The technology deployment specialist of the Adelaide District School Board, Christine Clark, needed to make immediate changes to the purchasing system in response to service demands. The current system was not widely accessible or user-friendly, and was creating heavy workloads and the need for overtime. Senior management recognized the advantages of implementing a system that would integrate the data processing of all functions, including human resources, inventory, finance, purchasing, etc., and gave her the mandate to find an integrated system and develop a proposal for its implementation. In addition to finding a system that would meet these criteria, she had to consider the conflicting interests of different users, a new system that had been implemented in the finance department, and the ongoing changes in the organization.
Authors :: Fernando Olivera, James A. Erskine, Michiel R. Leenders
Swot Analysis of "Purchasing Systems" written by Fernando Olivera, James A. Erskine, Michiel R. Leenders includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that System Purchasing facing as an external strategic factors. Some of the topics covered in Purchasing Systems case study are - Strategic Management Strategies, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Purchasing Systems casestudy better are - – talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, wage bills are increasing, technology disruption, there is backlash against globalization, central banks are concerned over increasing inflation, increasing household debt because of falling income levels,
increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Purchasing Systems
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Purchasing Systems case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the System Purchasing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which System Purchasing 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 Purchasing Systems can be done for the following purposes –
1. Strategic planning using facts provided in Purchasing Systems case study
2. Improving business portfolio management of System Purchasing
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of System Purchasing
Strengths Purchasing Systems | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of System Purchasing in Purchasing Systems Harvard Business Review case study are -
Highly skilled collaborators
– System Purchasing 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 Purchasing Systems HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– System Purchasing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Purchasing Systems 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.
Effective Research and Development (R&D)
– System Purchasing 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 Purchasing Systems - 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
- System Purchasing 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 System Purchasing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Purchasing Systems Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the System Purchasing 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 Technology & Operations field
– System Purchasing 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 System Purchasing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For System Purchasing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. System Purchasing 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.
Sustainable margins compare to other players in Technology & Operations industry
– Purchasing Systems firm has clearly differentiated products in the market place. This has enabled System Purchasing to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped System Purchasing to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Purchasing Systems 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.
Superior customer experience
– The customer experience strategy of System Purchasing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– System Purchasing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled System Purchasing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of System Purchasing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that System Purchasing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Purchasing Systems | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Purchasing Systems are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Purchasing Systems, in the dynamic environment System Purchasing has struggled to respond to the nimble upstart competition. System Purchasing has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– System Purchasing 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.
Skills based hiring
– The stress on hiring functional specialists at System Purchasing 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.
Aligning sales with marketing
– It come across in the case study Purchasing Systems 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 Purchasing Systems can leverage the sales team experience to cultivate customer relationships as System Purchasing is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Fernando Olivera, James A. Erskine, Michiel R. Leenders suggests that, System Purchasing 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.
Slow decision making process
– As mentioned earlier in the report, System Purchasing 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. System Purchasing 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Purchasing Systems 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 System Purchasing has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Purchasing Systems HBR case study mentions - System Purchasing takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of System Purchasing is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. System Purchasing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help System Purchasing to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Purchasing Systems, it seems that the employees of System Purchasing 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.
Products dominated business model
– Even though System Purchasing 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 - Purchasing Systems should strive to include more intangible value offerings along with its core products and services.
Opportunities Purchasing Systems | 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 Purchasing Systems are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects System Purchasing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for System Purchasing in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, System Purchasing is facing challenges because of the dominance of functional experts in the organization. Purchasing Systems 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.
Learning at scale
– Online learning technologies has now opened space for System Purchasing 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.
Creating value in data economy
– The success of analytics program of System Purchasing has opened avenues for new revenue streams for the organization in the industry. This can help System Purchasing to build a more holistic ecosystem as suggested in the Purchasing Systems case study. System Purchasing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for System Purchasing 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 System Purchasing to hire the very best people irrespective of their geographical location.
Loyalty marketing
– System Purchasing 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, System Purchasing can use these opportunities to build new business models that can help the communities that System Purchasing operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Developing new processes and practices
– System Purchasing can develop new processes and procedures in Technology & Operations 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. System Purchasing can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, System Purchasing 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.
Better consumer reach
– The expansion of the 5G network will help System Purchasing to increase its market reach. System Purchasing 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.
Manufacturing automation
– System Purchasing can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Threats Purchasing Systems External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Purchasing Systems are -
Stagnating economy with rate increase
– System Purchasing 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.
Environmental challenges
– System Purchasing 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. System Purchasing can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Regulatory challenges
– System Purchasing 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 Technology & Operations industry regulations.
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 System Purchasing business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for System Purchasing in the Technology & Operations industry. The Technology & Operations 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents System Purchasing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on System Purchasing 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.
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 System Purchasing in the Technology & Operations sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, System Purchasing 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 Purchasing Systems .
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. System Purchasing needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Purchasing Systems, System Purchasing may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Shortening product life cycle
– it is one of the major threat that System Purchasing is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Weighted SWOT Analysis of Purchasing Systems 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 Purchasing Systems 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 Purchasing Systems 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 Purchasing Systems 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 Purchasing Systems 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 System Purchasing needs to make to build a sustainable competitive advantage.
