In early 1991, Lithonia, the U.S.'s largest manufacturer of lighting fixtures, faced a major slump in the construction business that threatened to cause its first decline in revenues after over a decade of strong growth. With financial pressures from its parent company mounting, Lithonia was forced to reconsider its investments in LIGHT*LINK(tm), an ambitious information system that tied the company to agents, distributors, and other players in the lighting business. While Light*Link had clearly enabled much of the company's growth, the new economic climate raised a number of questions about the company's investment in information technology. Teaching objective: Requires students to analyze the structure of an industry and to reflect upon the factors that give competitive benefit to information systems investments within the context of an uncertain environment.
Swot Analysis of "Lithonia Lighting" written by Nitin Nohria, James D. Berkley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lithonia Lighting facing as an external strategic factors. Some of the topics covered in Lithonia Lighting case study are - Strategic Management Strategies, Decision making, Financial management, Growth strategy, IT, Organizational structure, Recession and Technology & Operations.
Some of the macro environment factors that can be used to understand the Lithonia Lighting casestudy better are - – geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, central banks are concerned over increasing inflation, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Lithonia Lighting
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lithonia Lighting case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lithonia Lighting, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lithonia Lighting 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 Lithonia Lighting can be done for the following purposes –
1. Strategic planning using facts provided in Lithonia Lighting case study
2. Improving business portfolio management of Lithonia Lighting
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 Lithonia Lighting
Strengths Lithonia Lighting | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lithonia Lighting in Lithonia Lighting Harvard Business Review case study are -
Training and development
– Lithonia Lighting has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lithonia Lighting 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
– Lithonia Lighting is present in almost all the verticals within the industry. This has provided firm in Lithonia Lighting 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.
Innovation driven organization
– Lithonia Lighting is one of the most innovative firm in sector. Manager in Lithonia Lighting Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Lithonia Lighting in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Lithonia Lighting is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Technology & Operations industry
– Lithonia Lighting firm has clearly differentiated products in the market place. This has enabled Lithonia Lighting to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Lithonia Lighting to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Lithonia Lighting 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.
Cross disciplinary teams
– Horizontal connected teams at the Lithonia Lighting 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Lithonia Lighting digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lithonia Lighting 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.
Learning organization
- Lithonia Lighting 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 Lithonia Lighting is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lithonia Lighting Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Lithonia Lighting is one of the leading recruiters in the industry. Managers in the Lithonia Lighting are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Lithonia Lighting 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 Lithonia Lighting - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Lithonia Lighting | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lithonia Lighting are -
Interest costs
– Compare to the competition, Lithonia Lighting 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lithonia Lighting, is just above the industry average. Lithonia Lighting 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.
Aligning sales with marketing
– It come across in the case study Lithonia Lighting 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 Lithonia Lighting can leverage the sales team experience to cultivate customer relationships as Lithonia Lighting is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Lithonia Lighting is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Lithonia Lighting needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lithonia Lighting to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Lithonia Lighting HBR case study mentions - Lithonia Lighting 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lithonia Lighting, it seems that the employees of Lithonia Lighting 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.
No frontier risks strategy
– After analyzing the HBR case study Lithonia Lighting, 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 operating costs
– Compare to the competitors, firm in the HBR case study Lithonia Lighting has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lithonia Lighting 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Lithonia Lighting 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 Lithonia Lighting has relatively successful track record of launching new products.
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 Lithonia Lighting supply chain. Even after few cautionary changes mentioned in the HBR case study - Lithonia Lighting, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lithonia Lighting vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Lithonia Lighting, firm in the HBR case study Lithonia Lighting needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Lithonia Lighting | 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 Lithonia Lighting are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lithonia Lighting can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lithonia Lighting can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Lithonia Lighting, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lithonia Lighting is facing challenges because of the dominance of functional experts in the organization. Lithonia Lighting 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lithonia Lighting can use these opportunities to build new business models that can help the communities that Lithonia Lighting operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lithonia Lighting 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.
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 Lithonia Lighting in the consumer business. Now Lithonia Lighting can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Lithonia Lighting 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lithonia Lighting 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.
Creating value in data economy
– The success of analytics program of Lithonia Lighting has opened avenues for new revenue streams for the organization in the industry. This can help Lithonia Lighting to build a more holistic ecosystem as suggested in the Lithonia Lighting case study. Lithonia Lighting can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Lithonia Lighting can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lithonia Lighting 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.
Using analytics as competitive advantage
– Lithonia Lighting 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 Lithonia Lighting - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lithonia Lighting to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lithonia Lighting 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 Lithonia Lighting to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Lithonia Lighting 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.
Threats Lithonia Lighting External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lithonia Lighting are -
Environmental challenges
– Lithonia Lighting 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. Lithonia Lighting can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lithonia Lighting with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Lithonia Lighting 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. Lithonia Lighting can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Lithonia Lighting 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lithonia Lighting, Lithonia Lighting 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 .
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 Lithonia Lighting.
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 Lithonia Lighting 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.
High dependence on third party suppliers
– Lithonia Lighting 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.
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. Lithonia Lighting needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lithonia Lighting 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.
Weighted SWOT Analysis of Lithonia Lighting 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 Lithonia Lighting 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 Lithonia Lighting 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 Lithonia Lighting 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 Lithonia Lighting 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 Lithonia Lighting needs to make to build a sustainable competitive advantage.
