Building Innovation into the Outsourcing Relationship: A Case Study SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Building Innovation into the Outsourcing Relationship: A Case Study
This teaching case has been developed for a global consumer products company. Interviews from several outsourcing managers and executives within the company have contributed to the case. This case focuses on how a company can build innovation into an outsourcing relationship when it has not been explicitly stated in the outsourcing agreement. The two fictitious companies in this case are Bentley & Brooks (B&B) (the client) and AlphaCorp (the provider). Both companies are based on, but are not accurate portrayals of, actual companies that are anonymous. The case is a composite of several actual outsourcing cases between the two companies. B&B has outsourced much of their human resource operations and IT support. They have been frustrated that their global outsource provider, AlphaCorp, has not been able to bring innovation to the relationship. In the outsourcing contract, innovation was not expressly identified, but was certainly discussed during the outsourcing proposal and negotiations. In addition, the ability of AlphaCorp to deliver consistent quality of service on a global basis has been uneven, particularly in Latin America. You will be asked to take on the role of a B&B employee who is part of a team looking into the innovation problem. The team has been asked to provide answers to three key questions and to present their recommendations to a panel of senior executives of B&B.
Swot Analysis of "Building Innovation into the Outsourcing Relationship: A Case Study" written by Ron Babin, Cheryl Schuster includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Outsourcing Alphacorp facing as an external strategic factors. Some of the topics covered in Building Innovation into the Outsourcing Relationship: A Case Study case study are - Strategic Management Strategies, Innovation, Managing people, Operations management and Technology & Operations.
Some of the macro environment factors that can be used to understand the Building Innovation into the Outsourcing Relationship: A Case Study casestudy better are - – wage bills are increasing, there is backlash against globalization, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, increasing energy prices, geopolitical disruptions,
supply chains are disrupted by pandemic , increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Building Innovation into the Outsourcing Relationship: A Case Study
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Building Innovation into the Outsourcing Relationship: A Case Study case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Outsourcing Alphacorp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Outsourcing Alphacorp 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 Building Innovation into the Outsourcing Relationship: A Case Study can be done for the following purposes –
1. Strategic planning using facts provided in Building Innovation into the Outsourcing Relationship: A Case Study case study
2. Improving business portfolio management of Outsourcing Alphacorp
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 Outsourcing Alphacorp
Strengths Building Innovation into the Outsourcing Relationship: A Case Study | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Outsourcing Alphacorp in Building Innovation into the Outsourcing Relationship: A Case Study Harvard Business Review case study are -
Learning organization
- Outsourcing Alphacorp 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 Outsourcing Alphacorp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Building Innovation into the Outsourcing Relationship: A Case Study Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Outsourcing Alphacorp has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Building Innovation into the Outsourcing Relationship: A Case Study 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
– Outsourcing Alphacorp 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 Building Innovation into the Outsourcing Relationship: A Case Study HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Outsourcing Alphacorp 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 recruit top talent
– Outsourcing Alphacorp is one of the leading recruiters in the industry. Managers in the Building Innovation into the Outsourcing Relationship: A Case Study are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Outsourcing Alphacorp
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Outsourcing Alphacorp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Outsourcing Alphacorp 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 Ron Babin, Cheryl Schuster 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.
Successful track record of launching new products
– Outsourcing Alphacorp has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Outsourcing Alphacorp 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.
Innovation driven organization
– Outsourcing Alphacorp is one of the most innovative firm in sector. Manager in Building Innovation into the Outsourcing Relationship: A Case Study 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 Outsourcing Alphacorp 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.
Sustainable margins compare to other players in Technology & Operations industry
– Building Innovation into the Outsourcing Relationship: A Case Study firm has clearly differentiated products in the market place. This has enabled Outsourcing Alphacorp to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Outsourcing Alphacorp to invest into research and development (R&D) and innovation.
