Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?
This case focuses on Skype in the voice-over-IP (VoIP) industry. Its offering created such exceptional utility for users around the world that Skype has become a verb - to "skype" someone means to call someone using the Skype application. Yet despite explosive growth in demand, the company was not profitable in four out of the five years prior to its acquisition by Microsoft in 2011. The case allows participants to deepen their understanding of Blue Ocean Strategy by applying first-hand the concepts and tools of the Blue Ocean strategy sequence.
Authors :: W. Chan Kim, Katrina Ling, Jee Eun Lee, Renee A. Mauborgne
Swot Analysis of "Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?" written by W. Chan Kim, Katrina Ling, Jee Eun Lee, Renee A. Mauborgne includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Skype Ocean facing as an external strategic factors. Some of the topics covered in Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? casestudy better are - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, supply chains are disrupted by pandemic , technology disruption, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Skype Ocean, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Skype Ocean 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? can be done for the following purposes –
1. Strategic planning using facts provided in Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? case study
2. Improving business portfolio management of Skype Ocean
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 Skype Ocean
Strengths Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Skype Ocean in Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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.
Analytics focus
– Skype Ocean 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 W. Chan Kim, Katrina Ling, Jee Eun Lee, Renee A. Mauborgne 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.
Diverse revenue streams
– Skype Ocean is present in almost all the verticals within the industry. This has provided firm in Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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.
Strong track record of project management
– Skype Ocean 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 recruit top talent
– Skype Ocean is one of the leading recruiters in the industry. Managers in the Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? firm has clearly differentiated products in the market place. This has enabled Skype Ocean to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Skype Ocean to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Skype Ocean in the sector have low bargaining power. Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Skype Ocean to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Skype Ocean 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.
Effective Research and Development (R&D)
– Skype Ocean 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? - 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
- Skype Ocean 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 Skype Ocean is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Skype Ocean 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Skype Ocean 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.
Weaknesses Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? are -
Interest costs
– Compare to the competition, Skype Ocean 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 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 Skype Ocean supply chain. Even after few cautionary changes mentioned in the HBR case study - Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Skype Ocean vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Skype Ocean 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, W. Chan Kim, Katrina Ling, Jee Eun Lee, Renee A. Mauborgne suggests that, Skype Ocean 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.
Aligning sales with marketing
– It come across in the case study Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? can leverage the sales team experience to cultivate customer relationships as Skype Ocean is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Skype Ocean 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype Ocean 's lucrative customers.
Products dominated business model
– Even though Skype Ocean 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 - Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?, is just above the industry average. Skype Ocean 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.
Lack of clear differentiation of Skype Ocean products
– To increase the profitability and margins on the products, Skype Ocean needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Skype Ocean 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.
Opportunities Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? | 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Skype Ocean is facing challenges because of the dominance of functional experts in the organization. Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Skype Ocean 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.
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. Skype Ocean 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. Skype Ocean 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Skype Ocean can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Skype Ocean can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Skype Ocean 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.
Creating value in data economy
– The success of analytics program of Skype Ocean has opened avenues for new revenue streams for the organization in the industry. This can help Skype Ocean to build a more holistic ecosystem as suggested in the Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? case study. Skype Ocean can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Skype Ocean 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.
Buying journey improvements
– Skype Ocean can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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.
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 Skype Ocean in the consumer business. Now Skype Ocean can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Skype Ocean 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Skype Ocean can use these opportunities to build new business models that can help the communities that Skype Ocean operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Skype Ocean 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.
Threats Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? are -
Stagnating economy with rate increase
– Skype Ocean 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean?, Skype Ocean 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. Skype Ocean 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. Skype Ocean can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Skype Ocean 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Skype Ocean 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.
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 Skype Ocean business can come under increasing regulations regarding data privacy, data security, etc.
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 Skype Ocean in the Strategy & Execution sector and impact the bottomline of the organization.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Skype Ocean with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Skype Ocean 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 Skype Ocean
– 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 Skype Ocean.
Weighted SWOT Analysis of Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype in the Voice-over-IP Industry: A Commercially Viable Blue Ocean? 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 Skype Ocean needs to make to build a sustainable competitive advantage.