Presents a full-scale business plan for the launch of an Internet service provider (ISP) for the Pacific Rim. Set in 1993, the case has a short introduction, followed by the business plan for PacNet. Dr. Kevin Wong, PacNet's founder, plans to take advantage of the exponential industry growth by becoming the dominant provider of Internet services to Pacific Rim businesses. PacNet's growth strategy depends on acquisition and consolidation of ISPs and the development of proprietary software through partnerships.
Authors :: Dennis Rohan, Alicia Seiger, Mark Benning
Swot Analysis of "PacNet" written by Dennis Rohan, Alicia Seiger, Mark Benning includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pacnet Pacnet's facing as an external strategic factors. Some of the topics covered in PacNet case study are - Strategic Management Strategies, Financial management, Internet, Joint ventures, Mergers & acquisitions, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the PacNet casestudy better are - – increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, technology disruption, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic ,
customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PacNet case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pacnet Pacnet's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pacnet Pacnet's 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 PacNet can be done for the following purposes –
1. Strategic planning using facts provided in PacNet case study
2. Improving business portfolio management of Pacnet Pacnet's
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 Pacnet Pacnet's
Strengths PacNet | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pacnet Pacnet's in PacNet Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the PacNet 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.
Training and development
– Pacnet Pacnet's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in PacNet 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.
Ability to lead change in Strategy & Execution field
– Pacnet Pacnet's 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 Pacnet Pacnet's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Pacnet Pacnet's is one of the leading recruiters in the industry. Managers in the PacNet are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– PacNet firm has clearly differentiated products in the market place. This has enabled Pacnet Pacnet's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pacnet Pacnet's to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Pacnet Pacnet's 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 PacNet - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Pacnet Pacnet's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pacnet Pacnet's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Pacnet Pacnet's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Pacnet Pacnet's 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 Pacnet Pacnet's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PacNet Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Pacnet Pacnet's 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.
Superior customer experience
– The customer experience strategy of Pacnet Pacnet's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Pacnet Pacnet's is present in almost all the verticals within the industry. This has provided firm in PacNet 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.
Weaknesses PacNet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PacNet are -
Interest costs
– Compare to the competition, Pacnet Pacnet's 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pacnet Pacnet's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study PacNet can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Pacnet Pacnet's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - PacNet should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PacNet, is just above the industry average. Pacnet Pacnet's 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.
No frontier risks strategy
– After analyzing the HBR case study PacNet, 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.
Skills based hiring
– The stress on hiring functional specialists at Pacnet Pacnet's 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.
Capital Spending Reduction
– Even during the low interest decade, Pacnet Pacnet's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study PacNet, it seems that the employees of Pacnet Pacnet's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study PacNet that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case PacNet can leverage the sales team experience to cultivate customer relationships as Pacnet Pacnet's is planning to shift buying processes online.
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 Pacnet Pacnet's supply chain. Even after few cautionary changes mentioned in the HBR case study - PacNet, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pacnet Pacnet's vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Pacnet Pacnet's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Pacnet Pacnet's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pacnet Pacnet's to focus more on services rather than just following the product oriented approach.
Opportunities PacNet | 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 PacNet are -
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. Pacnet Pacnet's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Pacnet Pacnet's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PacNet 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.
Leveraging digital technologies
– Pacnet Pacnet's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pacnet Pacnet's can use these opportunities to build new business models that can help the communities that Pacnet Pacnet's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pacnet Pacnet's is facing challenges because of the dominance of functional experts in the organization. PacNet 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.
Creating value in data economy
– The success of analytics program of Pacnet Pacnet's has opened avenues for new revenue streams for the organization in the industry. This can help Pacnet Pacnet's to build a more holistic ecosystem as suggested in the PacNet case study. Pacnet Pacnet's can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Pacnet Pacnet's in the consumer business. Now Pacnet Pacnet's can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Pacnet Pacnet's 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.
Manufacturing automation
– Pacnet Pacnet's 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.
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. Pacnet Pacnet's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pacnet Pacnet's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Pacnet Pacnet's 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 PacNet - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pacnet Pacnet's 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 Pacnet Pacnet's 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.
Threats PacNet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PacNet are -
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.
Stagnating economy with rate increase
– Pacnet Pacnet's 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
– Pacnet Pacnet's 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. Pacnet Pacnet's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Consumer confidence and its impact on Pacnet Pacnet's 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 Pacnet Pacnet's 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, Pacnet Pacnet's 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 PacNet .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pacnet Pacnet's 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 Pacnet Pacnet's business can come under increasing regulations regarding data privacy, data security, etc.
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.
High dependence on third party suppliers
– Pacnet Pacnet's 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.
Shortening product life cycle
– it is one of the major threat that Pacnet Pacnet's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Pacnet Pacnet's.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pacnet Pacnet's 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.
Weighted SWOT Analysis of PacNet 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 PacNet 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 PacNet 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 PacNet 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 PacNet 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 Pacnet Pacnet's needs to make to build a sustainable competitive advantage.