A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market

A123 Systems successfully went to market with new technologies that had the potential to revolutionize both the energy storage and electric battery industries. After opening the largest hybrid vehicle battery manufacturing facility in North America, CEO David Vieau needs to evaluate the road forward. Should he try to gain a foothold in established commercial battery markets or pursue the company's current mission of being the top supplier for grid storage and hybrid vehicles? Was he expanding too fast or not fast enough? Was Asia a potential avenue for future growth, a source of menacing competition, or both?

Authors :: Andrew Hoffman

Topics :: Strategy & Execution

Tags :: Growth strategy, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market" written by Andrew Hoffman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Battery A123 facing as an external strategic factors. Some of the topics covered in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market case study are - Strategic Management Strategies, Growth strategy and Strategy & Execution.

Some of the macro environment factors that can be used to understand the A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market casestudy better are - – there is backlash against globalization, cloud computing is disrupting traditional business models, technology disruption, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Battery A123, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Battery A123 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market can be done for the following purposes –
1. Strategic planning using facts provided in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market case study
2. Improving business portfolio management of Battery A123
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 Battery A123

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Strengths A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Battery A123 in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market Harvard Business Review case study are -

Organizational Resilience of Battery A123

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Battery A123 does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Highly skilled collaborators

– Battery A123 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Cross disciplinary teams

– Horizontal connected teams at the Battery A123 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.

Strong track record of project management

– Battery A123 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Effective Research and Development (R&D)

– Battery A123 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Analytics focus

– Battery A123 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 Andrew Hoffman 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.

Learning organization

- Battery A123 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 Battery A123 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Sustainable margins compare to other players in Strategy & Execution industry

– A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market firm has clearly differentiated products in the market place. This has enabled Battery A123 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Battery A123 to invest into research and development (R&D) and innovation.

Ability to lead change in Strategy & Execution field

– Battery A123 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 Battery A123 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Training and development

– Battery A123 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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.

Diverse revenue streams

– Battery A123 is present in almost all the verticals within the industry. This has provided firm in A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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.

Operational resilience

– The operational resilience strategy in the A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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.

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Weaknesses A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market are -

High operating costs

– Compare to the competitors, firm in the HBR case study A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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 Battery A123 's lucrative customers.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market, in the dynamic environment Battery A123 has struggled to respond to the nimble upstart competition. Battery A123 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Slow decision making process

– As mentioned earlier in the report, Battery A123 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. Battery A123 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.

Interest costs

– Compare to the competition, Battery A123 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.

Capital Spending Reduction

– Even during the low interest decade, Battery A123 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.

Workers concerns about automation

– As automation is fast increasing in the segment, Battery A123 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Battery A123 is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Lack of clear differentiation of Battery A123 products

– To increase the profitability and margins on the products, Battery A123 needs to provide more differentiated products than what it is currently offering in the marketplace.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market, is just above the industry average. Battery A123 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 cash cycle compare to competitors

Battery A123 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.

Need for greater diversity

– Battery A123 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.

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Opportunities A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market | 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market are -

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Battery A123 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. Battery A123 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.

Manufacturing automation

– Battery A123 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Battery A123 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Battery A123 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Leveraging digital technologies

– Battery A123 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Battery A123 is facing challenges because of the dominance of functional experts in the organization. A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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.

Using analytics as competitive advantage

– Battery A123 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Battery A123 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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 Battery A123 in the consumer business. Now Battery A123 can target international markets with far fewer capital restrictions requirements than the existing system.

Building a culture of innovation

– managers at Battery A123 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.

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. Battery A123 can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Better consumer reach

– The expansion of the 5G network will help Battery A123 to increase its market reach. Battery A123 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.

Loyalty marketing

– Battery A123 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.

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 Battery A123 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.

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Threats A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market are -

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 Battery A123 in the Strategy & Execution sector and impact the bottomline of the organization.

High dependence on third party suppliers

– Battery A123 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. Battery A123 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.

Stagnating economy with rate increase

– Battery A123 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.

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 Battery A123 business can come under increasing regulations regarding data privacy, data security, etc.

Consumer confidence and its impact on Battery A123 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Battery A123 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market .

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. Battery A123 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.

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.

Regulatory challenges

– Battery A123 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 Strategy & Execution industry regulations.

Shortening product life cycle

– it is one of the major threat that Battery A123 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market, Battery A123 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 .

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. Battery A123 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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Weighted SWOT Analysis of A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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 A123 Systems Powering a Sustainable Future: Strategizing in the Advanced Battery Market 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 Battery A123 needs to make to build a sustainable competitive advantage.

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