Incentive Problems in a Software Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Incentive Problems in a Software Company
In July, 2009, Jeffrey Pfeffer, a professor at the Graduate School of Business at Stanford University, received an e-mail. The two co-founders and joint co-CEOs and their colleagues at Orange Kimono Software were struggling with their pay system. Orange Kimono, based in the north of England, was a software company with approximately 150 employees that made products sold to businesses. This case contains the text of the e-mail which details the old and new sales compensation systems and the resulting effects on sales, representative behavior, and customer experience.
Swot Analysis of "Incentive Problems in a Software Company" written by Jeffrey Pfeffer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kimono Orange facing as an external strategic factors. Some of the topics covered in Incentive Problems in a Software Company case study are - Strategic Management Strategies, Motivating people, Sales, Technology and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Incentive Problems in a Software Company casestudy better are - – central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices,
there is backlash against globalization, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Incentive Problems in a Software Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Incentive Problems in a Software Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kimono Orange, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kimono Orange 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 Incentive Problems in a Software Company can be done for the following purposes –
1. Strategic planning using facts provided in Incentive Problems in a Software Company case study
2. Improving business portfolio management of Kimono Orange
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 Kimono Orange
Strengths Incentive Problems in a Software Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kimono Orange in Incentive Problems in a Software Company Harvard Business Review case study are -
Innovation driven organization
– Kimono Orange is one of the most innovative firm in sector. Manager in Incentive Problems in a Software Company 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
– Kimono Orange has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Incentive Problems in a Software Company 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
– Kimono Orange has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kimono Orange has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to recruit top talent
– Kimono Orange is one of the leading recruiters in the industry. Managers in the Incentive Problems in a Software Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Kimono Orange is present in almost all the verticals within the industry. This has provided firm in Incentive Problems in a Software Company 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
– Kimono Orange has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kimono Orange to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Kimono Orange 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.
Ability to lead change in Sales & Marketing field
– Kimono Orange is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Kimono Orange in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Kimono Orange in the sector have low bargaining power. Incentive Problems in a Software Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kimono Orange to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Kimono Orange 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 Incentive Problems in a Software Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Sales & Marketing industry
– Incentive Problems in a Software Company firm has clearly differentiated products in the market place. This has enabled Kimono Orange to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Kimono Orange to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Incentive Problems in a Software Company 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.
Weaknesses Incentive Problems in a Software Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Incentive Problems in a Software Company are -
Increasing silos among functional specialists
– The organizational structure of Kimono Orange is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Kimono Orange needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kimono Orange to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Incentive Problems in a Software Company, is just above the industry average. Kimono Orange needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High 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 Kimono Orange supply chain. Even after few cautionary changes mentioned in the HBR case study - Incentive Problems in a Software Company, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kimono Orange vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Incentive Problems in a Software Company 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 Incentive Problems in a Software Company can leverage the sales team experience to cultivate customer relationships as Kimono Orange is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Kimono Orange 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 bargaining power of channel partners
– Because of the regulatory requirements, Jeffrey Pfeffer suggests that, Kimono Orange 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.
Capital Spending Reduction
– Even during the low interest decade, Kimono Orange has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Incentive Problems in a Software Company 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 Kimono Orange has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Incentive Problems in a Software Company, 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.
Slow to strategic competitive environment developments
– As Incentive Problems in a Software Company HBR case study mentions - Kimono Orange takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Products dominated business model
– Even though Kimono Orange 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 - Incentive Problems in a Software Company should strive to include more intangible value offerings along with its core products and services.
Opportunities Incentive Problems in a Software Company | 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 Incentive Problems in a Software Company are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kimono Orange is facing challenges because of the dominance of functional experts in the organization. Incentive Problems in a Software Company 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.
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. Kimono Orange can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Kimono Orange has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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. Kimono Orange can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kimono Orange 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 Kimono Orange to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Kimono Orange has opened avenues for new revenue streams for the organization in the industry. This can help Kimono Orange to build a more holistic ecosystem as suggested in the Incentive Problems in a Software Company case study. Kimono Orange can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Kimono Orange 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. Kimono Orange 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kimono Orange can use these opportunities to build new business models that can help the communities that Kimono Orange operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Kimono Orange 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.
Buying journey improvements
– Kimono Orange can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Incentive Problems in a Software Company 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kimono Orange can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Kimono Orange 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
– Kimono Orange 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 Incentive Problems in a Software Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kimono Orange to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Incentive Problems in a Software Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Incentive Problems in a Software Company are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kimono Orange 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.
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.
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 Kimono Orange.
Consumer confidence and its impact on Kimono Orange 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.
Environmental challenges
– Kimono Orange 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. Kimono Orange can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Shortening product life cycle
– it is one of the major threat that Kimono Orange is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kimono Orange with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Kimono Orange needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Incentive Problems in a Software Company, Kimono Orange 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 .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kimono Orange business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Kimono Orange
– 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 Kimono Orange.
Technology acceleration in Forth Industrial Revolution
– Kimono Orange has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Kimono Orange 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
– Kimono Orange 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.
Weighted SWOT Analysis of Incentive Problems in a Software Company 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 Incentive Problems in a Software Company 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 Incentive Problems in a Software Company 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 Incentive Problems in a Software Company 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 Incentive Problems in a Software Company 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 Kimono Orange needs to make to build a sustainable competitive advantage.