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 - – digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation,
challanges to central banks by blockchain based private currencies, geopolitical disruptions, 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 -
Operational resilience
– The operational resilience strategy in the Transforming AMFAM 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.
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.
High switching costs
– The high switching costs that Amfam Salzwedel 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.
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.
Strong track record of project management
– Amfam Salzwedel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Successful track record of launching new products
– Amfam Salzwedel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amfam Salzwedel 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.
Cross disciplinary teams
– Horizontal connected teams at the Amfam Salzwedel 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.
Superior customer experience
– The customer experience strategy of Amfam Salzwedel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Weaknesses Transforming AMFAM | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Transforming AMFAM are -
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.
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.
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.
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.
High cash cycle compare to competitors
Amfam Salzwedel has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Amfam Salzwedel supply chain. Even after few cautionary changes mentioned in the HBR case study - Transforming AMFAM, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Amfam Salzwedel vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Transforming AMFAM 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 Amfam Salzwedel 's lucrative customers.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Amfam Salzwedel 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.
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Transforming AMFAM 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 Amfam Salzwedel has relatively successful track record of launching new products.
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 -
Buying journey improvements
– Amfam Salzwedel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Transforming AMFAM 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.
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.
Building a culture of innovation
– managers at Amfam Salzwedel 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 Amfam Salzwedel in the consumer business. Now Amfam Salzwedel can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Amfam Salzwedel is facing challenges because of the dominance of functional experts in the organization. Transforming AMFAM 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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Amfam Salzwedel 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, Transforming AMFAM, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Amfam Salzwedel 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. Amfam Salzwedel 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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Amfam Salzwedel 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 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.
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.
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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amfam Salzwedel in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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.
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.
Environmental challenges
– Amfam Salzwedel 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. Amfam Salzwedel can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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 .
Technology acceleration in Forth Industrial Revolution
– Amfam Salzwedel has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Amfam Salzwedel 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.
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.
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.
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 Amfam Salzwedel in the Sales & Marketing sector and impact the bottomline of the organization.
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.
