OnStar: Connecting to Customers Through Telematics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of OnStar: Connecting to Customers Through Telematics
OnStar, a provider of in-vehicle safety, security, and information services called "telematics," was founded in 1995 as a collaborative venture among General Motors (GM), EDS, and Hughes Electronics Corp. Safety and security services, including roadside assistance, emergency help after a crash, remote diagnostics, and stolen vehicle tracking, were the cornerstones of OnStar's offering. In addition, OnStar provided its customers with a 24-hour connection to convenience services such as navigation and route guidance, vehicle location assistance, and personal concierge services. To generate more revenues, OnStar expanded its offering to luxury vehicles of other auto manufacturers. Looking back, Chet Huber, OnStar president, was quite satisfied with the company's achievements since it was founded: OnStar's subscriber base had grown to more than 2 million and the company was routinely recognized as the leading telematics provider in the world. OnStar was also delivering benefits to its parent company, GM. By maintaining one-to-one relationships with customers, OnStar helped GM sell more cars and trucks, strengthen customer loyalty, and improve operational efficiency. Although revenues for the world market of in-car telematics terminals were expected to reach $20 billion by 2010, competition in the market was intensifying. Richard Wagoner, GM's CEO, and Huber needed to explore a number of strategic and operational questions around the future of OnStar: How would OnStar create ongoing value to GM? How should OnStar position itself to gain high acceptance and subscription renewal rates? What further strategic partnerships should OnStar form to maintain its leadership? How should GM leverage the continuous stream of vehicle and customer data it received from OnStar?
Authors :: Peter Koudal, Hau Lee, Barchi Peleg, Paresh Rajwat
Swot Analysis of "OnStar: Connecting to Customers Through Telematics" written by Peter Koudal, Hau Lee, Barchi Peleg, Paresh Rajwat includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Onstar Telematics facing as an external strategic factors. Some of the topics covered in OnStar: Connecting to Customers Through Telematics case study are - Strategic Management Strategies, Joint ventures, Leadership, Product development, Security & privacy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the OnStar: Connecting to Customers Through Telematics casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, etc
Introduction to SWOT Analysis of OnStar: Connecting to Customers Through Telematics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in OnStar: Connecting to Customers Through Telematics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Onstar Telematics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Onstar Telematics 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 OnStar: Connecting to Customers Through Telematics can be done for the following purposes –
1. Strategic planning using facts provided in OnStar: Connecting to Customers Through Telematics case study
2. Improving business portfolio management of Onstar Telematics
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 Onstar Telematics
Strengths OnStar: Connecting to Customers Through Telematics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Onstar Telematics in OnStar: Connecting to Customers Through Telematics Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the OnStar: Connecting to Customers Through Telematics 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
– Onstar Telematics 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 Peter Koudal, Hau Lee, Barchi Peleg, Paresh Rajwat 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.
Organizational Resilience of Onstar Telematics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Onstar Telematics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Onstar Telematics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Onstar Telematics 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.
Diverse revenue streams
– Onstar Telematics is present in almost all the verticals within the industry. This has provided firm in OnStar: Connecting to Customers Through Telematics 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.
Training and development
– Onstar Telematics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in OnStar: Connecting to Customers Through Telematics 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.
Highly skilled collaborators
– Onstar Telematics 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 OnStar: Connecting to Customers Through Telematics 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 Onstar Telematics 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.
Innovation driven organization
– Onstar Telematics is one of the most innovative firm in sector. Manager in OnStar: Connecting to Customers Through Telematics Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Onstar Telematics in the sector have low bargaining power. OnStar: Connecting to Customers Through Telematics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Onstar Telematics to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Onstar Telematics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Onstar Telematics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Onstar Telematics 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.
Weaknesses OnStar: Connecting to Customers Through Telematics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of OnStar: Connecting to Customers Through Telematics are -
High cash cycle compare to competitors
Onstar Telematics 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.
Lack of clear differentiation of Onstar Telematics products
– To increase the profitability and margins on the products, Onstar Telematics needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Onstar Telematics 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study OnStar: Connecting to Customers Through Telematics, it seems that the employees of Onstar Telematics 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.
Need for greater diversity
– Onstar Telematics has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Onstar Telematics, firm in the HBR case study OnStar: Connecting to Customers Through Telematics needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Onstar Telematics 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study OnStar: Connecting to Customers Through Telematics, is just above the industry average. Onstar Telematics 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.
High operating costs
– Compare to the competitors, firm in the HBR case study OnStar: Connecting to Customers Through Telematics 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 Onstar Telematics 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Peter Koudal, Hau Lee, Barchi Peleg, Paresh Rajwat suggests that, Onstar Telematics 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 OnStar: Connecting to Customers Through Telematics 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 OnStar: Connecting to Customers Through Telematics can leverage the sales team experience to cultivate customer relationships as Onstar Telematics is planning to shift buying processes online.
Opportunities OnStar: Connecting to Customers Through Telematics | 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 OnStar: Connecting to Customers Through Telematics are -
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. Onstar Telematics 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. Onstar Telematics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Onstar Telematics is facing challenges because of the dominance of functional experts in the organization. OnStar: Connecting to Customers Through Telematics 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.
Manufacturing automation
– Onstar Telematics 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.
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 Onstar Telematics 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Onstar Telematics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Onstar Telematics 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 Onstar Telematics to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Onstar Telematics 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Onstar Telematics 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.
Building a culture of innovation
– managers at Onstar Telematics 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.
Leveraging digital technologies
– Onstar Telematics 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Onstar Telematics can use these opportunities to build new business models that can help the communities that Onstar Telematics operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Onstar Telematics 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, OnStar: Connecting to Customers Through Telematics, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats OnStar: Connecting to Customers Through Telematics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study OnStar: Connecting to Customers Through Telematics are -
Regulatory challenges
– Onstar Telematics 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 Onstar Telematics is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Onstar Telematics 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. Onstar Telematics can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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 Onstar Telematics.
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.
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. Onstar Telematics 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.
Increasing wage structure of Onstar Telematics
– 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 Onstar Telematics.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study OnStar: Connecting to Customers Through Telematics, Onstar Telematics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Onstar Telematics needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Onstar Telematics has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Onstar Telematics 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.
Stagnating economy with rate increase
– Onstar Telematics 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.
High dependence on third party suppliers
– Onstar Telematics 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 OnStar: Connecting to Customers Through Telematics 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 OnStar: Connecting to Customers Through Telematics 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 OnStar: Connecting to Customers Through Telematics 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 OnStar: Connecting to Customers Through Telematics 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 OnStar: Connecting to Customers Through Telematics 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 Onstar Telematics needs to make to build a sustainable competitive advantage.