AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder
Confidential Instructions for the Founder for PON023.Two-party term sheet negotiation between a venture capitalist and the founder of an aerospace start-up company in which participants are scored both on their substantive performance and on the other party's perception of the relationship. The venture capital (VC) firm Aerovent Capital is considering a $100 million investment in the startup company Earth Escape. The founder of Earth Escape and the lead partner from Aerovent Capital must negotiate a term sheet outlining eight significant terms of the investment. Both parties are concerned with structuring a deal that protects their substantive investment interests and with creating a positive foundation for their potential collaboration. The simulation introduces the incorporation of process and relationship interests into negotiation strategy. This is a role play case.
Swot Analysis of "AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder" written by Nicholas Sabin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Aerovent Escape facing as an external strategic factors. Some of the topics covered in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder case study are - Strategic Management Strategies, Negotiations, Venture capital and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder casestudy better are - – increasing transportation and logistics costs, increasing commodity prices, cloud computing is disrupting traditional business models, technology disruption, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google,
increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aerovent Escape, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder can be done for the following purposes –
1. Strategic planning using facts provided in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder case study
2. Improving business portfolio management of Aerovent Escape
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Aerovent Escape
Strengths AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aerovent Escape in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Aerovent Escape digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Aerovent Escape 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.
Training and development
– Aerovent Escape has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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.
Cross disciplinary teams
– Horizontal connected teams at the Aerovent Escape 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.
Ability to recruit top talent
– Aerovent Escape is one of the leading recruiters in the industry. Managers in the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Strategy & Execution field
– Aerovent Escape 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 Aerovent Escape in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Aerovent Escape 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 Nicholas Sabin 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.
Organizational Resilience of Aerovent Escape
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Aerovent Escape does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Aerovent Escape has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Aerovent Escape 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.
Effective Research and Development (R&D)
– Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Aerovent Escape is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Strategy & Execution industry
– AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder firm has clearly differentiated products in the market place. This has enabled Aerovent Escape to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Aerovent Escape to invest into research and development (R&D) and innovation.
Learning organization
- Aerovent Escape 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 Aerovent Escape is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder are -
No frontier risks strategy
– After analyzing the HBR case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Skills based hiring
– The stress on hiring functional specialists at Aerovent Escape 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.
Lack of clear differentiation of Aerovent Escape products
– To increase the profitability and margins on the products, Aerovent Escape needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 Aerovent Escape 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Aerovent Escape 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. Aerovent Escape 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Nicholas Sabin suggests that, Aerovent Escape 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Aerovent Escape 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 Aerovent Escape has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Aerovent Escape 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Aerovent Escape is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Aerovent Escape supply chain. Even after few cautionary changes mentioned in the HBR case study - AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Aerovent Escape vulnerable to further global disruptions in South East Asia.
Opportunities AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder | 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder are -
Buying journey improvements
– Aerovent Escape can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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.
Loyalty marketing
– Aerovent Escape 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.
Manufacturing automation
– Aerovent Escape can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Leveraging digital technologies
– Aerovent Escape 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.
Better consumer reach
– The expansion of the 5G network will help Aerovent Escape to increase its market reach. Aerovent Escape will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Developing new processes and practices
– Aerovent Escape can develop new processes and procedures in Strategy & Execution 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.
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 Aerovent Escape 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.
Learning at scale
– Online learning technologies has now opened space for Aerovent Escape 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.
Using analytics as competitive advantage
– Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Aerovent Escape to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Aerovent Escape has opened avenues for new revenue streams for the organization in the industry. This can help Aerovent Escape to build a more holistic ecosystem as suggested in the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder case study. Aerovent Escape can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Aerovent Escape 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Aerovent Escape is facing challenges because of the dominance of functional experts in the organization. AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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.
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 Aerovent Escape in the consumer business. Now Aerovent Escape can target international markets with far fewer capital restrictions requirements than the existing system.
Threats AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder are -
Technology acceleration in Forth Industrial Revolution
– Aerovent Escape has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Aerovent Escape needs to keep up with the evolution of technology in the Strategy & Execution 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.
Increasing wage structure of Aerovent Escape
– 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 Aerovent Escape.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder .
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Aerovent Escape in the Strategy & Execution industry. The Strategy & Execution 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.
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 Aerovent Escape in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Aerovent Escape 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.
Consumer confidence and its impact on Aerovent Escape 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.
Shortening product life cycle
– it is one of the major threat that Aerovent Escape is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Aerovent Escape business can come under increasing regulations regarding data privacy, data security, etc.
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. Aerovent Escape 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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Aerovent Escape can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - Confidential Instructions for the Founder 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 Aerovent Escape needs to make to build a sustainable competitive advantage.
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