Opening the Valve: From Software to Hardware (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Opening the Valve: From Software to Hardware (B)
Valve, one of the world's top video game software companies, has also become an iconic example of an organization with virtually no hierarchy. A 400-person organization, Valve's unique organizational form (described in detail in the case and accompanying employee handbook) includes 100% self-allocated time, no managers (and therefore no managerial oversight), a structure so fluid that all desks have wheels to allow free movement between ""cabals"" (teams) on a regular basis (which happens frequently enough that Valve created a homegrown tracking app to allow peers to find each other), a unique hiring apparatus that supports recruitment of T-shaped individuals, and a purely peer-based performance review and stack ranking. As customer demand and market forces draw Valve into hardware in 2013, Valve questions whether their organizational model will need to change as it expands from software into hardware-and, if so, whether they should prioritize strategy over structure or structure over strategy. The case therefore presents students with a strategic and organizational challenge which tests students' understanding, and Valve's resolve, with regard to the congruence between their organizational model and strategic direction. Students should have read and discussed the (A) case, and Valve's options for entering hardware, prior to the (B) case being distributed. The (B) case provides significant detail on Valve's initial decisions but keeps the final outcome as a work-in-process. Students should have read and discussed the (A) case, and Valve's options for entering hardware, prior to the (B) case being distributed. The (B) case provides significant detail on Valve's initial decisions but keeps the final outcome as a work-in-process.
Authors :: Ethan S. Bernstein, Francesca Gino, Bradley R. Staats
Swot Analysis of "Opening the Valve: From Software to Hardware (B)" written by Ethan S. Bernstein, Francesca Gino, Bradley R. Staats includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Valve's Valve facing as an external strategic factors. Some of the topics covered in Opening the Valve: From Software to Hardware (B) case study are - Strategic Management Strategies, Design, Human resource management, Leading teams, Managing yourself, Organizational culture, Organizational structure, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Opening the Valve: From Software to Hardware (B) casestudy better are - – increasing household debt because of falling income levels, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, wage bills are increasing, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing commodity prices,
supply chains are disrupted by pandemic , geopolitical disruptions, etc
Introduction to SWOT Analysis of Opening the Valve: From Software to Hardware (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Opening the Valve: From Software to Hardware (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Valve's Valve, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Valve's Valve 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 Opening the Valve: From Software to Hardware (B) can be done for the following purposes –
1. Strategic planning using facts provided in Opening the Valve: From Software to Hardware (B) case study
2. Improving business portfolio management of Valve's Valve
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 Valve's Valve
Strengths Opening the Valve: From Software to Hardware (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Valve's Valve in Opening the Valve: From Software to Hardware (B) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Opening the Valve: From Software to Hardware (B) 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.
Highly skilled collaborators
– Valve's Valve 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 Opening the Valve: From Software to Hardware (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Opening the Valve: From Software to Hardware (B) firm has clearly differentiated products in the market place. This has enabled Valve's Valve to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Valve's Valve to invest into research and development (R&D) and innovation.
Innovation driven organization
– Valve's Valve is one of the most innovative firm in sector. Manager in Opening the Valve: From Software to Hardware (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Valve's Valve 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.
Low bargaining power of suppliers
– Suppliers of Valve's Valve in the sector have low bargaining power. Opening the Valve: From Software to Hardware (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Valve's Valve to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Valve's Valve digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Valve's Valve 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
– Valve's Valve is present in almost all the verticals within the industry. This has provided firm in Opening the Valve: From Software to Hardware (B) 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.
Successful track record of launching new products
– Valve's Valve has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Valve's Valve has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Valve's Valve 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.
Training and development
– Valve's Valve has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Opening the Valve: From Software to Hardware (B) 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.
Learning organization
- Valve's Valve 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 Valve's Valve is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Opening the Valve: From Software to Hardware (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Opening the Valve: From Software to Hardware (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Opening the Valve: From Software to Hardware (B) are -
Low market penetration in new markets
– Outside its home market of Valve's Valve, firm in the HBR case study Opening the Valve: From Software to Hardware (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Valve's Valve 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.
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 Valve's Valve supply chain. Even after few cautionary changes mentioned in the HBR case study - Opening the Valve: From Software to Hardware (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Valve's Valve vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Valve's Valve 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 bargaining power of channel partners
– Because of the regulatory requirements, Ethan S. Bernstein, Francesca Gino, Bradley R. Staats suggests that, Valve's Valve 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Opening the Valve: From Software to Hardware (B), it seems that the employees of Valve's Valve 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 decision making process
– As mentioned earlier in the report, Valve's Valve 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. Valve's Valve 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.
Increasing silos among functional specialists
– The organizational structure of Valve's Valve is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Valve's Valve needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Valve's Valve to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Valve's Valve 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Opening the Valve: From Software to Hardware (B) 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 Valve's Valve has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Valve's Valve 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 Opening the Valve: From Software to Hardware (B) | 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 Opening the Valve: From Software to Hardware (B) are -
Using analytics as competitive advantage
– Valve's Valve 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 Opening the Valve: From Software to Hardware (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Valve's Valve to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Valve's Valve 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Valve's Valve 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. Valve's Valve can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Valve's Valve 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Valve's Valve 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Valve's Valve 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 Valve's Valve to hire the very best people irrespective of their geographical location.
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 Valve's Valve 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
– Valve's Valve 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.
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. Valve's Valve 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. Valve's Valve 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.
Loyalty marketing
– Valve's Valve 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.
Buying journey improvements
– Valve's Valve can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Opening the Valve: From Software to Hardware (B) 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Valve's Valve is facing challenges because of the dominance of functional experts in the organization. Opening the Valve: From Software to Hardware (B) 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.
Threats Opening the Valve: From Software to Hardware (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Opening the Valve: From Software to Hardware (B) are -
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 Valve's Valve 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 Opening the Valve: From Software to Hardware (B), Valve's Valve 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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Valve's Valve 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
– Valve's Valve 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Valve's Valve with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Valve's Valve can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Valve's Valve has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Valve's Valve 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. Valve's Valve needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Valve's Valve
– 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 Valve's Valve.
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 Valve's Valve in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Valve's Valve 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 Opening the Valve: From Software to Hardware (B) .
Environmental challenges
– Valve's Valve 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. Valve's Valve can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Opening the Valve: From Software to Hardware (B) 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 Opening the Valve: From Software to Hardware (B) 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 Opening the Valve: From Software to Hardware (B) 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 Opening the Valve: From Software to Hardware (B) 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 Opening the Valve: From Software to Hardware (B) 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 Valve's Valve needs to make to build a sustainable competitive advantage.
