Optimizing Your Digital Business Model SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Optimizing Your Digital Business Model
This is an MIT Sloan Management Review article. A company's digital business model describes how the enterprise interacts digitally with its customers to generate value. The authors argue that it's time for companies to create a great digital business model before their customers leave them behind. A great digital business model will often challenge the status quo in the company: It can cause an organization to change how work gets done, who does the work and where it invests to best serve customers online. A digital business model often cannibalizes or changes the company's physical channels. And that is true whether the company is a born-on-the-Web company like Amazon, a large oil company or a local business just starting to focus on the best way to connect with customers online. The authors have created a framework to help enterprises compete digitally with three capabilities: their content, customer experience and platform. They illustrate the framework with case studies of top performers like Amazon, Apple, LexisNexis and USAA and results from an effective practices survey. They also include a self-assessment tool to help with next steps.
Swot Analysis of "Optimizing Your Digital Business Model" written by Peter Weill, Stephanie Woerner includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Digital Digitally facing as an external strategic factors. Some of the topics covered in Optimizing Your Digital Business Model case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Optimizing Your Digital Business Model casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, wage bills are increasing, geopolitical disruptions,
increasing commodity prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Optimizing Your Digital Business Model
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Optimizing Your Digital Business Model case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Digital Digitally, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Digital Digitally 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 Optimizing Your Digital Business Model can be done for the following purposes –
1. Strategic planning using facts provided in Optimizing Your Digital Business Model case study
2. Improving business portfolio management of Digital Digitally
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 Digital Digitally
Strengths Optimizing Your Digital Business Model | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Digital Digitally in Optimizing Your Digital Business Model Harvard Business Review case study are -
Innovation driven organization
– Digital Digitally is one of the most innovative firm in sector. Manager in Optimizing Your Digital Business Model Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Digital Digitally 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 Optimizing Your Digital Business Model - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Digital Digitally has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Digital Digitally 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 Digital Digitally in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Digital Digitally digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Digital Digitally 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.
Low bargaining power of suppliers
– Suppliers of Digital Digitally in the sector have low bargaining power. Optimizing Your Digital Business Model has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Digital Digitally to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Digital Digitally is one of the leading recruiters in the industry. Managers in the Optimizing Your Digital Business Model are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Optimizing Your Digital Business Model firm has clearly differentiated products in the market place. This has enabled Digital Digitally to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Digital Digitally to invest into research and development (R&D) and innovation.
Learning organization
- Digital Digitally 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 Digital Digitally is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Optimizing Your Digital Business Model Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Digital Digitally
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Digital Digitally does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Digital Digitally 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 Optimizing Your Digital Business Model HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Digital Digitally is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Optimizing Your Digital Business Model | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Optimizing Your Digital Business Model are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Optimizing Your Digital Business Model, is just above the industry average. Digital Digitally needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Digital Digitally 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 Optimizing Your Digital Business Model, in the dynamic environment Digital Digitally has struggled to respond to the nimble upstart competition. Digital Digitally has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Digital Digitally 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.
Aligning sales with marketing
– It come across in the case study Optimizing Your Digital Business Model 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 Optimizing Your Digital Business Model can leverage the sales team experience to cultivate customer relationships as Digital Digitally is planning to shift buying processes online.
Lack of clear differentiation of Digital Digitally products
– To increase the profitability and margins on the products, Digital Digitally needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Optimizing Your Digital Business Model 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 Digital Digitally has relatively successful track record of launching new products.
Need for greater diversity
– Digital Digitally 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.
Skills based hiring
– The stress on hiring functional specialists at Digital Digitally 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.
Low market penetration in new markets
– Outside its home market of Digital Digitally, firm in the HBR case study Optimizing Your Digital Business Model needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Optimizing Your Digital Business Model, it seems that the employees of Digital Digitally 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.
Opportunities Optimizing Your Digital Business Model | 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 Optimizing Your Digital Business Model are -
Using analytics as competitive advantage
– Digital Digitally 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 Optimizing Your Digital Business Model - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Digital Digitally to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Digital Digitally 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Digital Digitally 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.
Better consumer reach
– The expansion of the 5G network will help Digital Digitally to increase its market reach. Digital Digitally 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Digital Digitally 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Digital Digitally can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Digital Digitally is facing challenges because of the dominance of functional experts in the organization. Optimizing Your Digital Business Model 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.
Buying journey improvements
– Digital Digitally can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Optimizing Your Digital Business Model 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.
Learning at scale
– Online learning technologies has now opened space for Digital Digitally 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.
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. Digital Digitally 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. Digital Digitally 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.
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 Digital Digitally in the consumer business. Now Digital Digitally can target international markets with far fewer capital restrictions requirements than the existing system.
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. Digital Digitally can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Digital Digitally 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.
Threats Optimizing Your Digital Business Model External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Optimizing Your Digital Business Model are -
Technology acceleration in Forth Industrial Revolution
– Digital Digitally has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Digital Digitally 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.
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.
Stagnating economy with rate increase
– Digital Digitally 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.
Shortening product life cycle
– it is one of the major threat that Digital Digitally is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Digital Digitally 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.
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.
High dependence on third party suppliers
– Digital Digitally 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Optimizing Your Digital Business Model, Digital Digitally 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Digital Digitally 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
– Digital Digitally 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. Digital Digitally can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Digital Digitally with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Digital Digitally can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Digital Digitally business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Optimizing Your Digital Business Model 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 Optimizing Your Digital Business Model 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 Optimizing Your Digital Business Model 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 Optimizing Your Digital Business Model 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 Optimizing Your Digital Business Model 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 Digital Digitally needs to make to build a sustainable competitive advantage.
