AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties
This case includes supplements.Two-party term sheet negotiation between a venture capitalist and the founder of an aerospace start-up company in which participants are scored both on their substantive performance and on the other party's perception of the relationship. The venture capital (VC) firm Aerovent Capital is considering a $100 million investment in the startup company Earth Escape. The founder of Earth Escape and the lead partner from Aerovent Capital must negotiate a term sheet outlining eight significant terms of the investment. Both parties are concerned with structuring a deal that protects their substantive investment interests and with creating a positive foundation for their potential collaboration. The simulation introduces the incorporation of process and relationship interests into negotiation strategy. This is a role play case.
Swot Analysis of "AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties" written by Nicholas Sabin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Aerovent Escape facing as an external strategic factors. Some of the topics covered in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties case study are - Strategic Management Strategies, Negotiations, Venture capital and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties casestudy better are - – increasing transportation and logistics costs, technology disruption, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy,
wage bills are increasing, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aerovent Escape, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties can be done for the following purposes –
1. Strategic planning using facts provided in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties case study
2. Improving business portfolio management of Aerovent Escape
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 Aerovent Escape
Strengths AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aerovent Escape in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties Harvard Business Review case study are -
Effective Research and Development (R&D)
– Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Aerovent Escape digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Aerovent Escape 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.
Learning organization
- Aerovent Escape 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 Aerovent Escape is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Aerovent Escape is present in almost all the verticals within the industry. This has provided firm in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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.
Innovation driven organization
– Aerovent Escape is one of the most innovative firm in sector. Manager in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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
– AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties firm has clearly differentiated products in the market place. This has enabled Aerovent Escape to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Aerovent Escape to invest into research and development (R&D) and innovation.
Training and development
– Aerovent Escape has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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.
Organizational Resilience of Aerovent Escape
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Aerovent Escape does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Aerovent Escape has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Aerovent Escape to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Aerovent Escape in the sector have low bargaining power. AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Aerovent Escape to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Aerovent Escape is one of the leading recruiters in the industry. Managers in the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties are -
Workers concerns about automation
– As automation is fast increasing in the segment, Aerovent Escape 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 Aerovent Escape is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Aerovent Escape needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Aerovent Escape to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Aerovent Escape products
– To increase the profitability and margins on the products, Aerovent Escape needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Aerovent Escape is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Aerovent Escape, firm in the HBR case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties, in the dynamic environment Aerovent Escape has struggled to respond to the nimble upstart competition. Aerovent Escape has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Nicholas Sabin suggests that, Aerovent Escape 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.
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 Aerovent Escape supply chain. Even after few cautionary changes mentioned in the HBR case study - AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Aerovent Escape vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties HBR case study mentions - Aerovent Escape takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 Aerovent Escape has relatively successful track record of launching new products.
Need for greater diversity
– Aerovent Escape 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.
Opportunities AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties | 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Aerovent Escape can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Aerovent Escape can use these opportunities to build new business models that can help the communities that Aerovent Escape operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Aerovent Escape 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, AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Aerovent Escape is facing challenges because of the dominance of functional experts in the organization. AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Aerovent Escape 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.
Building a culture of innovation
– managers at Aerovent Escape can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
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. Aerovent Escape can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Aerovent Escape 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Aerovent Escape to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Aerovent Escape 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.
Buying journey improvements
– Aerovent Escape can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 Aerovent Escape has opened avenues for new revenue streams for the organization in the industry. This can help Aerovent Escape to build a more holistic ecosystem as suggested in the AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties case study. Aerovent Escape can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Aerovent Escape 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.
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 Aerovent Escape in the consumer business. Now Aerovent Escape can target international markets with far fewer capital restrictions requirements than the existing system.
Threats AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties are -
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. Aerovent Escape 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.
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. Aerovent Escape 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 Aerovent Escape 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.
Shortening product life cycle
– it is one of the major threat that Aerovent Escape is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Aerovent Escape 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.
Increasing wage structure of Aerovent Escape
– 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 Aerovent Escape.
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 Aerovent Escape.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties, Aerovent Escape 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 .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Aerovent Escape has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Aerovent Escape 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.
Stagnating economy with rate increase
– Aerovent Escape 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.
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 Aerovent Escape 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 Aerovent Escape 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.
Weighted SWOT Analysis of AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 AEROSPACE INVESTMENT: BALANCING VENTURE & RELATIONSHIP CAPITAL - General Instructions for Both Parties 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 Aerovent Escape needs to make to build a sustainable competitive advantage.
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