The case presents the unique business model of Inkaterra, a leading eco-tourism organization in Peru, and the different strategies the company can pursue to grow. Through the experience of Inkaterra the case studies two general issues. First, it discusses the potential barriers that exist for the development of the tourism sector. Second, it presents the debate of whether governments may want to use tourism as an engine of growth, and if so, what is the best strategy to preserve the environment.
Authors :: Diego Comin, Rohan Gopaldas, Diego Rehder
Swot Analysis of "Inkaterra" written by Diego Comin, Rohan Gopaldas, Diego Rehder includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Inkaterra Tourism facing as an external strategic factors. Some of the topics covered in Inkaterra case study are - Strategic Management Strategies, Business models, Competition, Conflict, Economic development, Economics, Government, Growth strategy, Marketing, Product development, Technology, Workspaces and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Inkaterra casestudy better are - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing commodity prices,
increasing energy prices, supply chains are disrupted by pandemic , etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Inkaterra case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inkaterra Tourism, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inkaterra Tourism 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 Inkaterra can be done for the following purposes –
1. Strategic planning using facts provided in Inkaterra case study
2. Improving business portfolio management of Inkaterra Tourism
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 Inkaterra Tourism
Strengths Inkaterra | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Inkaterra Tourism in Inkaterra Harvard Business Review case study are -
Analytics focus
– Inkaterra Tourism 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 Diego Comin, Rohan Gopaldas, Diego Rehder 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.
Strong track record of project management
– Inkaterra Tourism 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
– Inkaterra firm has clearly differentiated products in the market place. This has enabled Inkaterra Tourism to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Inkaterra Tourism to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Inkaterra Tourism in the sector have low bargaining power. Inkaterra has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Inkaterra Tourism to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Inkaterra Tourism in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Inkaterra Tourism is one of the most innovative firm in sector. Manager in Inkaterra Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Inkaterra Tourism 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
– Inkaterra Tourism is one of the leading recruiters in the industry. Managers in the Inkaterra are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Inkaterra Tourism 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Inkaterra Tourism digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Inkaterra Tourism 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.
Highly skilled collaborators
– Inkaterra Tourism 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 Inkaterra HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Inkaterra Tourism 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 Inkaterra Tourism is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Inkaterra Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Inkaterra | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Inkaterra are -
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 Inkaterra Tourism supply chain. Even after few cautionary changes mentioned in the HBR case study - Inkaterra, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Inkaterra Tourism vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Inkaterra Tourism 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, Inkaterra Tourism is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Inkaterra 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 operating costs
– Compare to the competitors, firm in the HBR case study Inkaterra 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 Inkaterra Tourism 's lucrative customers.
Need for greater diversity
– Inkaterra Tourism 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Inkaterra, in the dynamic environment Inkaterra Tourism has struggled to respond to the nimble upstart competition. Inkaterra Tourism has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Inkaterra Tourism products
– To increase the profitability and margins on the products, Inkaterra Tourism needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Inkaterra Tourism 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Inkaterra, is just above the industry average. Inkaterra Tourism 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.
Low market penetration in new markets
– Outside its home market of Inkaterra Tourism, firm in the HBR case study Inkaterra needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Inkaterra HBR case study mentions - Inkaterra Tourism 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.
Opportunities Inkaterra | 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 Inkaterra 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 Inkaterra Tourism in the consumer business. Now Inkaterra Tourism can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Inkaterra Tourism 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 Strategy & Execution segment.
Buying journey improvements
– Inkaterra Tourism can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Inkaterra 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.
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 Inkaterra Tourism 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Inkaterra Tourism 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.
Learning at scale
– Online learning technologies has now opened space for Inkaterra Tourism 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Inkaterra Tourism can use these opportunities to build new business models that can help the communities that Inkaterra Tourism operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Inkaterra Tourism 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
– Inkaterra Tourism 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.
Using analytics as competitive advantage
– Inkaterra Tourism 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 Inkaterra - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Inkaterra Tourism to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Inkaterra Tourism 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, Inkaterra, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Inkaterra Tourism in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Inkaterra Tourism to increase its market reach. Inkaterra Tourism 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.
Threats Inkaterra External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Inkaterra are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Inkaterra, Inkaterra Tourism may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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. Inkaterra Tourism 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.
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 Inkaterra Tourism.
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.
Technology acceleration in Forth Industrial Revolution
– Inkaterra Tourism has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Inkaterra Tourism 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.
Consumer confidence and its impact on Inkaterra Tourism 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.
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. Inkaterra Tourism needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Inkaterra Tourism is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Inkaterra Tourism with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Inkaterra Tourism business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Inkaterra Tourism 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.
Stagnating economy with rate increase
– Inkaterra Tourism can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Inkaterra 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 Inkaterra 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 Inkaterra 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 Inkaterra 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 Inkaterra 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 Inkaterra Tourism needs to make to build a sustainable competitive advantage.