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 - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices,
cloud computing is disrupting traditional business models, increasing energy prices, 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 -
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.
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.
Highly skilled collaborators
– Section Scope 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
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.
Innovation driven organization
– Section Scope is one of the most innovative firm in sector. Manager in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
Learning organization
- Section Scope 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 Section Scope is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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 -
Aligning sales with marketing
– It come across in the case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions can leverage the sales team experience to cultivate customer relationships as Section Scope is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Section Scope 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 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.
No frontier risks strategy
– After analyzing the HBR case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions, 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
Section Scope has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Section Scope 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 - Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions, it seems that the employees of Section Scope 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.
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.
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.
Leveraging digital technologies
– Section Scope 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, 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.
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. Section Scope 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. Section Scope 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.
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.
Creating value in data economy
– The success of analytics program of Section Scope has opened avenues for new revenue streams for the organization in the industry. This can help Section Scope to build a more holistic ecosystem as suggested in the Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions case study. Section Scope can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
Using analytics as competitive advantage
– Section Scope 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 Note on Managing the Value Chain: Governance, Location, and Firm Scope Decisions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Section Scope to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Building a culture of innovation
– managers at Section Scope 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.
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 -
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.
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 .
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.
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.
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. Section Scope 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. Section Scope can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
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.
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.
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.
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.
