SAP: The Challenge of Aligning Sourcing and Innovation Strategies SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of SAP: The Challenge of Aligning Sourcing and Innovation Strategies
In late 2011, SAP, the German leader in the enterprise software industry, announced a major investment plan for expanding in China and also acquired a leading American firm in cloud-based human capital management software. At first glance, these investments seemed rather unconnected. A closer look at SAP's strategy, however, revealed a closely connected and coordinated network of strategic decisions and investments for which alignment and finding the right balance were key challenges. Hence, it was crucial to ask: What were the principal challenges for SAP in aligning its innovation and sourcing strategies? Compared to its key competitors - Microsoft, IBM and Oracle - how was it aligning its innovation strategy with its sourcing strategy?
Authors :: Bent Petersen, Dominique Nikerle-Uhthoff, Helen Schwaerzler
Swot Analysis of "SAP: The Challenge of Aligning Sourcing and Innovation Strategies" written by Bent Petersen, Dominique Nikerle-Uhthoff, Helen Schwaerzler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sap Aligning facing as an external strategic factors. Some of the topics covered in SAP: The Challenge of Aligning Sourcing and Innovation Strategies case study are - Strategic Management Strategies, International business, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the SAP: The Challenge of Aligning Sourcing and Innovation Strategies casestudy better are - – increasing energy prices, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs,
banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of SAP: The Challenge of Aligning Sourcing and Innovation Strategies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SAP: The Challenge of Aligning Sourcing and Innovation Strategies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sap Aligning, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sap Aligning 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies can be done for the following purposes –
1. Strategic planning using facts provided in SAP: The Challenge of Aligning Sourcing and Innovation Strategies case study
2. Improving business portfolio management of Sap Aligning
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 Sap Aligning
Strengths SAP: The Challenge of Aligning Sourcing and Innovation Strategies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sap Aligning in SAP: The Challenge of Aligning Sourcing and Innovation Strategies Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Sap Aligning in the sector have low bargaining power. SAP: The Challenge of Aligning Sourcing and Innovation Strategies has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sap Aligning to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Sap Aligning is one of the most innovative firm in sector. Manager in SAP: The Challenge of Aligning Sourcing and Innovation Strategies Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Sap Aligning 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Sap Aligning has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sap Aligning 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.
Diverse revenue streams
– Sap Aligning is present in almost all the verticals within the industry. This has provided firm in SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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.
Training and development
– Sap Aligning has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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 Sap Aligning
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sap Aligning does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Sap Aligning 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– SAP: The Challenge of Aligning Sourcing and Innovation Strategies firm has clearly differentiated products in the market place. This has enabled Sap Aligning to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sap Aligning to invest into research and development (R&D) and innovation.
High brand equity
– Sap Aligning has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sap Aligning to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Sap Aligning 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
– Sap Aligning 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 Sap Aligning in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses SAP: The Challenge of Aligning Sourcing and Innovation Strategies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SAP: The Challenge of Aligning Sourcing and Innovation Strategies are -
Workers concerns about automation
– As automation is fast increasing in the segment, Sap Aligning 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.
High operating costs
– Compare to the competitors, firm in the HBR case study SAP: The Challenge of Aligning Sourcing and Innovation Strategies has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sap Aligning 's lucrative customers.
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 Sap Aligning supply chain. Even after few cautionary changes mentioned in the HBR case study - SAP: The Challenge of Aligning Sourcing and Innovation Strategies, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sap Aligning vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sap Aligning is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study SAP: The Challenge of Aligning Sourcing and Innovation Strategies can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study SAP: The Challenge of Aligning Sourcing and Innovation Strategies, it seems that the employees of Sap Aligning 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Bent Petersen, Dominique Nikerle-Uhthoff, Helen Schwaerzler suggests that, Sap Aligning 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.
Products dominated business model
– Even though Sap Aligning 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 - SAP: The Challenge of Aligning Sourcing and Innovation Strategies should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Sap Aligning products
– To increase the profitability and margins on the products, Sap Aligning needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Sap Aligning 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.
Capital Spending Reduction
– Even during the low interest decade, Sap Aligning 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.
No frontier risks strategy
– After analyzing the HBR case study SAP: The Challenge of Aligning Sourcing and Innovation Strategies, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities SAP: The Challenge of Aligning Sourcing and Innovation Strategies | 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies are -
Better consumer reach
– The expansion of the 5G network will help Sap Aligning to increase its market reach. Sap Aligning 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.
Manufacturing automation
– Sap Aligning 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.
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. Sap Aligning can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Sap Aligning 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sap Aligning 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.
Using analytics as competitive advantage
– Sap Aligning 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sap Aligning to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sap Aligning can use these opportunities to build new business models that can help the communities that Sap Aligning operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sap Aligning is facing challenges because of the dominance of functional experts in the organization. SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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.
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. Sap Aligning 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. Sap Aligning 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.
Loyalty marketing
– Sap Aligning 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
– Sap Aligning 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.
Creating value in data economy
– The success of analytics program of Sap Aligning has opened avenues for new revenue streams for the organization in the industry. This can help Sap Aligning to build a more holistic ecosystem as suggested in the SAP: The Challenge of Aligning Sourcing and Innovation Strategies case study. Sap Aligning can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Sap Aligning 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.
Threats SAP: The Challenge of Aligning Sourcing and Innovation Strategies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SAP: The Challenge of Aligning Sourcing and Innovation Strategies are -
Technology acceleration in Forth Industrial Revolution
– Sap Aligning has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sap Aligning 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
– Sap Aligning 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.
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. Sap Aligning can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sap Aligning with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sap Aligning 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies .
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. Sap Aligning needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Sap Aligning 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 Sap Aligning 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
– Sap Aligning 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.
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. Sap Aligning 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.
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 Sap Aligning.
Consumer confidence and its impact on Sap Aligning 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 Sap Aligning is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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 SAP: The Challenge of Aligning Sourcing and Innovation Strategies 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 Sap Aligning needs to make to build a sustainable competitive advantage.