Case Study Description of Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse
In September 2004, four months after Hungary joined the European Union, the strategy group of Matav, Hungary's largest communications company, is working on its mid-term strategic plan. Since being privatized from the state in 1993, the company has seen several changes in its strategy, structure, and culture. Nearly 15 years later, the company is a fully integrated telecommunications company involved in a broad range of services, including fixed line telephony, mobile communications, Internet services, data transmission, and outsourcing. The company's latest acquisition of a state-run telecommunications company is considered a success, and management believes that international expansion is necessary to realize dynamic growth as its domestic fixed line business is declining. In addition, Hungary's mobile market is highly competitive and saturated with 80% of the country having mobile phones. The management team feels that Matav is at a crossroads with three main options: expansion in Hungary, regional expansion, or organic growth in existing product lines. The team has to consider all of the lines of business in forming a strategy and whether Matav's resources and organization are suitable for a healthy future.
Swot Analysis of "Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse" written by Michael Rouse, Jordan Mitchell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Matav Hungary's facing as an external strategic factors. Some of the topics covered in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse case study are - Strategic Management Strategies, International business, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse casestudy better are - – there is increasing trade war between United States & China, increasing transportation and logistics costs, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Matav Hungary's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Matav Hungary'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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse can be done for the following purposes –
1. Strategic planning using facts provided in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse case study
2. Improving business portfolio management of Matav Hungary'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 Matav Hungary's
Strengths Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Matav Hungary's in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse Harvard Business Review case study are -
Analytics focus
– Matav Hungary's 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 Rouse, Jordan Mitchell 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.
Strong track record of project management
– Matav Hungary'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.
High switching costs
– The high switching costs that Matav Hungary's 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.
Ability to recruit top talent
– Matav Hungary's is one of the leading recruiters in the industry. Managers in the Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Matav Hungary's is one of the most innovative firm in sector. Manager in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Matav Hungary'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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Matav Hungary's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Matav Hungary's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Matav Hungary's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Matav Hungary's 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.
Low bargaining power of suppliers
– Suppliers of Matav Hungary's in the sector have low bargaining power. Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Matav Hungary's to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Matav Hungary's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Matav Hungary's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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.
Learning organization
- Matav Hungary'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 Matav Hungary's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse are -
Aligning sales with marketing
– It come across in the case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse can leverage the sales team experience to cultivate customer relationships as Matav Hungary's is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse, in the dynamic environment Matav Hungary's has struggled to respond to the nimble upstart competition. Matav Hungary's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Matav Hungary's 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.
Increasing silos among functional specialists
– The organizational structure of Matav Hungary's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Matav Hungary's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Matav Hungary's to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Matav Hungary's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Matav Hungary's products
– To increase the profitability and margins on the products, Matav Hungary's needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Matav Hungary'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.
Need for greater diversity
– Matav Hungary's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Matav Hungary'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 - Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Rouse, Jordan Mitchell suggests that, Matav Hungary's 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 Matav Hungary's, firm in the HBR case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse | 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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse are -
Better consumer reach
– The expansion of the 5G network will help Matav Hungary's to increase its market reach. Matav Hungary's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Matav Hungary's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Matav Hungary's 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 Matav Hungary's to hire the very best people irrespective of their geographical location.
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. Matav Hungary's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Matav Hungary's 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.
Creating value in data economy
– The success of analytics program of Matav Hungary's has opened avenues for new revenue streams for the organization in the industry. This can help Matav Hungary's to build a more holistic ecosystem as suggested in the Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse case study. Matav Hungary's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Matav Hungary's 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.
Manufacturing automation
– Matav Hungary'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.
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. Matav Hungary's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Matav Hungary'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.
Buying journey improvements
– Matav Hungary's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Matav Hungary's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Matav Hungary's can use these opportunities to build new business models that can help the communities that Matav Hungary's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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.
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. Matav Hungary's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Matav Hungary's 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.
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 Matav Hungary's.
Stagnating economy with rate increase
– Matav Hungary'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.
Consumer confidence and its impact on Matav Hungary'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.
Regulatory challenges
– Matav Hungary's 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.
Shortening product life cycle
– it is one of the major threat that Matav Hungary's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Matav Hungary's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse, Matav Hungary's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Matav Hungary's business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Matav Hungary'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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Matav Hungary'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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse .
Weighted SWOT Analysis of Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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 Matav Hungary's needs to make to build a sustainable competitive advantage.
