Deutsche Telekom in 2016: Driving Disruption from Within the Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study Description of Deutsche Telekom in 2016: Driving Disruption from Within the Industry
In 2016, Deutsche Telekom's CEO Tim Hottges was steering the 69 billion euro telecom incumbent in new directions and seeking to disrupt the industry from within. The company's tagline was "Life is For Sharing." Its goal was to be Europe's leading digital communication services company that was most trusted by consumers and business customers for safely sharing content. Hottges wanted to achieve this by having the best network, the best service, the best products, and the best customer experience. The company also aimed to be the preferred provider for business customers. A major part of Deutsche Telekom's strategy involved building up the company's core business-its network-by increasing infrastructure investment 20 percent. Hottges described this as his "big bet," saying the network was the basis for everything the company did. Even as it built out the network, an ongoing challenge was finding the right software talent to support the growing software IT components of the network infrastructure. With that in mind, Deutsche Telekom was also developing capabilities on top of network connectivity, such as security, device management, privacy, and global reach capability. While focusing its innovation on advanced network capabilities, Deutsche Telekom was shifting resources away from efforts to internally innovate in competition with Internet-based players. Instead, it was now intent on winning by partnering with companies like Microsoft, Spotify, and BMW to bring new capabilities, innovations, and services to customers. European and German regulations created significant constraints, and external competition remained fierce from both telecommunications companies and so-called "Over the Top" companies such as Google, Facebook, and WhatsApp. These companies had diverted billions of dollars away from traditional telecommunications companies, enabled by telco companies' infrastructures. To counter that, Deutsche Telekom needed to strongly align strategy and execution.
Swot Analysis of "Deutsche Telekom in 2016: Driving Disruption from Within the Industry" written by Robert A. Burgelman, Debra Schifrin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Deutsche Hottges facing as an external strategic factors. Some of the topics covered in Deutsche Telekom in 2016: Driving Disruption from Within the Industry case study are - Strategic Management Strategies, Customer service, Innovation, International business, Regulation, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Deutsche Telekom in 2016: Driving Disruption from Within the Industry casestudy better are - – increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Deutsche Telekom in 2016: Driving Disruption from Within the Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Deutsche Telekom in 2016: Driving Disruption from Within the Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Deutsche Hottges, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Deutsche Hottges 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry can be done for the following purposes –
1. Strategic planning using facts provided in Deutsche Telekom in 2016: Driving Disruption from Within the Industry case study
2. Improving business portfolio management of Deutsche Hottges
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 Deutsche Hottges
Strengths Deutsche Telekom in 2016: Driving Disruption from Within the Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Deutsche Hottges in Deutsche Telekom in 2016: Driving Disruption from Within the Industry Harvard Business Review case study are -
Ability to recruit top talent
– Deutsche Hottges is one of the leading recruiters in the industry. Managers in the Deutsche Telekom in 2016: Driving Disruption from Within the Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Deutsche Hottges is present in almost all the verticals within the industry. This has provided firm in Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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.
Ability to lead change in Strategy & Execution field
– Deutsche Hottges 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 Deutsche Hottges in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Deutsche Hottges
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Deutsche Hottges does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Deutsche Hottges digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Deutsche Hottges 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.
Analytics focus
– Deutsche Hottges 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 Robert A. Burgelman, Debra Schifrin 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.
Effective Research and Development (R&D)
– Deutsche Hottges 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Deutsche Telekom in 2016: Driving Disruption from Within the Industry firm has clearly differentiated products in the market place. This has enabled Deutsche Hottges to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Deutsche Hottges to invest into research and development (R&D) and innovation.
Strong track record of project management
– Deutsche Hottges is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Deutsche Hottges has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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.
High brand equity
– Deutsche Hottges has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Deutsche Hottges to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Deutsche Telekom in 2016: Driving Disruption from Within the Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Deutsche Telekom in 2016: Driving Disruption from Within the Industry are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Hottges has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Deutsche Hottges is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Deutsche Hottges needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Deutsche Hottges to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Deutsche Telekom in 2016: Driving Disruption from Within the Industry, it seems that the employees of Deutsche Hottges 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.
Skills based hiring
– The stress on hiring functional specialists at Deutsche Hottges 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.
Need for greater diversity
– Deutsche Hottges 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry can leverage the sales team experience to cultivate customer relationships as Deutsche Hottges is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Deutsche Telekom in 2016: Driving Disruption from Within the Industry, is just above the industry average. Deutsche Hottges 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.
High cash cycle compare to competitors
Deutsche Hottges 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, Robert A. Burgelman, Debra Schifrin suggests that, Deutsche Hottges 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.
Slow decision making process
– As mentioned earlier in the report, Deutsche Hottges 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. Deutsche Hottges 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.
Products dominated business model
– Even though Deutsche Hottges 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 - Deutsche Telekom in 2016: Driving Disruption from Within the Industry should strive to include more intangible value offerings along with its core products and services.
Opportunities Deutsche Telekom in 2016: Driving Disruption from Within the Industry | 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry are -
Loyalty marketing
– Deutsche Hottges 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.
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. Deutsche Hottges can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Deutsche Hottges 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Deutsche Hottges 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Deutsche Hottges is facing challenges because of the dominance of functional experts in the organization. Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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.
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. Deutsche Hottges can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Deutsche Hottges 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. Deutsche Hottges 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.
Better consumer reach
– The expansion of the 5G network will help Deutsche Hottges to increase its market reach. Deutsche Hottges 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Deutsche Hottges can use these opportunities to build new business models that can help the communities that Deutsche Hottges operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Deutsche Hottges in the consumer business. Now Deutsche Hottges can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Deutsche Hottges can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Deutsche Hottges 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.
Manufacturing automation
– Deutsche Hottges 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.
Threats Deutsche Telekom in 2016: Driving Disruption from Within the Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Deutsche Telekom in 2016: Driving Disruption from Within the Industry are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Deutsche Telekom in 2016: Driving Disruption from Within the Industry, Deutsche Hottges 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 .
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. Deutsche Hottges 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.
Regulatory challenges
– Deutsche Hottges 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Deutsche Hottges 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
– Deutsche Hottges 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.
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. Deutsche Hottges 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. Deutsche Hottges needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Deutsche Hottges demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Deutsche Hottges in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Deutsche Hottges 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry .
Environmental challenges
– Deutsche Hottges 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. Deutsche Hottges can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Deutsche Hottges
– 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 Deutsche Hottges.
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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Telekom in 2016: Driving Disruption from Within the Industry 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 Deutsche Hottges needs to make to build a sustainable competitive advantage.
