Examines the battle to set the standard for the 56K modem. Set in 1996, this case looks at how computers accessed the Internet via a telephone line, or dial-up connection, and a hardware modem. In 1995, there were 18.6 million total modem unit shipments, with market revenues of $5.8 billion. The dominant manufacturer of modems was U.S. Robotics, a company based in Skokie, Illinois with 20 years of experience in the modem business. In September 1996, U.S. Robotics announced x2--a new modem technology that could transmit data at twice the bit rate of a 28.8kbps modem. U.S. Robotics had control over the patents that were crucial to the 56K technology. Yet, a few weeks after U.S. Robotics' announcement, Rockwell and Lucent declared the near introduction of a similar 56K technology called "K56 Plus." Both x2 and K56Plus would be able to communicate with older modem standards, although not with each other.
Swot Analysis of "56K Modem Battle" written by David B. Yoffie, Debbie Freier includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Modem 56k facing as an external strategic factors. Some of the topics covered in 56K Modem Battle case study are - Strategic Management Strategies, Competition, Internet, IT and Strategy & Execution.
Some of the macro environment factors that can be used to understand the 56K Modem Battle casestudy better are - – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, increasing household debt because of falling income levels,
increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in 56K Modem Battle case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Modem 56k, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Modem 56k 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 56K Modem Battle can be done for the following purposes –
1. Strategic planning using facts provided in 56K Modem Battle case study
2. Improving business portfolio management of Modem 56k
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 Modem 56k
Strengths 56K Modem Battle | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Modem 56k in 56K Modem Battle Harvard Business Review case study are -
Analytics focus
– Modem 56k 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 David B. Yoffie, Debbie Freier 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.
Organizational Resilience of Modem 56k
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Modem 56k does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Modem 56k has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Modem 56k to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Modem 56k is present in almost all the verticals within the industry. This has provided firm in 56K Modem Battle 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.
Strong track record of project management
– Modem 56k 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)
– Modem 56k 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 56K Modem Battle - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– 56K Modem Battle firm has clearly differentiated products in the market place. This has enabled Modem 56k to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Modem 56k to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Modem 56k 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.
Cross disciplinary teams
– Horizontal connected teams at the Modem 56k 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.
Innovation driven organization
– Modem 56k is one of the most innovative firm in sector. Manager in 56K Modem Battle Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Modem 56k is one of the leading recruiters in the industry. Managers in the 56K Modem Battle 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
– Modem 56k has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in 56K Modem Battle 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.
Weaknesses 56K Modem Battle | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of 56K Modem Battle are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study 56K Modem Battle, it seems that the employees of Modem 56k 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study 56K Modem Battle, is just above the industry average. Modem 56k needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to strategic competitive environment developments
– As 56K Modem Battle HBR case study mentions - Modem 56k 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.
High operating costs
– Compare to the competitors, firm in the HBR case study 56K Modem Battle 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 Modem 56k 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Modem 56k 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. Modem 56k 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.
Aligning sales with marketing
– It come across in the case study 56K Modem Battle 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 56K Modem Battle can leverage the sales team experience to cultivate customer relationships as Modem 56k is planning to shift buying processes online.
High cash cycle compare to competitors
Modem 56k 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 bargaining power of channel partners
– Because of the regulatory requirements, David B. Yoffie, Debbie Freier suggests that, Modem 56k 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Modem 56k 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the 56K Modem Battle 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 Modem 56k has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study 56K Modem Battle, in the dynamic environment Modem 56k has struggled to respond to the nimble upstart competition. Modem 56k has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities 56K Modem Battle | 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 56K Modem Battle are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Modem 56k 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
– Modem 56k 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.
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. Modem 56k can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Modem 56k can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. 56K Modem Battle 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Modem 56k 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 Modem 56k to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Modem 56k 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.
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 Modem 56k in the consumer business. Now Modem 56k can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Modem 56k to increase its market reach. Modem 56k will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Modem 56k 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.
Building a culture of innovation
– managers at Modem 56k 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.
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. Modem 56k can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Modem 56k is facing challenges because of the dominance of functional experts in the organization. 56K Modem Battle 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, Modem 56k can use these opportunities to build new business models that can help the communities that Modem 56k operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats 56K Modem Battle External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study 56K Modem Battle are -
Technology acceleration in Forth Industrial Revolution
– Modem 56k has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Modem 56k 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.
High dependence on third party suppliers
– Modem 56k 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.
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.
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. Modem 56k will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Modem 56k 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
– Modem 56k 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. Modem 56k can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Modem 56k is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study 56K Modem Battle, Modem 56k 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Modem 56k 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.
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 Modem 56k business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Modem 56k
– 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 Modem 56k.
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 Modem 56k 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.
Weighted SWOT Analysis of 56K Modem Battle 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 56K Modem Battle 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 56K Modem Battle 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 56K Modem Battle 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 56K Modem Battle 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 Modem 56k needs to make to build a sustainable competitive advantage.
