Honda Performance Development: CART vs. IRL--Who Has the Inside Track? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Honda Performance Development: CART vs. IRL--Who Has the Inside Track?
In 2001, Honda supplied engines to the Championship Auto Racing Teams (CART) series, the most technically sophisticated racing series in North America. In 1996, a rival series had broken off from CART--the Indy Racing League (IRL). The owner of the Indianapolis Motor Speedway controlled the IRL, which centered around the Indy 500. Since its founding, the IRL had become well established and threatened CART's future. Honda had many reasons to be unhappy with CART, including uncertainties surrounding future engine specifications. A large part of Honda's motivation for racing was to train its engineers and to compete at the most technically sophisticated level. The IRL's lower tech engines did not offer the technical challenge that Honda sought. However, Honda's most important rival, Toyota, announced that it would move to the IRL, and it appeared that some of the most powerful race teams might also make that move. At the end of the 2001 season, Honda needed to decide on the direction of its auto racing future. Provides an overview of the business of auto racing.
Authors :: George Foster, David W. Hoyt, Tom Covington, Jake Moskowitz
Swot Analysis of "Honda Performance Development: CART vs. IRL--Who Has the Inside Track?" written by George Foster, David W. Hoyt, Tom Covington, Jake Moskowitz includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Irl Racing facing as an external strategic factors. Some of the topics covered in Honda Performance Development: CART vs. IRL--Who Has the Inside Track? case study are - Strategic Management Strategies, Human resource management, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Honda Performance Development: CART vs. IRL--Who Has the Inside Track? casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic ,
banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Honda Performance Development: CART vs. IRL--Who Has the Inside Track?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Honda Performance Development: CART vs. IRL--Who Has the Inside Track? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Irl Racing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Irl Racing 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? can be done for the following purposes –
1. Strategic planning using facts provided in Honda Performance Development: CART vs. IRL--Who Has the Inside Track? case study
2. Improving business portfolio management of Irl Racing
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 Irl Racing
Strengths Honda Performance Development: CART vs. IRL--Who Has the Inside Track? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Irl Racing in Honda Performance Development: CART vs. IRL--Who Has the Inside Track? Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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.
Cross disciplinary teams
– Horizontal connected teams at the Irl Racing 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.
Analytics focus
– Irl Racing 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 George Foster, David W. Hoyt, Tom Covington, Jake Moskowitz 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.
Innovation driven organization
– Irl Racing is one of the most innovative firm in sector. Manager in Honda Performance Development: CART vs. IRL--Who Has the Inside Track? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Irl Racing has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Irl Racing 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.
Strong track record of project management
– Irl Racing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Irl Racing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Irl Racing is one of the leading recruiters in the industry. Managers in the Honda Performance Development: CART vs. IRL--Who Has the Inside Track? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Sales & Marketing industry
– Honda Performance Development: CART vs. IRL--Who Has the Inside Track? firm has clearly differentiated products in the market place. This has enabled Irl Racing to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Irl Racing to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Irl Racing 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 Irl Racing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Irl Racing 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Irl Racing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Irl Racing 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.
Weaknesses Honda Performance Development: CART vs. IRL--Who Has the Inside Track? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Honda Performance Development: CART vs. IRL--Who Has the Inside Track? are -
High bargaining power of channel partners
– Because of the regulatory requirements, George Foster, David W. Hoyt, Tom Covington, Jake Moskowitz suggests that, Irl Racing 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.
Increasing silos among functional specialists
– The organizational structure of Irl Racing is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Irl Racing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Irl Racing to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Irl Racing 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Irl Racing has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Irl Racing 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? can leverage the sales team experience to cultivate customer relationships as Irl Racing is planning to shift buying processes online.
Need for greater diversity
– Irl Racing 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.
Slow to strategic competitive environment developments
– As Honda Performance Development: CART vs. IRL--Who Has the Inside Track? HBR case study mentions - Irl Racing 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.
Skills based hiring
– The stress on hiring functional specialists at Irl Racing 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.
Products dominated business model
– Even though Irl Racing 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 - Honda Performance Development: CART vs. IRL--Who Has the Inside Track? should strive to include more intangible value offerings along with its core products and services.
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 Irl Racing supply chain. Even after few cautionary changes mentioned in the HBR case study - Honda Performance Development: CART vs. IRL--Who Has the Inside Track?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Irl Racing vulnerable to further global disruptions in South East Asia.
Opportunities Honda Performance Development: CART vs. IRL--Who Has the Inside Track? | 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Irl Racing is facing challenges because of the dominance of functional experts in the organization. Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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, Irl Racing 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, Honda Performance Development: CART vs. IRL--Who Has the Inside Track?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Irl Racing has opened avenues for new revenue streams for the organization in the industry. This can help Irl Racing to build a more holistic ecosystem as suggested in the Honda Performance Development: CART vs. IRL--Who Has the Inside Track? case study. Irl Racing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Irl Racing 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.
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. Irl Racing 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. Irl Racing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Irl Racing 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.
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 Irl Racing in the consumer business. Now Irl Racing can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Irl Racing can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Irl Racing 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.
Leveraging digital technologies
– Irl Racing 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.
Buying journey improvements
– Irl Racing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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.
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. Irl Racing can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Irl Racing 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Honda Performance Development: CART vs. IRL--Who Has the Inside Track? are -
Regulatory challenges
– Irl Racing 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.
Shortening product life cycle
– it is one of the major threat that Irl Racing is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Irl Racing has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Irl Racing 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
– Irl Racing 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.
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. Irl Racing needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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. Irl Racing 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Irl Racing 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.
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.
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 Irl Racing in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing wage structure of Irl Racing
– 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 Irl Racing.
Environmental challenges
– Irl Racing 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. Irl Racing can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Irl Racing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Honda Performance Development: CART vs. IRL--Who Has the Inside Track? 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 Irl Racing needs to make to build a sustainable competitive advantage.