Case Study Description of EMC Corp.: Proposed Acquisition of VMware
Involves the decision by the CEO of EMC Corp. whether to acquire VMware, a small software firm in California that makes virtualization software. Among the factors to be considered are a pending patent case involving WMare and Microsoft and integration challenges associated with EMC's decision to spend $3 billion to acquire two other software firms based in California. Also, raises the issues about deal protection devices.
Authors :: Constance E. Bagley, Christopher J. Lombardi, Carin-Isabel Knoop
Swot Analysis of "EMC Corp.: Proposed Acquisition of VMware" written by Constance E. Bagley, Christopher J. Lombardi, Carin-Isabel Knoop includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Emc Vmware facing as an external strategic factors. Some of the topics covered in EMC Corp.: Proposed Acquisition of VMware case study are - Strategic Management Strategies, Disruptive innovation, Intellectual property, Mergers & acquisitions, Regulation, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the EMC Corp.: Proposed Acquisition of VMware casestudy better are - – geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, talent flight as more people leaving formal jobs,
increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of EMC Corp.: Proposed Acquisition of VMware
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in EMC Corp.: Proposed Acquisition of VMware case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Emc Vmware, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Emc Vmware 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 EMC Corp.: Proposed Acquisition of VMware can be done for the following purposes –
1. Strategic planning using facts provided in EMC Corp.: Proposed Acquisition of VMware case study
2. Improving business portfolio management of Emc Vmware
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 Emc Vmware
Strengths EMC Corp.: Proposed Acquisition of VMware | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Emc Vmware in EMC Corp.: Proposed Acquisition of VMware Harvard Business Review case study are -
Strong track record of project management
– Emc Vmware is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Emc Vmware is one of the leading recruiters in the industry. Managers in the EMC Corp.: Proposed Acquisition of VMware are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Emc Vmware has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in EMC Corp.: Proposed Acquisition of VMware 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
– Emc Vmware has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Emc Vmware to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the EMC Corp.: Proposed Acquisition of VMware 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.
High switching costs
– The high switching costs that Emc Vmware 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.
Superior customer experience
– The customer experience strategy of Emc Vmware in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Emc Vmware 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 Constance E. Bagley, Christopher J. Lombardi, Carin-Isabel Knoop 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.
Highly skilled collaborators
– Emc Vmware 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 EMC Corp.: Proposed Acquisition of VMware HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Emc Vmware in the sector have low bargaining power. EMC Corp.: Proposed Acquisition of VMware has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Emc Vmware to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– EMC Corp.: Proposed Acquisition of VMware firm has clearly differentiated products in the market place. This has enabled Emc Vmware to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Emc Vmware to invest into research and development (R&D) and innovation.
Innovation driven organization
– Emc Vmware is one of the most innovative firm in sector. Manager in EMC Corp.: Proposed Acquisition of VMware Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses EMC Corp.: Proposed Acquisition of VMware | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of EMC Corp.: Proposed Acquisition of VMware are -
Capital Spending Reduction
– Even during the low interest decade, Emc Vmware 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.
Interest costs
– Compare to the competition, Emc Vmware 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.
Need for greater diversity
– Emc Vmware 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.
Slow to strategic competitive environment developments
– As EMC Corp.: Proposed Acquisition of VMware HBR case study mentions - Emc Vmware takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Emc Vmware is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study EMC Corp.: Proposed Acquisition of VMware can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Emc Vmware is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Emc Vmware needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Emc Vmware to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Emc Vmware products
– To increase the profitability and margins on the products, Emc Vmware 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 EMC Corp.: Proposed Acquisition of VMware, is just above the industry average. Emc Vmware 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the EMC Corp.: Proposed Acquisition of VMware 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 Emc Vmware has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study EMC Corp.: Proposed Acquisition of VMware 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 Emc Vmware 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study EMC Corp.: Proposed Acquisition of VMware, 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.
Opportunities EMC Corp.: Proposed Acquisition of VMware | 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 EMC Corp.: Proposed Acquisition of VMware are -
Better consumer reach
– The expansion of the 5G network will help Emc Vmware to increase its market reach. Emc Vmware 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Emc Vmware 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 Emc Vmware to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Emc Vmware can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. EMC Corp.: Proposed Acquisition of VMware 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.
Manufacturing automation
– Emc Vmware 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Emc Vmware can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Emc Vmware in the consumer business. Now Emc Vmware can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Emc Vmware 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 EMC Corp.: Proposed Acquisition of VMware - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Emc Vmware to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Emc Vmware can use these opportunities to build new business models that can help the communities that Emc Vmware operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Creating value in data economy
– The success of analytics program of Emc Vmware has opened avenues for new revenue streams for the organization in the industry. This can help Emc Vmware to build a more holistic ecosystem as suggested in the EMC Corp.: Proposed Acquisition of VMware case study. Emc Vmware can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Emc Vmware 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, Emc Vmware is facing challenges because of the dominance of functional experts in the organization. EMC Corp.: Proposed Acquisition of VMware 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.
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 Emc Vmware 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.
Loyalty marketing
– Emc Vmware 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.
Threats EMC Corp.: Proposed Acquisition of VMware External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study EMC Corp.: Proposed Acquisition of VMware are -
High dependence on third party suppliers
– Emc Vmware 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.
Regulatory challenges
– Emc Vmware 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.
Technology acceleration in Forth Industrial Revolution
– Emc Vmware has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Emc Vmware 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.
Increasing wage structure of Emc Vmware
– 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 Emc Vmware.
Consumer confidence and its impact on Emc Vmware 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.
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 Emc Vmware in the Strategy & Execution sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Emc Vmware with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Emc Vmware needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Emc Vmware can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Emc Vmware 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study EMC Corp.: Proposed Acquisition of VMware, Emc Vmware 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 .
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 Emc Vmware business can come under increasing regulations regarding data privacy, data security, 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. Emc Vmware can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of EMC Corp.: Proposed Acquisition of VMware 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 EMC Corp.: Proposed Acquisition of VMware 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 EMC Corp.: Proposed Acquisition of VMware 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 EMC Corp.: Proposed Acquisition of VMware 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 EMC Corp.: Proposed Acquisition of VMware 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 Emc Vmware needs to make to build a sustainable competitive advantage.
