Case Study Description of Teracom Limited: Appointing a Consumer Distributor
Teracom Limited was a medium-sized engineering manufacturing firm in India whose product portfolio included modems. The company catered to the various telecom service providers across India, including Bharat Sanchar Nigam Limited , a major state-owned telecommunications company. Teracom's customers were primarily business-to-business entities such as government organizations and telecom operators. However, it was considering selling its modems to retail customers. After seeking applications for new distributors of Teracom modems, the company narrowed the list down to four candidate firms. In December 2014, Teracom's president of corporate business had to use a distributor selection model and undertake a distributor performance appraisal. What were the main criteria for evaluating the four applicants, and which firm was the best fit? Rajeev Kumra is affiliated with Indian Institute of Management Lucknow.
Authors :: Rajeev Kumra
Topics :: Sales & Marketing
Tags :: Business models, Entrepreneurship, International business, IT, Marketing, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Teracom Limited: Appointing a Consumer Distributor" written by Rajeev Kumra includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Teracom Modems facing as an external strategic factors. Some of the topics covered in Teracom Limited: Appointing a Consumer Distributor case study are - Strategic Management Strategies, Business models, Entrepreneurship, International business, IT, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Teracom Limited: Appointing a Consumer Distributor casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, geopolitical disruptions, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies,
increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, etc
Introduction to SWOT Analysis of Teracom Limited: Appointing a Consumer Distributor
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Teracom Limited: Appointing a Consumer Distributor case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Teracom Modems, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Teracom Modems 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 Teracom Limited: Appointing a Consumer Distributor can be done for the following purposes –
1. Strategic planning using facts provided in Teracom Limited: Appointing a Consumer Distributor case study
2. Improving business portfolio management of Teracom Modems
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 Teracom Modems
Strengths Teracom Limited: Appointing a Consumer Distributor | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Teracom Modems in Teracom Limited: Appointing a Consumer Distributor Harvard Business Review case study are -
Highly skilled collaborators
– Teracom Modems 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 Teracom Limited: Appointing a Consumer Distributor HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Teracom Modems 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 Teracom Modems
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Teracom Modems does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Teracom Modems 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 brand equity
– Teracom Modems has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Teracom Modems to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Teracom Modems in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Teracom Modems is one of the most innovative firm in sector. Manager in Teracom Limited: Appointing a Consumer Distributor 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
– Teracom Modems has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Teracom Limited: Appointing a Consumer Distributor 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.
Operational resilience
– The operational resilience strategy in the Teracom Limited: Appointing a Consumer Distributor 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.
Successful track record of launching new products
– Teracom Modems has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Teracom Modems 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.
Ability to lead change in Sales & Marketing field
– Teracom Modems 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 Teracom Modems in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Teracom Modems is present in almost all the verticals within the industry. This has provided firm in Teracom Limited: Appointing a Consumer Distributor 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 Teracom Limited: Appointing a Consumer Distributor | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Teracom Limited: Appointing a Consumer Distributor are -
Low market penetration in new markets
– Outside its home market of Teracom Modems, firm in the HBR case study Teracom Limited: Appointing a Consumer Distributor needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Teracom Limited: Appointing a Consumer Distributor, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Teracom Limited: Appointing a Consumer Distributor, is just above the industry average. Teracom Modems 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 operating costs
– Compare to the competitors, firm in the HBR case study Teracom Limited: Appointing a Consumer Distributor 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 Teracom Modems 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Teracom Modems is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Teracom Modems needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Teracom Modems to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Teracom Modems needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Teracom Limited: Appointing a Consumer Distributor 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 Teracom Modems has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Teracom Limited: Appointing a Consumer Distributor, in the dynamic environment Teracom Modems has struggled to respond to the nimble upstart competition. Teracom Modems has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Teracom Modems has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Teracom Limited: Appointing a Consumer Distributor 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 Teracom Limited: Appointing a Consumer Distributor can leverage the sales team experience to cultivate customer relationships as Teracom Modems is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Teracom Limited: Appointing a Consumer Distributor HBR case study mentions - Teracom Modems 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.
Opportunities Teracom Limited: Appointing a Consumer Distributor | 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 Teracom Limited: Appointing a Consumer Distributor are -
Learning at scale
– Online learning technologies has now opened space for Teracom Modems 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Teracom Modems 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.
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. Teracom Modems 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. Teracom Modems 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.
Leveraging digital technologies
– Teracom Modems 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.
Loyalty marketing
– Teracom Modems 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.
Building a culture of innovation
– managers at Teracom Modems 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.
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 Teracom Modems in the consumer business. Now Teracom Modems can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Teracom Modems 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Teracom Modems is facing challenges because of the dominance of functional experts in the organization. Teracom Limited: Appointing a Consumer Distributor 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Teracom Modems can use these opportunities to build new business models that can help the communities that Teracom Modems operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Using analytics as competitive advantage
– Teracom Modems 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 Teracom Limited: Appointing a Consumer Distributor - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Teracom Modems to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Teracom Modems 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.
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 Teracom Modems 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.
Threats Teracom Limited: Appointing a Consumer Distributor External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Teracom Limited: Appointing a Consumer Distributor are -
Environmental challenges
– Teracom Modems 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. Teracom Modems can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High dependence on third party suppliers
– Teracom Modems 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.
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 Teracom Modems in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Teracom Modems 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 Teracom Limited: Appointing a Consumer Distributor .
Stagnating economy with rate increase
– Teracom Modems 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 wage structure of Teracom Modems
– 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 Teracom Modems.
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 Teracom Modems business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Teracom Modems with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Teracom Modems 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. Teracom Modems needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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. Teracom Modems can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Teracom Limited: Appointing a Consumer Distributor, Teracom Modems 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 .
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 Teracom Modems.
Weighted SWOT Analysis of Teracom Limited: Appointing a Consumer Distributor 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 Teracom Limited: Appointing a Consumer Distributor 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 Teracom Limited: Appointing a Consumer Distributor 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 Teracom Limited: Appointing a Consumer Distributor 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 Teracom Limited: Appointing a Consumer Distributor 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 Teracom Modems needs to make to build a sustainable competitive advantage.