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 - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing commodity prices,
increasing energy prices, challanges to central banks by blockchain based private currencies, 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 -
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.
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.
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.
Strong track record of project management
– Outsourcing Alphacorp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Outsourcing Alphacorp 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 Building Innovation into the Outsourcing Relationship: A Case Study - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
Diverse revenue streams
– Outsourcing Alphacorp is present in almost all the verticals within the industry. This has provided firm in Building Innovation into the Outsourcing Relationship: A Case Study 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.
High brand equity
– Outsourcing Alphacorp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Outsourcing Alphacorp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Outsourcing Alphacorp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Outsourcing Alphacorp 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
– 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.
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 -
Products dominated business model
– Even though Outsourcing Alphacorp 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 - Building Innovation into the Outsourcing Relationship: A Case Study should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Building Innovation into the Outsourcing Relationship: A Case Study 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 Building Innovation into the Outsourcing Relationship: A Case Study can leverage the sales team experience to cultivate customer relationships as Outsourcing Alphacorp is planning to shift buying processes online.
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 Outsourcing Alphacorp supply chain. Even after few cautionary changes mentioned in the HBR case study - Building Innovation into the Outsourcing Relationship: A Case Study, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Outsourcing Alphacorp vulnerable to further global disruptions in South East Asia.
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.
Slow decision making process
– As mentioned earlier in the report, Outsourcing Alphacorp 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. Outsourcing Alphacorp 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 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.
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.
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.
Interest costs
– Compare to the competition, Outsourcing Alphacorp 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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Building Innovation into the Outsourcing Relationship: A Case Study 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 Outsourcing Alphacorp has relatively successful track record of launching new products.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Outsourcing Alphacorp has opened avenues for new revenue streams for the organization in the industry. This can help Outsourcing Alphacorp to build a more holistic ecosystem as suggested in the Building Innovation into the Outsourcing Relationship: A Case Study case study. Outsourcing Alphacorp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Outsourcing Alphacorp 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Outsourcing Alphacorp 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 Outsourcing Alphacorp to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Outsourcing Alphacorp can use these opportunities to build new business models that can help the communities that Outsourcing Alphacorp operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Leveraging digital technologies
– Outsourcing Alphacorp 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.
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.
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.
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.
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.
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.
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.
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.
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.
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 Outsourcing Alphacorp in the Technology & Operations sector and impact the bottomline of the organization.
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.
Environmental challenges
– Outsourcing Alphacorp 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. Outsourcing Alphacorp can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Shortening product life cycle
– it is one of the major threat that Outsourcing Alphacorp is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
Consumer confidence and its impact on Outsourcing Alphacorp 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.
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.
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.