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 - – geopolitical disruptions, increasing household debt because of falling income levels, technology disruption, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google,
increasing transportation and logistics costs, there is backlash against globalization, 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 -
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.
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.
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.
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.
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.
Analytics focus
– Ibm Dynamic is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by J. Bruce Harreld, Charles A. O'Reilly, Michael L. Tushman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Ibm Dynamic digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ibm Dynamic 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.
Successful track record of launching new products
– Ibm Dynamic has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ibm Dynamic 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.
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.
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.
Training and development
– Ibm Dynamic has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dynamic Capabilities at IBM: Driving Strategy into Action 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.
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.
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 -
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.
Skills based hiring
– The stress on hiring functional specialists at Ibm Dynamic 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.
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ibm Dynamic is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Dynamic Capabilities at IBM: Driving Strategy into Action can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Aligning sales with marketing
– It come across in the case study Dynamic Capabilities at IBM: Driving Strategy into Action 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 Dynamic Capabilities at IBM: Driving Strategy into Action can leverage the sales team experience to cultivate customer relationships as Ibm Dynamic is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Dynamic Capabilities at IBM: Driving Strategy into Action, in the dynamic environment Ibm Dynamic has struggled to respond to the nimble upstart competition. Ibm Dynamic has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 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 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.
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 -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ibm Dynamic can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Ibm Dynamic 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.
Loyalty marketing
– Ibm Dynamic 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ibm Dynamic 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, Dynamic Capabilities at IBM: Driving Strategy into Action, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Ibm Dynamic in the consumer business. Now Ibm Dynamic can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 -
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.
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. Ibm Dynamic 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.
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
– 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.
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 Ibm Dynamic.
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 Ibm Dynamic in the Strategy & Execution sector and impact the bottomline of the organization.
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.
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ibm Dynamic 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.
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.
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 .
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.