To maximize their effectiveness, color cases should be printed in color.On a winter day in December 2007 at the American Family Mutual Insurance Company (AMFAM) headquarters in Madison, Wisconsin, Dave Anderson and Jack Salzwedel remained in the conference room after the senior management meeting had concluded. Anderson, CEO of AMFAM since January 2007 and Salzwedel, named President in August 2006, reflected together on how far the company had come over the past two years. Both recalled meetings in which top executives simply read out activity reports to help prepare a previous CEO for a largely ceremonial board meeting. These days, they sensed energy and movement at different levels--whether in a strategic planning meeting, or in Salzwedel's recent visit to a regional office to explain in person the content of and motivation for the company's new strategic plan. Anderson and Salzwedel were pleased that the just-ended meeting exhibited the kind of engaged discussion, "pushback," and argumentation they had been encouraging.
Authors :: Rakesh Khurana, Rajiv Lal, Catherine Ross
Swot Analysis of "Transforming AMFAM" written by Rakesh Khurana, Rajiv Lal, Catherine Ross includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amfam Salzwedel facing as an external strategic factors. Some of the topics covered in Transforming AMFAM case study are - Strategic Management Strategies, Innovation, Marketing, Strategic planning and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Transforming AMFAM casestudy better are - – supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, 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%, there is increasing trade war between United States & China,
digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Transforming AMFAM
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Transforming AMFAM case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amfam Salzwedel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amfam Salzwedel 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 Transforming AMFAM can be done for the following purposes –
1. Strategic planning using facts provided in Transforming AMFAM case study
2. Improving business portfolio management of Amfam Salzwedel
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 Amfam Salzwedel
Strengths Transforming AMFAM | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amfam Salzwedel in Transforming AMFAM Harvard Business Review case study are -
Analytics focus
– Amfam Salzwedel 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 Rakesh Khurana, Rajiv Lal, Catherine Ross 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.
Ability to recruit top talent
– Amfam Salzwedel is one of the leading recruiters in the industry. Managers in the Transforming AMFAM are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Amfam Salzwedel in the sector have low bargaining power. Transforming AMFAM has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Amfam Salzwedel to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Amfam Salzwedel is present in almost all the verticals within the industry. This has provided firm in Transforming AMFAM 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Transforming AMFAM firm has clearly differentiated products in the market place. This has enabled Amfam Salzwedel to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Amfam Salzwedel to invest into research and development (R&D) and innovation.
Organizational Resilience of Amfam Salzwedel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amfam Salzwedel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Amfam Salzwedel 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 Transforming AMFAM - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Amfam Salzwedel 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 Amfam Salzwedel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Transforming AMFAM Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Amfam Salzwedel is one of the most innovative firm in sector. Manager in Transforming AMFAM Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Amfam Salzwedel 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 Transforming AMFAM HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Amfam Salzwedel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Amfam Salzwedel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Amfam Salzwedel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Transforming AMFAM 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.
Weaknesses Transforming AMFAM | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Transforming AMFAM are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Amfam Salzwedel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Transforming AMFAM can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Transforming AMFAM, it seems that the employees of Amfam Salzwedel 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.
Lack of clear differentiation of Amfam Salzwedel products
– To increase the profitability and margins on the products, Amfam Salzwedel needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Amfam Salzwedel 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 - Transforming AMFAM should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Transforming AMFAM, 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.
Aligning sales with marketing
– It come across in the case study Transforming AMFAM 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 Transforming AMFAM can leverage the sales team experience to cultivate customer relationships as Amfam Salzwedel is planning to shift buying processes online.
Need for greater diversity
– Amfam Salzwedel 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.
Low market penetration in new markets
– Outside its home market of Amfam Salzwedel, firm in the HBR case study Transforming AMFAM needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Amfam Salzwedel 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.
Skills based hiring
– The stress on hiring functional specialists at Amfam Salzwedel 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Rakesh Khurana, Rajiv Lal, Catherine Ross suggests that, Amfam Salzwedel 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 Transforming AMFAM | 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 Transforming AMFAM are -
Developing new processes and practices
– Amfam Salzwedel 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.
Leveraging digital technologies
– Amfam Salzwedel 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.
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 Amfam Salzwedel 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.
Using analytics as competitive advantage
– Amfam Salzwedel 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 Transforming AMFAM - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Amfam Salzwedel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Amfam Salzwedel has opened avenues for new revenue streams for the organization in the industry. This can help Amfam Salzwedel to build a more holistic ecosystem as suggested in the Transforming AMFAM case study. Amfam Salzwedel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Amfam Salzwedel 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amfam Salzwedel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Amfam Salzwedel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Amfam Salzwedel in the consumer business. Now Amfam Salzwedel can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amfam Salzwedel 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 Amfam Salzwedel to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Amfam Salzwedel to increase its market reach. Amfam Salzwedel 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amfam Salzwedel can use these opportunities to build new business models that can help the communities that Amfam Salzwedel operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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. Amfam Salzwedel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Transforming AMFAM External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Transforming AMFAM are -
Regulatory challenges
– Amfam Salzwedel 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.
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.
High dependence on third party suppliers
– Amfam Salzwedel 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.
Consumer confidence and its impact on Amfam Salzwedel 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Transforming AMFAM, Amfam Salzwedel 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amfam Salzwedel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amfam Salzwedel 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 Transforming AMFAM .
Increasing wage structure of Amfam Salzwedel
– 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 Amfam Salzwedel.
Stagnating economy with rate increase
– Amfam Salzwedel 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.
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 Amfam Salzwedel.
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. Amfam Salzwedel 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.
Shortening product life cycle
– it is one of the major threat that Amfam Salzwedel 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. Amfam Salzwedel needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Transforming AMFAM 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 Transforming AMFAM 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 Transforming AMFAM 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 Transforming AMFAM 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 Transforming AMFAM 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 Amfam Salzwedel needs to make to build a sustainable competitive advantage.