Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions
This note explains the considerations involved in determining a firm's vertical, horizontal, and geographic scope. It is organized into five sections: An introduction that presents important questions related to strategy formulation that managers face after mapping their firm's value chain; a second section that provides a brief introduction to Transactions Cost Economics, a framework that helps explain firm governance and scope decisions; a third section that links TCE considerations to decisions about a firm's vertical and horizontal scope; a fourth section that explores the issue of where to locate activities; and a fifth section that concludes. This case is included in Module 1 of the course Business Thought & Action.
Swot Analysis of "Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions" written by Robert E. Kennedy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Section Scope facing as an external strategic factors. Some of the topics covered in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions case study are - Strategic Management Strategies, Economics, Pricing, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions casestudy better are - – talent flight as more people leaving formal jobs, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%,
increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Section Scope, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Section Scope 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions can be done for the following purposes –
1. Strategic planning using facts provided in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions case study
2. Improving business portfolio management of Section Scope
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 Section Scope
Strengths Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Section Scope in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Section Scope 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Section Scope digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Section Scope has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Section Scope is present in almost all the verticals within the industry. This has provided firm in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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.
High brand equity
– Section Scope has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Section Scope to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Section Scope has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Section Scope 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 Section Scope 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.
Analytics focus
– Section Scope 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 Robert E. Kennedy 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
– Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions firm has clearly differentiated products in the market place. This has enabled Section Scope to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Section Scope to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Section Scope is one of the leading recruiters in the industry. Managers in the Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Section Scope has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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.
Organizational Resilience of Section Scope
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Section Scope does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Section Scope in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions are -
Interest costs
– Compare to the competition, Section Scope 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.
Lack of clear differentiation of Section Scope products
– To increase the profitability and margins on the products, Section Scope needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Section Scope 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.
Increasing silos among functional specialists
– The organizational structure of Section Scope is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Section Scope needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Section Scope to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Section Scope has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Section Scope even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Section Scope 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions, in the dynamic environment Section Scope has struggled to respond to the nimble upstart competition. Section Scope has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Section Scope 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Section Scope has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Section Scope, firm in the HBR case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Section Scope supply chain. Even after few cautionary changes mentioned in the HBR case study - Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Section Scope vulnerable to further global disruptions in South East Asia.
Opportunities Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions | 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions are -
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 Section Scope in the consumer business. Now Section Scope 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, Section Scope is facing challenges because of the dominance of functional experts in the organization. Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Section Scope 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, Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions, 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, Section Scope can use these opportunities to build new business models that can help the communities that Section Scope operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Buying journey improvements
– Section Scope can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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.
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. Section Scope can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Section Scope can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Section Scope 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Section Scope can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Section Scope 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Section Scope 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Section Scope 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 Section Scope to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Section Scope 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.
Threats Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions are -
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 Section Scope
– 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 Section Scope.
Shortening product life cycle
– it is one of the major threat that Section Scope is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Section Scope 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 acceleration in Forth Industrial Revolution
– Section Scope has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Section Scope 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.
Stagnating economy with rate increase
– Section Scope can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Section Scope 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions .
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 Section Scope.
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 Section Scope in the Sales & Marketing sector and impact the bottomline of the organization.
Environmental challenges
– Section Scope 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. Section Scope can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Section Scope with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Section Scope 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.
Consumer confidence and its impact on Section Scope 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.
Weighted SWOT Analysis of Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Section Scope needs to make to build a sustainable competitive advantage.