Upon becoming General Manager of ArtesanA?as de Colombia (AC) in January 2007, Paola MuA?oz faced the challenge of redefining the organization's strategy. The mission of AC, a mainly government organization with a 3 % private ownership, was to foster, promote, and market Colombian handicrafts, thus creating economic development opportunities for artisans, a low-income, mainly indigenous population. In early 2007, soon after assuming her role as General Manager, Paola evaluated the strategy, achievements, and limitations of her predecessor's 16-year-long management tenure, in order to craft her own strategy for the organization. Whereas the previous strategy focused on crafts-with a strong emphasis on the promotion of design and the positioning of crafts as very differentiated products among high-income clients-Paola wanted to discuss with her staff the pros and cons of reorienting the AC's strategy toward the artisans, through increased training, support, and capacity building especially in administrative, economic and organizational areas. The case is based on an organization that is primarily a public/ government organization with a social mission. Governments and government agencies still represent in most OECD countries between 40% and 50% of the economy. This case invites students to (1) strategy formulation in not-for-profit or governmental contexts (specifically in this case a hybrid organization with (a) a dual mandate -social and business orientations (b) in a sector in which the small focal organization promotes value creation with a vast number of producers -over 350,000 artisans in the country) and to (2) highlight the relevance and limitations of strategic management concepts and tools in such contexts. Besides a strategic management course, this case can be used in a corporate social responsibility course to illustrate the challenges of a hybrid organization, in which profit-making and social mission are complementary objectives.
Authors :: Guillermo D'Andrea, Javier Jorge Silva, Emmanuel ER Raufflet, Maricruz Prado
Swot Analysis of "ArtesanA?as de Colombia" written by Guillermo D'Andrea, Javier Jorge Silva, Emmanuel ER Raufflet, Maricruz Prado includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Paola Artisans facing as an external strategic factors. Some of the topics covered in ArtesanA?as de Colombia case study are - Strategic Management Strategies, Government, Leadership, Social responsibility, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the ArtesanA?as de Colombia casestudy better are - – increasing commodity prices, 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, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, technology disruption,
cloud computing is disrupting traditional business models, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of ArtesanA?as de Colombia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ArtesanA?as de Colombia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Paola Artisans, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Paola Artisans 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 ArtesanA?as de Colombia can be done for the following purposes –
1. Strategic planning using facts provided in ArtesanA?as de Colombia case study
2. Improving business portfolio management of Paola Artisans
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 Paola Artisans
Strengths ArtesanA?as de Colombia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Paola Artisans in ArtesanA?as de Colombia Harvard Business Review case study are -
Organizational Resilience of Paola Artisans
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Paola Artisans does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the ArtesanA?as de Colombia 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.
Strong track record of project management
– Paola Artisans 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
– Paola Artisans 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 Paola Artisans in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– ArtesanA?as de Colombia firm has clearly differentiated products in the market place. This has enabled Paola Artisans to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Paola Artisans to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Paola Artisans 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 ArtesanA?as de Colombia - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Paola Artisans in the sector have low bargaining power. ArtesanA?as de Colombia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Paola Artisans to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Paola Artisans 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 ArtesanA?as de Colombia HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Paola Artisans has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Paola Artisans to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Paola Artisans 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 Paola Artisans is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ArtesanA?as de Colombia Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Paola Artisans is one of the leading recruiters in the industry. Managers in the ArtesanA?as de Colombia are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Paola Artisans is present in almost all the verticals within the industry. This has provided firm in ArtesanA?as de Colombia 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.
Weaknesses ArtesanA?as de Colombia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ArtesanA?as de Colombia are -
Slow decision making process
– As mentioned earlier in the report, Paola Artisans 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. Paola Artisans 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study ArtesanA?as de Colombia, in the dynamic environment Paola Artisans has struggled to respond to the nimble upstart competition. Paola Artisans has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ArtesanA?as de Colombia, is just above the industry average. Paola Artisans 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.
No frontier risks strategy
– After analyzing the HBR case study ArtesanA?as de Colombia, 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.
Need for greater diversity
– Paola Artisans 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Paola Artisans is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study ArtesanA?as de Colombia can help to provide better information regarding products and services. It can also build an online community to further reach out to potential 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 Paola Artisans supply chain. Even after few cautionary changes mentioned in the HBR case study - ArtesanA?as de Colombia, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Paola Artisans vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Paola Artisans 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 bargaining power of channel partners
– Because of the regulatory requirements, Guillermo D'Andrea, Javier Jorge Silva, Emmanuel ER Raufflet, Maricruz Prado suggests that, Paola Artisans 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 Paola Artisans 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 - ArtesanA?as de Colombia should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Paola Artisans 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.
Opportunities ArtesanA?as de Colombia | 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 ArtesanA?as de Colombia are -
Manufacturing automation
– Paola Artisans 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Paola Artisans 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 Paola Artisans to increase its market reach. Paola Artisans 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.
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. Paola Artisans 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. Paola Artisans 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Paola Artisans can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, ArtesanA?as de Colombia, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Paola Artisans 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.
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 Paola Artisans 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.
Loyalty marketing
– Paola Artisans 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.
Using analytics as competitive advantage
– Paola Artisans 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 ArtesanA?as de Colombia - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Paola Artisans to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Paola Artisans 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.
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. Paola Artisans can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Paola Artisans can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Paola Artisans can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats ArtesanA?as de Colombia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ArtesanA?as de Colombia are -
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 Paola Artisans in the Strategy & Execution sector and impact the bottomline of the organization.
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. Paola Artisans 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.
Environmental challenges
– Paola Artisans 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. Paola Artisans can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Paola Artisans is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Paola Artisans 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 Paola Artisans 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, Paola Artisans 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 ArtesanA?as de Colombia .
High dependence on third party suppliers
– Paola Artisans 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.
Increasing wage structure of Paola Artisans
– 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 Paola Artisans.
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 Paola Artisans.
Technology acceleration in Forth Industrial Revolution
– Paola Artisans has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Paola Artisans 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 ArtesanA?as de Colombia, Paola Artisans 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 .
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. Paola Artisans needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Weighted SWOT Analysis of ArtesanA?as de Colombia 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 ArtesanA?as de Colombia 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 ArtesanA?as de Colombia 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 ArtesanA?as de Colombia 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 ArtesanA?as de Colombia 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 Paola Artisans needs to make to build a sustainable competitive advantage.
