Tata Communications' Acquisition of Tyco Global Network (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tata Communications' Acquisition of Tyco Global Network (A)
In 2004, Tata Communications (TCL) was trying to act on its strategic intent to become a globally connected network provider. It had two alternatives: build or buy. The build option would provide TCL with a chance to develop its own network under its own terms. The possible acquisition of the Tyco Global Network (TGN), however, provided a unique opportunity for TCL to establish this global position quickly. As one of the largest global networks at the time of the case, the TGN was a limited asset. The acquisition of the TGN would catapult TCL into being a top player in global Internet connectivity. Even though the acquisition price was low, the associated liabilities and risks could make this a substantially expensive acquisition for TCL. Should TCL negotiate with Tyco? If yes, what would be an acceptable position to proceed with the deal? How should TCL plan for the mitigation of risks and uncertainties? If not, what would be the consequences of losing the TGN opportunity, particularly if a competitor acquired it? Andrew Karl Delios is affiliated with National University of Singapore. Srinivasa Addepalli is affiliated with Indian Institute of Management, Ahmedabad.
Authors :: Andrew Karl Delios, Srinivasa Addepalli
Swot Analysis of "Tata Communications' Acquisition of Tyco Global Network (A)" written by Andrew Karl Delios, Srinivasa Addepalli includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tcl Tgn facing as an external strategic factors. Some of the topics covered in Tata Communications' Acquisition of Tyco Global Network (A) case study are - Strategic Management Strategies, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Tata Communications' Acquisition of Tyco Global Network (A) casestudy better are - – supply chains are disrupted by pandemic , increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Tata Communications' Acquisition of Tyco Global Network (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tata Communications' Acquisition of Tyco Global Network (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tcl Tgn, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tcl Tgn 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 Tata Communications' Acquisition of Tyco Global Network (A) can be done for the following purposes –
1. Strategic planning using facts provided in Tata Communications' Acquisition of Tyco Global Network (A) case study
2. Improving business portfolio management of Tcl Tgn
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 Tcl Tgn
Strengths Tata Communications' Acquisition of Tyco Global Network (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tcl Tgn in Tata Communications' Acquisition of Tyco Global Network (A) Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Tcl Tgn in the sector have low bargaining power. Tata Communications' Acquisition of Tyco Global Network (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tcl Tgn to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Tcl Tgn 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.
Organizational Resilience of Tcl Tgn
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tcl Tgn does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Tcl Tgn has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tata Communications' Acquisition of Tyco Global Network (A) 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.
Superior customer experience
– The customer experience strategy of Tcl Tgn in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Tcl Tgn has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tcl Tgn 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.
Ability to recruit top talent
– Tcl Tgn is one of the leading recruiters in the industry. Managers in the Tata Communications' Acquisition of Tyco Global Network (A) 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)
– Tcl Tgn 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 Tata Communications' Acquisition of Tyco Global Network (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Tcl Tgn digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tcl Tgn 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.
Diverse revenue streams
– Tcl Tgn is present in almost all the verticals within the industry. This has provided firm in Tata Communications' Acquisition of Tyco Global Network (A) 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.
Innovation driven organization
– Tcl Tgn is one of the most innovative firm in sector. Manager in Tata Communications' Acquisition of Tyco Global Network (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Tcl Tgn 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 Karl Delios, Srinivasa Addepalli 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.
Weaknesses Tata Communications' Acquisition of Tyco Global Network (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tata Communications' Acquisition of Tyco Global Network (A) are -
No frontier risks strategy
– After analyzing the HBR case study Tata Communications' Acquisition of Tyco Global Network (A), 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tcl Tgn is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Tata Communications' Acquisition of Tyco Global Network (A) 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 Tcl Tgn products
– To increase the profitability and margins on the products, Tcl Tgn needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Tcl Tgn 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.
Low market penetration in new markets
– Outside its home market of Tcl Tgn, firm in the HBR case study Tata Communications' Acquisition of Tyco Global Network (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tata Communications' Acquisition of Tyco Global Network (A), in the dynamic environment Tcl Tgn has struggled to respond to the nimble upstart competition. Tcl Tgn has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Tcl Tgn is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Tcl Tgn needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tcl Tgn to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tata Communications' Acquisition of Tyco Global Network (A), is just above the industry average. Tcl Tgn 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 bargaining power of channel partners
– Because of the regulatory requirements, Andrew Karl Delios, Srinivasa Addepalli suggests that, Tcl Tgn 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Tata Communications' Acquisition of Tyco Global Network (A) 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 Tcl Tgn has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Tcl Tgn 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.
Opportunities Tata Communications' Acquisition of Tyco Global Network (A) | 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 Tata Communications' Acquisition of Tyco Global Network (A) are -
Creating value in data economy
– The success of analytics program of Tcl Tgn has opened avenues for new revenue streams for the organization in the industry. This can help Tcl Tgn to build a more holistic ecosystem as suggested in the Tata Communications' Acquisition of Tyco Global Network (A) case study. Tcl Tgn 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, Tcl Tgn 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tcl Tgn can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Tcl Tgn can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tata Communications' Acquisition of Tyco Global Network (A) 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.
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. Tcl Tgn 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. Tcl Tgn 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.
Building a culture of innovation
– managers at Tcl Tgn 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.
Loyalty marketing
– Tcl Tgn 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.
Better consumer reach
– The expansion of the 5G network will help Tcl Tgn to increase its market reach. Tcl Tgn 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.
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 Tcl Tgn 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.
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. Tcl Tgn can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tcl Tgn is facing challenges because of the dominance of functional experts in the organization. Tata Communications' Acquisition of Tyco Global Network (A) 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.
Manufacturing automation
– Tcl Tgn 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.
Using analytics as competitive advantage
– Tcl Tgn 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 Tata Communications' Acquisition of Tyco Global Network (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tcl Tgn to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Tata Communications' Acquisition of Tyco Global Network (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tata Communications' Acquisition of Tyco Global Network (A) are -
Technology acceleration in Forth Industrial Revolution
– Tcl Tgn has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Tcl Tgn 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.
Stagnating economy with rate increase
– Tcl Tgn 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.
Shortening product life cycle
– it is one of the major threat that Tcl Tgn is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Tcl Tgn can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Tcl Tgn 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tcl Tgn 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 Tata Communications' Acquisition of Tyco Global Network (A) .
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 Tcl Tgn in the Strategy & Execution sector and impact the bottomline 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tcl Tgn with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Tcl Tgn
– 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 Tcl Tgn.
Regulatory challenges
– Tcl Tgn 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tata Communications' Acquisition of Tyco Global Network (A), Tcl Tgn 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 .
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.
Weighted SWOT Analysis of Tata Communications' Acquisition of Tyco Global Network (A) 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 Tata Communications' Acquisition of Tyco Global Network (A) 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 Tata Communications' Acquisition of Tyco Global Network (A) 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 Tata Communications' Acquisition of Tyco Global Network (A) 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 Tata Communications' Acquisition of Tyco Global Network (A) 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 Tcl Tgn needs to make to build a sustainable competitive advantage.