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 - – central banks are concerned over increasing inflation, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, geopolitical disruptions, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, 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 -
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Emc Vmware digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Emc Vmware 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.
Cross disciplinary teams
– Horizontal connected teams at the Emc Vmware 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 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.
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.
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.
Effective Research and Development (R&D)
– Emc Vmware 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 EMC Corp.: Proposed Acquisition of VMware - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
Learning organization
- Emc Vmware 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 Emc Vmware is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in EMC Corp.: Proposed Acquisition of VMware Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Successful track record of launching new products
– Emc Vmware has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Emc Vmware 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.
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 -
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Emc Vmware 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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Emc Vmware 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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Emc Vmware 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. Emc Vmware 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.
Low market penetration in new markets
– Outside its home market of Emc Vmware, firm in the HBR case study EMC Corp.: Proposed Acquisition of VMware needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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 -
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.
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.
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.
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.
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.
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.
Building a culture of innovation
– managers at Emc Vmware 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.
Developing new processes and practices
– Emc Vmware 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.
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.
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.
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. Emc Vmware 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. Emc Vmware 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.
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. Emc Vmware can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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 Emc Vmware.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Emc Vmware 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 EMC Corp.: Proposed Acquisition of VMware .
Shortening product life cycle
– it is one of the major threat that Emc Vmware is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Emc Vmware 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.
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.
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. Emc Vmware needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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.
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.
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.
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.