Ability to lead change in Technology & Operations field
– Outsourcing Alphacorp 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 Outsourcing Alphacorp in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Building Innovation into the Outsourcing Relationship: A Case Study | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Building Innovation into the Outsourcing Relationship: A Case Study are -
Capital Spending Reduction
– Even during the low interest decade, Outsourcing Alphacorp 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Outsourcing Alphacorp needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Outsourcing Alphacorp products
– To increase the profitability and margins on the products, Outsourcing Alphacorp needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Building Innovation into the Outsourcing Relationship: A Case Study, in the dynamic environment Outsourcing Alphacorp has struggled to respond to the nimble upstart competition. Outsourcing Alphacorp 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 Building Innovation into the Outsourcing Relationship: A Case Study, it seems that the employees of Outsourcing Alphacorp 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.
Skills based hiring
– The stress on hiring functional specialists at Outsourcing Alphacorp 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.
Low market penetration in new markets
– Outside its home market of Outsourcing Alphacorp, firm in the HBR case study Building Innovation into the Outsourcing Relationship: A Case Study needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Outsourcing Alphacorp 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Building Innovation into the Outsourcing Relationship: A Case Study, is just above the industry average. Outsourcing Alphacorp 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.
Increasing silos among functional specialists
– The organizational structure of Outsourcing Alphacorp is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Outsourcing Alphacorp needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Outsourcing Alphacorp to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Building Innovation into the Outsourcing Relationship: A Case Study, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Opportunities Building Innovation into the Outsourcing Relationship: A Case Study | 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 Building Innovation into the Outsourcing Relationship: A Case Study are -
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. Outsourcing Alphacorp 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, Outsourcing Alphacorp is facing challenges because of the dominance of functional experts in the organization. Building Innovation into the Outsourcing Relationship: A Case Study 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.
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 Outsourcing Alphacorp 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Outsourcing Alphacorp 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Outsourcing Alphacorp 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. Outsourcing Alphacorp 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.
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 Outsourcing Alphacorp in the consumer business. Now Outsourcing Alphacorp can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Outsourcing Alphacorp to increase its market reach. Outsourcing Alphacorp 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.
Buying journey improvements
– Outsourcing Alphacorp can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Building Innovation into the Outsourcing Relationship: A Case Study 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.
Learning at scale
– Online learning technologies has now opened space for Outsourcing Alphacorp 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Outsourcing Alphacorp can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Outsourcing Alphacorp 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.
Using analytics as competitive advantage
– Outsourcing Alphacorp 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 Building Innovation into the Outsourcing Relationship: A Case Study - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Outsourcing Alphacorp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Outsourcing Alphacorp can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Building Innovation into the Outsourcing Relationship: A Case Study External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Building Innovation into the Outsourcing Relationship: A Case Study are -
Technology acceleration in Forth Industrial Revolution
– Outsourcing Alphacorp has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Outsourcing Alphacorp needs to keep up with the evolution of technology in the Technology & Operations 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.
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. Outsourcing Alphacorp 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.
High dependence on third party suppliers
– Outsourcing Alphacorp 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.
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 Outsourcing Alphacorp.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Outsourcing Alphacorp 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 Building Innovation into the Outsourcing Relationship: A Case Study .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Outsourcing Alphacorp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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. Outsourcing Alphacorp needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Increasing wage structure of Outsourcing Alphacorp
– 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 Outsourcing Alphacorp.
Regulatory challenges
– Outsourcing Alphacorp 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 Outsourcing Alphacorp business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Outsourcing Alphacorp can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Outsourcing Alphacorp 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.
Weighted SWOT Analysis of Building Innovation into the Outsourcing Relationship: A Case Study 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 Building Innovation into the Outsourcing Relationship: A Case Study 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 Building Innovation into the Outsourcing Relationship: A Case Study 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 Building Innovation into the Outsourcing Relationship: A Case Study 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 Building Innovation into the Outsourcing Relationship: A Case Study 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 Outsourcing Alphacorp needs to make to build a sustainable competitive advantage.