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 - – technology disruption, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies,
wage bills are increasing, there is increasing trade war between United States & China, 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 -
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.
Ability to lead change in Strategy & Execution field
– Matav Hungary'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 Matav Hungary's 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
– 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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse firm has clearly differentiated products in the market place. This has enabled Matav Hungary's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Matav Hungary's to invest into research and development (R&D) and innovation.
High brand equity
– Matav Hungary's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Matav Hungary's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Matav Hungary's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Matav Hungary's 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.
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.
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.
Diverse revenue streams
– Matav Hungary's is present in almost all the verticals within the industry. This has provided firm in Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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.
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.
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 -
Skills based hiring
– The stress on hiring functional specialists at Matav Hungary'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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse, it seems that the employees of Matav Hungary'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.
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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Matav Hungary's 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. Matav Hungary's 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.
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.
High cash cycle compare to competitors
Matav Hungary's 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 Matav Hungary's supply chain. Even after few cautionary changes mentioned in the HBR case study - Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Matav Hungary's vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse, 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.
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 -
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Matav Hungary's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Developing new processes and practices
– Matav Hungary's 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Matav Hungary's is facing challenges because of the dominance of functional experts in the organization. Strategic Crossroads at Matav: Hungary's Telecommunications Powerhouse 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.
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.
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. Matav Hungary's 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. Matav Hungary's 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.
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.
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.
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 -
Environmental challenges
– Matav Hungary'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. Matav Hungary's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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.
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 Matav Hungary's in the Strategy & Execution sector and impact the bottomline 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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Matav Hungary'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.
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 .
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.
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.
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.