Case Study Description of Quick Drying Paint And Licensing Negotiations
This is a Thunderbird Case Study.This is a negotiation exercise. The case involves the negotiated licensing agreement between an American manufacturer in Arizona, and a Mexican licensor in the State of Sonora. Sam Paint owns and operates the largest wholesale paint business in southern Arizona. Although he sells a variety of house-paint products, he is best known for his quick-drying paint, a process he developed and patented in the United States twelve years ago. Sam also holds a Mexican patent for quick-drying paint. Both patents are scheduled to expire in five years. This negotiation takes place in the aftermath of the North American Free Trade Agreement (NAFTA) and the passage in Mexico of a strengthened intellectual property system
Swot Analysis of "Quick Drying Paint And Licensing Negotiations" written by Robert Tancer, Paul G. Johnson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Paint Drying facing as an external strategic factors. Some of the topics covered in Quick Drying Paint And Licensing Negotiations case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Quick Drying Paint And Licensing Negotiations casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing energy prices, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , increasing commodity prices, there is backlash against globalization,
digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Quick Drying Paint And Licensing Negotiations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Quick Drying Paint And Licensing Negotiations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Paint Drying, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Paint Drying 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 Quick Drying Paint And Licensing Negotiations can be done for the following purposes –
1. Strategic planning using facts provided in Quick Drying Paint And Licensing Negotiations case study
2. Improving business portfolio management of Paint Drying
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 Paint Drying
Strengths Quick Drying Paint And Licensing Negotiations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Paint Drying in Quick Drying Paint And Licensing Negotiations Harvard Business Review case study are -
Learning organization
- Paint Drying 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 Paint Drying is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Quick Drying Paint And Licensing Negotiations Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Paint Drying is one of the leading recruiters in the industry. Managers in the Quick Drying Paint And Licensing Negotiations are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Paint Drying 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 Quick Drying Paint And Licensing Negotiations - 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
– Paint Drying 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 Robert Tancer, Paul G. Johnson 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 Paint Drying
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Paint Drying 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
– Paint Drying has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Paint Drying 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.
Superior customer experience
– The customer experience strategy of Paint Drying in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Quick Drying Paint And Licensing Negotiations 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.
Ability to lead change in Strategy & Execution field
– Paint Drying 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 Paint Drying in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Paint Drying 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.
Training and development
– Paint Drying has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Quick Drying Paint And Licensing Negotiations 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.
High brand equity
– Paint Drying has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Paint Drying to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Quick Drying Paint And Licensing Negotiations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Quick Drying Paint And Licensing Negotiations are -
Low market penetration in new markets
– Outside its home market of Paint Drying, firm in the HBR case study Quick Drying Paint And Licensing Negotiations needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Quick Drying Paint And Licensing Negotiations, is just above the industry average. Paint Drying 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 operating costs
– Compare to the competitors, firm in the HBR case study Quick Drying Paint And Licensing Negotiations 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 Paint Drying 's lucrative customers.
Products dominated business model
– Even though Paint Drying 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 - Quick Drying Paint And Licensing Negotiations should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Quick Drying Paint And Licensing Negotiations, in the dynamic environment Paint Drying has struggled to respond to the nimble upstart competition. Paint Drying has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert Tancer, Paul G. Johnson suggests that, Paint Drying 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.
Need for greater diversity
– Paint Drying 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.
Capital Spending Reduction
– Even during the low interest decade, Paint Drying 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.
Slow decision making process
– As mentioned earlier in the report, Paint Drying 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. Paint Drying 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.
Skills based hiring
– The stress on hiring functional specialists at Paint Drying 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.
Increasing silos among functional specialists
– The organizational structure of Paint Drying is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Paint Drying needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Paint Drying to focus more on services rather than just following the product oriented approach.
Opportunities Quick Drying Paint And Licensing Negotiations | 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 Quick Drying Paint And Licensing Negotiations are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Paint Drying 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, Quick Drying Paint And Licensing Negotiations, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Paint Drying 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.
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 Paint Drying in the consumer business. Now Paint Drying can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Paint Drying 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Paint Drying is facing challenges because of the dominance of functional experts in the organization. Quick Drying Paint And Licensing Negotiations case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Paint Drying can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Paint Drying 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 Quick Drying Paint And Licensing Negotiations - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Paint Drying to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Paint Drying 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.
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. Paint Drying 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. Paint Drying 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.
Creating value in data economy
– The success of analytics program of Paint Drying has opened avenues for new revenue streams for the organization in the industry. This can help Paint Drying to build a more holistic ecosystem as suggested in the Quick Drying Paint And Licensing Negotiations case study. Paint Drying can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Paint Drying can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Paint Drying 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Paint Drying to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Paint Drying to hire the very best people irrespective of their geographical location.
Threats Quick Drying Paint And Licensing Negotiations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Quick Drying Paint And Licensing Negotiations 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 Quick Drying Paint And Licensing Negotiations, Paint Drying 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 .
Consumer confidence and its impact on Paint Drying 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Paint Drying 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.
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. Paint Drying can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Paint Drying in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Paint Drying
– 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 Paint Drying.
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.
Technology acceleration in Forth Industrial Revolution
– Paint Drying has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Paint Drying 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.
High dependence on third party suppliers
– Paint Drying 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.
Shortening product life cycle
– it is one of the major threat that Paint Drying is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Paint Drying 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.
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. Paint Drying needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Paint Drying business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Quick Drying Paint And Licensing Negotiations 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 Quick Drying Paint And Licensing Negotiations 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 Quick Drying Paint And Licensing Negotiations 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 Quick Drying Paint And Licensing Negotiations 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 Quick Drying Paint And Licensing Negotiations 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 Paint Drying needs to make to build a sustainable competitive advantage.