Companies in every industry are attempting to reduce their use of chemicals, particularly synthetic organic compounds, where there is a perception of harm to human health or the environment. The industrial and commercial floor-cleaning equipment industry is no different, with many equipment manufacturers seeking to reduce their use of harsh cleaning chemicals such as petroleum solvents. But with every competitor pursuing similar greening efforts in a mature market, companies find it difficult to differentiate their offers to customers. Tennant Company chose to differentiate itself through a technology-driven business strategy based on chemical-free cleaning. Instead of reducing the use of harsh cleaning chemicals, or reducing the harshness of those chemicals, Tennant offered its customers a cleaning solution that used ionized tap water to clean and disinfect surfaces, thereby eliminating harsh chemicals altogether. The benefits to customers were numerous, including lower total cost of ownership and improved health and safety, while maintaining cleaning performance relative to conventional chemical-based products. This case helps to illustrate the challenge of profitably going beyond incremental "greening" efforts (aimed at doing less harm) to offer a disruptive step-change in environmental performance as the central argument for the company's value proposition. Author Chris Laszlo is affiliated with Case Western Reserve University.
Authors :: Garima Sharma, Chris Laszlo, Eric Ahearn, Indrajeet Ghatge
Swot Analysis of "Tennant Company: Can" written by Garima Sharma, Chris Laszlo, Eric Ahearn, Indrajeet Ghatge includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cleaning Chemicals facing as an external strategic factors. Some of the topics covered in Tennant Company: Can case study are - Strategic Management Strategies, Leadership, Marketing, Organizational culture, Social responsibility, Strategy, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Tennant Company: Can casestudy better are - – cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, geopolitical disruptions, technology disruption, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, increasing commodity prices,
there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Tennant Company: Can
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tennant Company: Can case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cleaning Chemicals, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cleaning Chemicals 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 Tennant Company: Can can be done for the following purposes –
1. Strategic planning using facts provided in Tennant Company: Can case study
2. Improving business portfolio management of Cleaning Chemicals
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 Cleaning Chemicals
Strengths Tennant Company: Can | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cleaning Chemicals in Tennant Company: Can Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Tennant Company: Can firm has clearly differentiated products in the market place. This has enabled Cleaning Chemicals to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cleaning Chemicals to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Cleaning Chemicals 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 Tennant Company: Can - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Tennant Company: Can 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.
Analytics focus
– Cleaning Chemicals 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 Garima Sharma, Chris Laszlo, Eric Ahearn, Indrajeet Ghatge 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.
Training and development
– Cleaning Chemicals has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tennant Company: Can 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 Cleaning Chemicals in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cleaning Chemicals digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cleaning Chemicals 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.
Successful track record of launching new products
– Cleaning Chemicals has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cleaning Chemicals 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.
Learning organization
- Cleaning Chemicals 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 Cleaning Chemicals is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tennant Company: Can Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Cleaning Chemicals 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 Cleaning Chemicals in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Cleaning Chemicals 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.
High switching costs
– The high switching costs that Cleaning Chemicals 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.
Weaknesses Tennant Company: Can | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tennant Company: Can are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tennant Company: Can, is just above the industry average. Cleaning Chemicals 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cleaning Chemicals is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Tennant Company: Can 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 bargaining power of channel partners
– Because of the regulatory requirements, Garima Sharma, Chris Laszlo, Eric Ahearn, Indrajeet Ghatge suggests that, Cleaning Chemicals 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tennant Company: Can, in the dynamic environment Cleaning Chemicals has struggled to respond to the nimble upstart competition. Cleaning Chemicals has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Tennant Company: Can 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 Cleaning Chemicals 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Cleaning Chemicals 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.
Lack of clear differentiation of Cleaning Chemicals products
– To increase the profitability and margins on the products, Cleaning Chemicals needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Cleaning Chemicals 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
– Cleaning Chemicals 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cleaning Chemicals 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.
Skills based hiring
– The stress on hiring functional specialists at Cleaning Chemicals 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.
Opportunities Tennant Company: Can | 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 Tennant Company: Can are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cleaning Chemicals can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Cleaning Chemicals can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Cleaning Chemicals has opened avenues for new revenue streams for the organization in the industry. This can help Cleaning Chemicals to build a more holistic ecosystem as suggested in the Tennant Company: Can case study. Cleaning Chemicals can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Cleaning Chemicals to increase its market reach. Cleaning Chemicals 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.
Leveraging digital technologies
– Cleaning Chemicals 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, Cleaning Chemicals is facing challenges because of the dominance of functional experts in the organization. Tennant Company: Can case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Cleaning Chemicals in the consumer business. Now Cleaning Chemicals can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Cleaning Chemicals can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Cleaning Chemicals to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Cleaning Chemicals to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Cleaning Chemicals 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 Tennant Company: Can - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cleaning Chemicals to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Cleaning Chemicals 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cleaning Chemicals 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.
Threats Tennant Company: Can External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tennant Company: Can are -
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 Cleaning Chemicals.
Regulatory challenges
– Cleaning Chemicals 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.
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.
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. Cleaning Chemicals can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Cleaning Chemicals 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cleaning Chemicals with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Cleaning Chemicals 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tennant Company: Can, Cleaning Chemicals 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. Cleaning Chemicals 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.
Stagnating economy with rate increase
– Cleaning Chemicals 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 Cleaning Chemicals is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Cleaning Chemicals has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cleaning Chemicals 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.
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 Cleaning Chemicals in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Tennant Company: Can 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 Tennant Company: Can 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 Tennant Company: Can 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 Tennant Company: Can 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 Tennant Company: Can 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 Cleaning Chemicals needs to make to build a sustainable competitive advantage.