To maximize their effectiveness, color cases should be printed in color.In June 2005, Koldo Saratxaga, the leader of Basque-based luxury coach manufacturer Irizar, decided to leave after 14 years at the helm of the worker-owned cooperative. Under Saratxaga's stewardship, Irizar was saved from near bankruptcy in 1991 and has become a highly profitable industry leader with a 23.9% compound annual growth rate since 1991. The company opened a number of manufacturing sites as far-reaching as Mexico, Morocco, India, Brazil, China, and South Africa. Irizar calls itself "a project based on people" and has realized its success through a business model characterized by a narrow product focus, strict quality adherence, an empowered workforce, and a truly customer-centric organization. Irizar's model is completely different from that of most other coach manufacturing firms given the absence of unions, departments, and hierarchy. All activities are carried out by self-managed teams (teams, for example, are responsible for setting their own work schedules and objectives). Although Irizar's model has worked fantastically well for over 14 years (since Sarataga's arrival), the question now is: Will the company continue to thrive without Saratxaga? Or is Irizar's success due to Saratxaga's leadership? Includes color exhibits.
Authors :: Ramon Casadesus-Masanell, Jordan Mitchell
Swot Analysis of "Irizar in 2005" written by Ramon Casadesus-Masanell, Jordan Mitchell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Irizar Irizar's facing as an external strategic factors. Some of the topics covered in Irizar in 2005 case study are - Strategic Management Strategies, Leadership, Organizational culture and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Irizar in 2005 casestudy better are - – wage bills are increasing, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing energy prices, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google,
challanges to central banks by blockchain based private currencies, geopolitical disruptions, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Irizar in 2005 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Irizar Irizar's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Irizar Irizar'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 Irizar in 2005 can be done for the following purposes –
1. Strategic planning using facts provided in Irizar in 2005 case study
2. Improving business portfolio management of Irizar Irizar'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 Irizar Irizar's
Strengths Irizar in 2005 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Irizar Irizar's in Irizar in 2005 Harvard Business Review case study are -
Training and development
– Irizar Irizar's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Irizar in 2005 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.
Strong track record of project management
– Irizar Irizar'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.
Organizational Resilience of Irizar Irizar's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Irizar Irizar's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Irizar Irizar'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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Irizar Irizar's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Irizar Irizar'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)
– Irizar Irizar'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 Irizar in 2005 - 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
– Irizar Irizar's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Irizar Irizar's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Irizar Irizar'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 Irizar Irizar's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Irizar in 2005 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Irizar in 2005 firm has clearly differentiated products in the market place. This has enabled Irizar Irizar's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Irizar Irizar's to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Irizar Irizar's is one of the leading recruiters in the industry. Managers in the Irizar in 2005 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
– Irizar Irizar's is one of the most innovative firm in sector. Manager in Irizar in 2005 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Irizar Irizar's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Irizar in 2005 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Irizar in 2005 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Irizar in 2005 are -
Increasing silos among functional specialists
– The organizational structure of Irizar Irizar's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Irizar Irizar's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Irizar Irizar's to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Irizar in 2005, in the dynamic environment Irizar Irizar's has struggled to respond to the nimble upstart competition. Irizar Irizar's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Irizar Irizar's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Irizar in 2005 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Irizar in 2005, is just above the industry average. Irizar Irizar'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.
Skills based hiring
– The stress on hiring functional specialists at Irizar Irizar'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.
Lack of clear differentiation of Irizar Irizar's products
– To increase the profitability and margins on the products, Irizar Irizar's needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Irizar Irizar'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 - Irizar in 2005 should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Irizar Irizar'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.
Slow decision making process
– As mentioned earlier in the report, Irizar Irizar'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. Irizar Irizar'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.
Need for greater diversity
– Irizar Irizar'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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Irizar in 2005 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 Irizar Irizar's has relatively successful track record of launching new products.
Opportunities Irizar in 2005 | 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 Irizar in 2005 are -
Manufacturing automation
– Irizar Irizar'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.
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 Irizar Irizar's in the consumer business. Now Irizar Irizar's 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 Irizar Irizar's to increase its market reach. Irizar Irizar'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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Irizar Irizar's 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.
Buying journey improvements
– Irizar Irizar's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Irizar in 2005 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Irizar Irizar'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, Irizar in 2005, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Irizar Irizar'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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Irizar Irizar's is facing challenges because of the dominance of functional experts in the organization. Irizar in 2005 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.
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 Irizar Irizar'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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Irizar Irizar'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 Irizar Irizar's to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Irizar Irizar's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Irizar Irizar'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.
Using analytics as competitive advantage
– Irizar Irizar'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 Irizar in 2005 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Irizar Irizar's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Irizar in 2005 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Irizar in 2005 are -
Technology acceleration in Forth Industrial Revolution
– Irizar Irizar's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Irizar Irizar's needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Irizar Irizar'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.
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. Irizar Irizar's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Irizar Irizar's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Irizar Irizar'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 Irizar in 2005 .
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 Irizar Irizar's in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Irizar Irizar'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.
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 Irizar Irizar's.
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. Irizar Irizar'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.
Environmental challenges
– Irizar Irizar'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. Irizar Irizar's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Irizar Irizar'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.
Increasing wage structure of Irizar Irizar's
– 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 Irizar Irizar's.
Consumer confidence and its impact on Irizar Irizar'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.
Weighted SWOT Analysis of Irizar in 2005 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 Irizar in 2005 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 Irizar in 2005 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 Irizar in 2005 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 Irizar in 2005 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 Irizar Irizar's needs to make to build a sustainable competitive advantage.
