From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity
In today's interconnected world, a web of entities rather than predominantly a single firm coordinates a set of activities that deliver utility to mutually connected consumers, thus creating ecosystems. In this article, we suggest that in the current, ecosystem-based production and consumption environment it is important to identify a new set of factors that determines business success. We then propose that in order to develop a network-centric strategic mindset it is important to make a transition from the notion of firm-based competitive advantage to ecosystem-based nodal advantage by which products, services, or processes held by a single firm and affecting one or more ecosystems are exploited individually to improve business. To this end, we offer a new set of five forces that are likely to affect not only a node's financial profitability but also its vulnerability within its ecosystem and the survival of the ecosystem itself. Based on these forces, we recommend strategic triangulation and the formulation of policies to prevent infra-nodal substitution, increase nodal stranglehold, and improve nimbleness to accommodate ecosystemic transitions.
Swot Analysis of "From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity" written by Piyush Kumar, Mayukh Dass, Shivina Kumar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nodal Ecosystem facing as an external strategic factors. Some of the topics covered in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity case study are - Strategic Management Strategies, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, wage bills are increasing,
technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nodal Ecosystem, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nodal Ecosystem 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity can be done for the following purposes –
1. Strategic planning using facts provided in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity case study
2. Improving business portfolio management of Nodal Ecosystem
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 Nodal Ecosystem
Strengths From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nodal Ecosystem in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity Harvard Business Review case study are -
Training and development
– Nodal Ecosystem has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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.
Low bargaining power of suppliers
– Suppliers of Nodal Ecosystem in the sector have low bargaining power. From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nodal Ecosystem to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Nodal Ecosystem has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nodal Ecosystem 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.
Superior customer experience
– The customer experience strategy of Nodal Ecosystem in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Strategy & Execution industry
– From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity firm has clearly differentiated products in the market place. This has enabled Nodal Ecosystem to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Nodal Ecosystem to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Nodal Ecosystem is present in almost all the verticals within the industry. This has provided firm in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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
– Nodal Ecosystem 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 Nodal Ecosystem in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Nodal Ecosystem 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 Nodal Ecosystem is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Nodal Ecosystem 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 Piyush Kumar, Mayukh Dass, Shivina Kumar 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.
Operational resilience
– The operational resilience strategy in the From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Nodal Ecosystem digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nodal Ecosystem 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)
– Nodal Ecosystem 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity are -
Skills based hiring
– The stress on hiring functional specialists at Nodal Ecosystem 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
– Nodal Ecosystem 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.
Low market penetration in new markets
– Outside its home market of Nodal Ecosystem, firm in the HBR case study From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Nodal Ecosystem is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Nodal Ecosystem needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nodal Ecosystem to focus more on services rather than just following the product 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 Nodal Ecosystem supply chain. Even after few cautionary changes mentioned in the HBR case study - From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nodal Ecosystem vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Nodal Ecosystem 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity, in the dynamic environment Nodal Ecosystem has struggled to respond to the nimble upstart competition. Nodal Ecosystem has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 Nodal Ecosystem has relatively successful track record of launching new products.
High cash cycle compare to competitors
Nodal Ecosystem 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, Nodal Ecosystem 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. Nodal Ecosystem 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.
Aligning sales with marketing
– It come across in the case study From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity can leverage the sales team experience to cultivate customer relationships as Nodal Ecosystem is planning to shift buying processes online.
Opportunities From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity | 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity are -
Learning at scale
– Online learning technologies has now opened space for Nodal Ecosystem 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nodal Ecosystem 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
– Nodal Ecosystem 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nodal Ecosystem 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 Nodal Ecosystem to hire the very best people irrespective of their geographical location.
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 Nodal Ecosystem in the consumer business. Now Nodal Ecosystem can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nodal Ecosystem can use these opportunities to build new business models that can help the communities that Nodal Ecosystem operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Nodal Ecosystem 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.
Developing new processes and practices
– Nodal Ecosystem 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.
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. Nodal Ecosystem can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Nodal Ecosystem to increase its market reach. Nodal Ecosystem 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.
Leveraging digital technologies
– Nodal Ecosystem 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.
Creating value in data economy
– The success of analytics program of Nodal Ecosystem has opened avenues for new revenue streams for the organization in the industry. This can help Nodal Ecosystem to build a more holistic ecosystem as suggested in the From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity case study. Nodal Ecosystem 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, Nodal Ecosystem 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.
Threats From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nodal Ecosystem with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Nodal Ecosystem 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.
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. Nodal Ecosystem 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. Nodal Ecosystem needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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 Nodal Ecosystem business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nodal Ecosystem 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.
Environmental challenges
– Nodal Ecosystem 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. Nodal Ecosystem can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity, Nodal Ecosystem 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nodal Ecosystem 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity .
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. Nodal Ecosystem can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Nodal Ecosystem 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.
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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 From competitive advantage to nodal advantage: Ecosystem structure and the new five forces that affect prosperity 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 Nodal Ecosystem needs to make to build a sustainable competitive advantage.
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