Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma
Large international corporations commonly engage in IT outsourcing. However, the process of evaluating, selecting, and subsequently contracting out or selling the organization's IT assets, people, and/or activities to a third-party supplier creates the possibility of a "Winner's Curse." This occurs when the supplier overpromises on what can be delivered for the contract price. This article presents a longitudinal outsourcing case study that explicates the often abstruse Winner's Curse, its effect on post-contract management and the relationship, and how it was alleviated by a mutual renegotiation of the terms of the deal. Building on auction and IT outsourcing theory, the article provides both a model of IT outsourcing processes and a Winner's Curse typology for understanding IT outsourcing ventures. To avoid the experience of relational trauma as a consequence of a Winner's Curse, this article identifies six lessons that client and supplier companies should consider before signing IT outsourcing deals.
Authors :: Thomas Kern, Leslie P. Willcocks, Eric Van Heck
Swot Analysis of "Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma" written by Thomas Kern, Leslie P. Willcocks, Eric Van Heck includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Winner's Curse facing as an external strategic factors. Some of the topics covered in Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma case study are - Strategic Management Strategies, Negotiations, Operations management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, increasing energy prices, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China,
digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Winner's Curse, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Winner's Curse 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma can be done for the following purposes –
1. Strategic planning using facts provided in Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma case study
2. Improving business portfolio management of Winner's Curse
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 Winner's Curse
Strengths Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Winner's Curse in Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma Harvard Business Review case study are -
Training and development
– Winner's Curse has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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.
Cross disciplinary teams
– Horizontal connected teams at the Winner's Curse 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.
Highly skilled collaborators
– Winner's Curse 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Winner's Curse in the sector have low bargaining power. Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Winner's Curse to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma firm has clearly differentiated products in the market place. This has enabled Winner's Curse to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Winner's Curse to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Winner's Curse is one of the leading recruiters in the industry. Managers in the Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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
– Winner's Curse is present in almost all the verticals within the industry. This has provided firm in Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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.
High brand equity
– Winner's Curse has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Winner's Curse to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Winner's Curse 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 Winner's Curse in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Winner's Curse 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.
Operational resilience
– The operational resilience strategy in the Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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.
Successful track record of launching new products
– Winner's Curse has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Winner's Curse 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.
Weaknesses Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma are -
High operating costs
– Compare to the competitors, firm in the HBR case study Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse 's lucrative customers.
High cash cycle compare to competitors
Winner's Curse 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma, is just above the industry average. Winner's Curse 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.
Increasing silos among functional specialists
– The organizational structure of Winner's Curse is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Winner's Curse needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Winner's Curse to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Winner's Curse products
– To increase the profitability and margins on the products, Winner's Curse 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Winner's Curse, firm in the HBR case study Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma, it seems that the employees of Winner's Curse 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.
Slow to strategic competitive environment developments
– As Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma HBR case study mentions - Winner's Curse 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.
Capital Spending Reduction
– Even during the low interest decade, Winner's Curse 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Winner's Curse 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.
Opportunities Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma | 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma are -
Leveraging digital technologies
– Winner's Curse 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.
Learning at scale
– Online learning technologies has now opened space for Winner's Curse 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.
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. Winner's Curse can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Winner's Curse can use these opportunities to build new business models that can help the communities that Winner's Curse operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Winner's Curse 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Winner's Curse to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Winner's Curse 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 Winner's Curse to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Winner's Curse 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Winner's Curse 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 Winner's Curse to increase its market reach. Winner's Curse 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 Winner's Curse 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.
Manufacturing automation
– Winner's Curse 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Winner's Curse 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, Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Winner's Curse 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma are -
Technology acceleration in Forth Industrial Revolution
– Winner's Curse has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Winner's Curse 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.
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. Winner's Curse needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Winner's Curse 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Winner's Curse 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma .
Stagnating economy with rate increase
– Winner's Curse 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.
Regulatory challenges
– Winner's Curse 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.
Shortening product life cycle
– it is one of the major threat that Winner's Curse is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Winner's Curse
– 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 Winner's Curse.
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 Winner's Curse.
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 Winner's Curse business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma, Winner's Curse 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 .
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. Winner's Curse 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.
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. Winner's Curse can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma 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 Winner's Curse needs to make to build a sustainable competitive advantage.
