Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry
In industries characterized by network externalities, the self-reinforcing effects of installed base and the availability of complementary goods can lead to a single (or few) firm(s) controlling nearly all of the market share in a product category. A new entrant may attempt to displace the incumbent standard by introducing a radically improved technology-- "leapfrogging" the current generation. However, a technological advantage alone is often not enough. To lure customers away from the existing standard, the new technology must somehow yield more value than the combination of value yielded by the incumbent technology's functionality, installed base, and complementary goods. This article develops a multidimensional framework of technology value components and applies it to data from case studies of three generations of competition in the U.S. video game industry. Presents strategies a potential entrant can use to leapfrog an incumbent successfully and strategies an incumbent can use to defend its position.
Swot Analysis of "Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry" written by Melissa A. Schilling includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Incumbent Leapfrogging facing as an external strategic factors. Some of the topics covered in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry case study are - Strategic Management Strategies, IT, Marketing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry casestudy better are - – central banks are concerned over increasing inflation, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, geopolitical disruptions, cloud computing is disrupting traditional business models, increasing energy prices,
technology disruption, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Incumbent Leapfrogging, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Incumbent Leapfrogging 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry can be done for the following purposes –
1. Strategic planning using facts provided in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry case study
2. Improving business portfolio management of Incumbent Leapfrogging
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 Incumbent Leapfrogging
Strengths Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Incumbent Leapfrogging in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry Harvard Business Review case study are -
Innovation driven organization
– Incumbent Leapfrogging is one of the most innovative firm in sector. Manager in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Incumbent Leapfrogging has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Incumbent Leapfrogging to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Incumbent Leapfrogging are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Strategy & Execution field
– Incumbent Leapfrogging 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 Incumbent Leapfrogging in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Incumbent Leapfrogging is present in almost all the verticals within the industry. This has provided firm in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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.
Superior customer experience
– The customer experience strategy of Incumbent Leapfrogging in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Incumbent Leapfrogging 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry firm has clearly differentiated products in the market place. This has enabled Incumbent Leapfrogging to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Incumbent Leapfrogging to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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.
Learning organization
- Incumbent Leapfrogging 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 Incumbent Leapfrogging is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Incumbent Leapfrogging in the sector have low bargaining power. Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Incumbent Leapfrogging to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Incumbent Leapfrogging 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 Melissa A. Schilling 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.
Weaknesses Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry, in the dynamic environment Incumbent Leapfrogging has struggled to respond to the nimble upstart competition. Incumbent Leapfrogging 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry, it seems that the employees of Incumbent Leapfrogging 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 operating costs
– Compare to the competitors, firm in the HBR case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Incumbent Leapfrogging 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Incumbent Leapfrogging 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. Incumbent Leapfrogging 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.
No frontier risks strategy
– After analyzing the HBR case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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 Incumbent Leapfrogging supply chain. Even after few cautionary changes mentioned in the HBR case study - Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Incumbent Leapfrogging vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Incumbent Leapfrogging is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Incumbent Leapfrogging needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Incumbent Leapfrogging to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Incumbent Leapfrogging products
– To increase the profitability and margins on the products, Incumbent Leapfrogging needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry can leverage the sales team experience to cultivate customer relationships as Incumbent Leapfrogging is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Incumbent Leapfrogging, firm in the HBR case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Incumbent Leapfrogging 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.
Opportunities Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry | 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Incumbent Leapfrogging can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Incumbent Leapfrogging to increase its market reach. Incumbent Leapfrogging 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.
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. Incumbent Leapfrogging can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Incumbent Leapfrogging 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, Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Incumbent Leapfrogging 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.
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 Incumbent Leapfrogging in the consumer business. Now Incumbent Leapfrogging can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Incumbent Leapfrogging 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 Incumbent Leapfrogging to hire the very best people irrespective of their geographical location.
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. Incumbent Leapfrogging 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. Incumbent Leapfrogging 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.
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 Incumbent Leapfrogging 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
– Incumbent Leapfrogging can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Incumbent Leapfrogging is facing challenges because of the dominance of functional experts in the organization. Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Incumbent Leapfrogging 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.
Buying journey improvements
– Incumbent Leapfrogging can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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.
Threats Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry are -
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.
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. Incumbent Leapfrogging 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.
Regulatory challenges
– Incumbent Leapfrogging 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.
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. Incumbent Leapfrogging needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Incumbent Leapfrogging.
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 Incumbent Leapfrogging in the Strategy & Execution sector and impact the bottomline of the organization.
Environmental challenges
– Incumbent Leapfrogging 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. Incumbent Leapfrogging can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry, Incumbent Leapfrogging 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 .
Technology acceleration in Forth Industrial Revolution
– Incumbent Leapfrogging has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Incumbent Leapfrogging 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
– Incumbent Leapfrogging 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.
Consumer confidence and its impact on Incumbent Leapfrogging 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Incumbent Leapfrogging 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.
High dependence on third party suppliers
– Incumbent Leapfrogging 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Technological Leapfrogging: Lessons from the U.S. Video Game Console Industry 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 Incumbent Leapfrogging needs to make to build a sustainable competitive advantage.
