Castlight Health: Disrupting the Health Care Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Castlight Health: Disrupting the Health Care Industry
This case study focuses on Castlight Health, a company that offered web-based health comparison tools for consumers. The company provided its tool through a business-to-business based subscription model where the employees of Castlight's clients could research health care costs before receiving care. The case study focuses on the company's newest product, a reference-based pricing product and whether this concept was a short-term fad or whether Castlight Health could successfully implement this new product and strategy.
Swot Analysis of "Castlight Health: Disrupting the Health Care Industry" written by Kristiana Raube includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Castlight Health facing as an external strategic factors. Some of the topics covered in Castlight Health: Disrupting the Health Care Industry case study are - Strategic Management Strategies, Customers, Entrepreneurship, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Castlight Health: Disrupting the Health Care Industry casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, technology disruption, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, wage bills are increasing, there is backlash against globalization,
geopolitical disruptions, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Castlight Health: Disrupting the Health Care Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Castlight Health: Disrupting the Health Care Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Castlight Health, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Castlight Health 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 Castlight Health: Disrupting the Health Care Industry can be done for the following purposes –
1. Strategic planning using facts provided in Castlight Health: Disrupting the Health Care Industry case study
2. Improving business portfolio management of Castlight Health
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 Castlight Health
Strengths Castlight Health: Disrupting the Health Care Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Castlight Health in Castlight Health: Disrupting the Health Care Industry Harvard Business Review case study are -
High switching costs
– The high switching costs that Castlight Health has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Castlight Health has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Castlight Health has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Castlight Health 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 Castlight Health: Disrupting the Health Care 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.
Superior customer experience
– The customer experience strategy of Castlight Health in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Castlight Health has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Castlight Health to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Castlight Health is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Castlight Health 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 Castlight Health in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Castlight Health 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 Castlight Health: Disrupting the Health Care Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Castlight Health digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Castlight Health 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.
Ability to recruit top talent
– Castlight Health is one of the leading recruiters in the industry. Managers in the Castlight Health: Disrupting the Health Care 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.
Low bargaining power of suppliers
– Suppliers of Castlight Health in the sector have low bargaining power. Castlight Health: Disrupting the Health Care Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Castlight Health to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Castlight Health: Disrupting the Health Care Industry firm has clearly differentiated products in the market place. This has enabled Castlight Health to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Castlight Health to invest into research and development (R&D) and innovation.
Weaknesses Castlight Health: Disrupting the Health Care Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Castlight Health: Disrupting the Health Care Industry are -
Lack of clear differentiation of Castlight Health products
– To increase the profitability and margins on the products, Castlight Health needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Castlight Health is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Castlight Health needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Castlight Health to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Castlight Health has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High cash cycle compare to competitors
Castlight Health 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Castlight Health: Disrupting the Health Care Industry, it seems that the employees of Castlight Health 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.
Interest costs
– Compare to the competition, Castlight Health has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Castlight Health, firm in the HBR case study Castlight Health: Disrupting the Health Care Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Castlight Health 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 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 Castlight Health supply chain. Even after few cautionary changes mentioned in the HBR case study - Castlight Health: Disrupting the Health Care Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Castlight Health vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Castlight Health: Disrupting the Health Care 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 Castlight Health: Disrupting the Health Care Industry can leverage the sales team experience to cultivate customer relationships as Castlight Health is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Castlight Health 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. Castlight Health 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.
Opportunities Castlight Health: Disrupting the Health Care 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 Castlight Health: Disrupting the Health Care Industry are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Castlight Health 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.
Loyalty marketing
– Castlight Health 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.
Leveraging digital technologies
– Castlight Health 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.
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. Castlight Health can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Castlight Health has opened avenues for new revenue streams for the organization in the industry. This can help Castlight Health to build a more holistic ecosystem as suggested in the Castlight Health: Disrupting the Health Care Industry case study. Castlight Health can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Castlight Health can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Castlight Health 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.
Building a culture of innovation
– managers at Castlight Health 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.
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. Castlight Health 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. Castlight Health 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.
Developing new processes and practices
– Castlight Health 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Castlight Health can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Castlight Health to increase its market reach. Castlight Health 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.
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 Castlight Health 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.
Threats Castlight Health: Disrupting the Health Care Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Castlight Health: Disrupting the Health Care Industry are -
Technology acceleration in Forth Industrial Revolution
– Castlight Health has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Castlight Health 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Castlight Health: Disrupting the Health Care Industry, Castlight Health 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 .
Increasing wage structure of Castlight Health
– 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 Castlight Health.
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. Castlight Health 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 Castlight Health 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.
High dependence on third party suppliers
– Castlight Health 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.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Castlight Health business can come under increasing regulations regarding data privacy, data security, etc.
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 Castlight Health.
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. Castlight Health 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Castlight Health with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Castlight Health in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Castlight Health 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.
Weighted SWOT Analysis of Castlight Health: Disrupting the Health Care 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 Castlight Health: Disrupting the Health Care 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 Castlight Health: Disrupting the Health Care 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 Castlight Health: Disrupting the Health Care 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 Castlight Health: Disrupting the Health Care 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 Castlight Health needs to make to build a sustainable competitive advantage.