Alstom: The Acela Express Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Bombardier and Alstom: The Acela Express 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.
Learning organization
- Acela Alstom 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 Acela Alstom is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bombardier and Alstom: The Acela Express Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Acela Alstom is present in almost all the verticals within the industry. This has provided firm in Bombardier and Alstom: The Acela Express 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.
Innovation driven organization
– Acela Alstom is one of the most innovative firm in sector. Manager in Bombardier and Alstom: The Acela Express Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Acela Alstom has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Acela Alstom to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Sales & Marketing field
– Acela Alstom 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 Acela Alstom in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Acela Alstom is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Acela Alstom 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 Nicholas Rowell, David A. Soberman 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Bombardier and Alstom: The Acela Express firm has clearly differentiated products in the market place. This has enabled Acela Alstom to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Acela Alstom to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Acela Alstom 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 Bombardier and Alstom: The Acela Express - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Acela Alstom has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Acela Alstom 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.
High switching costs
– The high switching costs that Acela Alstom 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.
Weaknesses Bombardier and Alstom: The Acela Express | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bombardier and Alstom: The Acela Express are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bombardier and Alstom: The Acela Express HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Acela Alstom has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Acela Alstom is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Acela Alstom needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Acela Alstom to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Bombardier and Alstom: The Acela Express 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 Bombardier and Alstom: The Acela Express can leverage the sales team experience to cultivate customer relationships as Acela Alstom is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Acela Alstom, firm in the HBR case study Bombardier and Alstom: The Acela Express needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Acela Alstom 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Bombardier and Alstom: The Acela Express 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 Acela Alstom 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Bombardier and Alstom: The Acela Express, is just above the industry average. Acela Alstom 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 cash cycle compare to competitors
Acela Alstom 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.
Products dominated business model
– Even though Acela Alstom 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 - Bombardier and Alstom: The Acela Express should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Acela Alstom has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Nicholas Rowell, David A. Soberman suggests that, Acela Alstom 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 Bombardier and Alstom: The Acela Express | 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 Bombardier and Alstom: The Acela Express are -
Using analytics as competitive advantage
– Acela Alstom 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 Bombardier and Alstom: The Acela Express - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Acela Alstom to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Acela Alstom to increase its market reach. Acela Alstom 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Acela Alstom can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Acela Alstom can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bombardier and Alstom: The Acela Express 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Acela Alstom 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.
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 Acela Alstom 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.
Leveraging digital technologies
– Acela Alstom 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.
Creating value in data economy
– The success of analytics program of Acela Alstom has opened avenues for new revenue streams for the organization in the industry. This can help Acela Alstom to build a more holistic ecosystem as suggested in the Bombardier and Alstom: The Acela Express case study. Acela Alstom can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Acela Alstom 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.
Learning at scale
– Online learning technologies has now opened space for Acela Alstom 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, Acela Alstom 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, Bombardier and Alstom: The Acela Express, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Acela Alstom can use these opportunities to build new business models that can help the communities that Acela Alstom operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Acela Alstom has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Bombardier and Alstom: The Acela Express External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bombardier and Alstom: The Acela Express are -
High dependence on third party suppliers
– Acela Alstom 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.
Increasing wage structure of Acela Alstom
– 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 Acela Alstom.
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. Acela Alstom 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.
Environmental challenges
– Acela Alstom 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. Acela Alstom can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Technology acceleration in Forth Industrial Revolution
– Acela Alstom has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Acela Alstom 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.
Consumer confidence and its impact on Acela Alstom 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.
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.
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 Acela Alstom is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Acela Alstom 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 Bombardier and Alstom: The Acela Express .
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 Acela Alstom 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. Acela Alstom can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Acela Alstom in the Sales & Marketing sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Bombardier and Alstom: The Acela Express 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 Bombardier and Alstom: The Acela Express 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 Bombardier and Alstom: The Acela Express 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 Bombardier and Alstom: The Acela Express 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 Bombardier and Alstom: The Acela Express 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 Acela Alstom needs to make to build a sustainable competitive advantage.
