Building a Cluster: Electronics and Information Technology in Costa Rica SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Building a Cluster: Electronics and Information Technology in Costa Rica
Describes the actions of Costa Rica President Figueres and his cabinet in attracting an Intel assembly and testing plant to their country. The effort was part of a government strategy that sought to develop further the Costa Rican electronics and information technology cluster.
Swot Analysis of "Building a Cluster: Electronics and Information Technology in Costa Rica" written by Michael E. Porter, Niels W. Ketelhohn includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Costa Rica facing as an external strategic factors. Some of the topics covered in Building a Cluster: Electronics and Information Technology in Costa Rica case study are - Strategic Management Strategies, Disruptive innovation, Economic development, Economics, Entrepreneurship, Global strategy, Government, IT, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Building a Cluster: Electronics and Information Technology in Costa Rica casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, technology disruption, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing energy prices, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Building a Cluster: Electronics and Information Technology in Costa Rica
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Building a Cluster: Electronics and Information Technology in Costa Rica case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Costa Rica, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica can be done for the following purposes –
1. Strategic planning using facts provided in Building a Cluster: Electronics and Information Technology in Costa Rica case study
2. Improving business portfolio management of Costa Rica
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 Costa Rica
Strengths Building a Cluster: Electronics and Information Technology in Costa Rica | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Costa Rica in Building a Cluster: Electronics and Information Technology in Costa Rica Harvard Business Review case study are -
Organizational Resilience of Costa Rica
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Costa Rica does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Costa Rica in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Costa Rica 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 Michael E. Porter, Niels W. Ketelhohn 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.
Low bargaining power of suppliers
– Suppliers of Costa Rica in the sector have low bargaining power. Building a Cluster: Electronics and Information Technology in Costa Rica has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Costa Rica to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Costa Rica 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 Costa Rica is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Building a Cluster: Electronics and Information Technology in Costa Rica Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Costa Rica has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Costa Rica 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.
Cross disciplinary teams
– Horizontal connected teams at the Costa Rica 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.
Training and development
– Costa Rica has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Building a Cluster: Electronics and Information Technology in Costa Rica 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.
Diverse revenue streams
– Costa Rica is present in almost all the verticals within the industry. This has provided firm in Building a Cluster: Electronics and Information Technology in Costa Rica 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Costa Rica digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Costa Rica 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.
Ability to lead change in Strategy & Execution field
– Costa Rica 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 Costa Rica in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Costa Rica is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Building a Cluster: Electronics and Information Technology in Costa Rica | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Building a Cluster: Electronics and Information Technology in Costa Rica are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Costa Rica is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Building a Cluster: Electronics and Information Technology in Costa Rica 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 Costa Rica products
– To increase the profitability and margins on the products, Costa Rica needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Costa Rica 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. Costa Rica 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.
Slow to strategic competitive environment developments
– As Building a Cluster: Electronics and Information Technology in Costa Rica HBR case study mentions - Costa Rica 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.
Capital Spending Reduction
– Even during the low interest decade, Costa Rica 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Building a Cluster: Electronics and Information Technology in Costa Rica, in the dynamic environment Costa Rica has struggled to respond to the nimble upstart competition. Costa Rica 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 Costa Rica is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Costa Rica needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Costa Rica to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Costa Rica 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Costa Rica supply chain. Even after few cautionary changes mentioned in the HBR case study - Building a Cluster: Electronics and Information Technology in Costa Rica, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Costa Rica vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael E. Porter, Niels W. Ketelhohn suggests that, Costa Rica 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.
Low market penetration in new markets
– Outside its home market of Costa Rica, firm in the HBR case study Building a Cluster: Electronics and Information Technology in Costa Rica needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Building a Cluster: Electronics and Information Technology in Costa Rica | 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 Building a Cluster: Electronics and Information Technology in Costa Rica are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Costa Rica 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.
Developing new processes and practices
– Costa Rica 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 Costa Rica in the consumer business. Now Costa Rica can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Costa Rica to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Costa Rica 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Costa Rica 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 Costa Rica can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Costa Rica 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. Costa Rica 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Costa Rica can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Costa Rica has opened avenues for new revenue streams for the organization in the industry. This can help Costa Rica to build a more holistic ecosystem as suggested in the Building a Cluster: Electronics and Information Technology in Costa Rica case study. Costa Rica can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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, Costa Rica can use these opportunities to build new business models that can help the communities that Costa Rica operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Costa Rica can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Costa Rica 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.
Threats Building a Cluster: Electronics and Information Technology in Costa Rica External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Building a Cluster: Electronics and Information Technology in Costa Rica are -
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. Costa Rica can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Technology acceleration in Forth Industrial Revolution
– Costa Rica has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Costa Rica 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.
Regulatory challenges
– Costa Rica 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.
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. Costa Rica 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Building a Cluster: Electronics and Information Technology in Costa Rica, Costa Rica 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 .
Increasing wage structure of Costa Rica
– 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 Costa Rica.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Costa Rica with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Costa Rica in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica .
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 Costa Rica.
Stagnating economy with rate increase
– Costa Rica 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.
Consumer confidence and its impact on Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica 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 Building a Cluster: Electronics and Information Technology in Costa Rica 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 Costa Rica needs to make to build a sustainable competitive advantage.
