Dynamic Capabilities at IBM: Driving Strategy into Action SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Dynamic Capabilities at IBM: Driving Strategy into Action
In the past 15 years, IBM has undergone a remarkable transformation from a struggling seller of hardware to a successful broad range solutions provider. Underlying this change is a story of foresighted strategy and disciplined execution--of connecting knowing to doing. In strategic terms, the IBM transformation illustrates the ideas behind dynamic capabilities, showing how the company has been able to sense changes in the marketplace and to seize these opportunities by reconfiguring existing assets and competencies. We review the literature on dynamic capabilities and, using IBM as an example, show how their strategy process permits them both to explore new markets and technologies (e.g., life sciences, pervasive computing) as well as to exploit mature products and markets (e.g., mainframe computers, middleware).
Authors :: J. Bruce Harreld, Charles A. O'Reilly, Michael L. Tushman
Swot Analysis of "Dynamic Capabilities at IBM: Driving Strategy into Action" written by J. Bruce Harreld, Charles A. O'Reilly, Michael L. Tushman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ibm Dynamic facing as an external strategic factors. Some of the topics covered in Dynamic Capabilities at IBM: Driving Strategy into Action case study are - Strategic Management Strategies, Competitive strategy, Organizational structure and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Dynamic Capabilities at IBM: Driving Strategy into Action casestudy better are - – increasing transportation and logistics costs, cloud computing is disrupting traditional business models, increasing energy prices, supply chains are disrupted by pandemic , geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation,
challanges to central banks by blockchain based private currencies, wage bills are increasing, etc
Introduction to SWOT Analysis of Dynamic Capabilities at IBM: Driving Strategy into Action
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dynamic Capabilities at IBM: Driving Strategy into Action case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ibm Dynamic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ibm Dynamic 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 Dynamic Capabilities at IBM: Driving Strategy into Action can be done for the following purposes –
1. Strategic planning using facts provided in Dynamic Capabilities at IBM: Driving Strategy into Action case study
2. Improving business portfolio management of Ibm Dynamic
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 Ibm Dynamic
Strengths Dynamic Capabilities at IBM: Driving Strategy into Action | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ibm Dynamic in Dynamic Capabilities at IBM: Driving Strategy into Action Harvard Business Review case study are -
Diverse revenue streams
– Ibm Dynamic is present in almost all the verticals within the industry. This has provided firm in Dynamic Capabilities at IBM: Driving Strategy into Action 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.
Cross disciplinary teams
– Horizontal connected teams at the Ibm Dynamic are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Ibm Dynamic is one of the leading recruiters in the industry. Managers in the Dynamic Capabilities at IBM: Driving Strategy into Action are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Ibm Dynamic has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Ibm Dynamic 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 Dynamic Capabilities at IBM: Driving Strategy into Action HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Ibm Dynamic
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ibm Dynamic does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Ibm Dynamic 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 Dynamic Capabilities at IBM: Driving Strategy into Action - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Ibm Dynamic 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 Ibm Dynamic is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dynamic Capabilities at IBM: Driving Strategy into Action Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Ibm Dynamic has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ibm Dynamic to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Strategy & Execution industry
– Dynamic Capabilities at IBM: Driving Strategy into Action firm has clearly differentiated products in the market place. This has enabled Ibm Dynamic to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Ibm Dynamic to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Dynamic Capabilities at IBM: Driving Strategy into Action 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.
Low bargaining power of suppliers
– Suppliers of Ibm Dynamic in the sector have low bargaining power. Dynamic Capabilities at IBM: Driving Strategy into Action has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ibm Dynamic to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Dynamic Capabilities at IBM: Driving Strategy into Action | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dynamic Capabilities at IBM: Driving Strategy into Action are -
Slow decision making process
– As mentioned earlier in the report, Ibm Dynamic 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. Ibm Dynamic 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Dynamic Capabilities at IBM: Driving Strategy into Action, it seems that the employees of Ibm Dynamic 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Dynamic Capabilities at IBM: Driving Strategy into Action 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 Ibm Dynamic has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Ibm Dynamic, firm in the HBR case study Dynamic Capabilities at IBM: Driving Strategy into Action needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Ibm Dynamic 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Dynamic Capabilities at IBM: Driving Strategy into Action 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 Ibm Dynamic 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Ibm Dynamic is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Ibm Dynamic needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ibm Dynamic to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Ibm Dynamic 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 - Dynamic Capabilities at IBM: Driving Strategy into Action should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, J. Bruce Harreld, Charles A. O'Reilly, Michael L. Tushman suggests that, Ibm Dynamic 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.
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 Ibm Dynamic supply chain. Even after few cautionary changes mentioned in the HBR case study - Dynamic Capabilities at IBM: Driving Strategy into Action, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ibm Dynamic vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Dynamic Capabilities at IBM: Driving Strategy into Action HBR case study mentions - Ibm Dynamic takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Dynamic Capabilities at IBM: Driving Strategy into Action | 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 Dynamic Capabilities at IBM: Driving Strategy into Action are -
Creating value in data economy
– The success of analytics program of Ibm Dynamic has opened avenues for new revenue streams for the organization in the industry. This can help Ibm Dynamic to build a more holistic ecosystem as suggested in the Dynamic Capabilities at IBM: Driving Strategy into Action case study. Ibm Dynamic can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Ibm Dynamic 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 Dynamic Capabilities at IBM: Driving Strategy into Action - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ibm Dynamic to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Ibm Dynamic can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dynamic Capabilities at IBM: Driving Strategy into Action 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.
Better consumer reach
– The expansion of the 5G network will help Ibm Dynamic to increase its market reach. Ibm Dynamic will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ibm Dynamic 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.
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. Ibm Dynamic can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Ibm Dynamic can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ibm Dynamic 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 Ibm Dynamic to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Ibm Dynamic 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.
Developing new processes and practices
– Ibm Dynamic 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ibm Dynamic is facing challenges because of the dominance of functional experts in the organization. Dynamic Capabilities at IBM: Driving Strategy into Action 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.
Building a culture of innovation
– managers at Ibm Dynamic can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ibm Dynamic 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. Ibm Dynamic 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.
Threats Dynamic Capabilities at IBM: Driving Strategy into Action External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dynamic Capabilities at IBM: Driving Strategy into Action are -
Environmental challenges
– Ibm Dynamic 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. Ibm Dynamic can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Ibm Dynamic can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Ibm Dynamic 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.
Technology acceleration in Forth Industrial Revolution
– Ibm Dynamic has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Ibm Dynamic 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.
Increasing wage structure of Ibm Dynamic
– 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 Ibm Dynamic.
Shortening product life cycle
– it is one of the major threat that Ibm Dynamic 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 Ibm Dynamic 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.
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 Ibm Dynamic business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Ibm Dynamic 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ibm Dynamic 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 Dynamic Capabilities at IBM: Driving Strategy into Action .
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. Ibm Dynamic needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ibm Dynamic with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Ibm Dynamic 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.
Weighted SWOT Analysis of Dynamic Capabilities at IBM: Driving Strategy into Action 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 Dynamic Capabilities at IBM: Driving Strategy into Action 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 Dynamic Capabilities at IBM: Driving Strategy into Action 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 Dynamic Capabilities at IBM: Driving Strategy into Action 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 Dynamic Capabilities at IBM: Driving Strategy into Action 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 Ibm Dynamic needs to make to build a sustainable competitive advantage.
