The case describes the strategic internationalization options of a digital music service provider, KKBOX.com, based in Taiwan. KKBOX was the first independent profitable digital music service provider in the world. There were several factors contributing to the profitability of KKBOX. Looking for growth, service internationalization has made KKBOX increase their involvement in international operations adapting its strategy, resources and structure. The strategies included content based path, technology platform path or new service path. Though there were good reasons to pursue each one in depth, it was vital to prioritize to understand what was negotiable and what was core when going across boarders to build a sustainable and strong brand of KKBOX.
Swot Analysis of "KKBOX.com" written by Soe-Tsyr Yuan, Darren Meister includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kkbox Kkbox.com facing as an external strategic factors. Some of the topics covered in KKBOX.com case study are - Strategic Management Strategies, and Technology & Operations.
Some of the macro environment factors that can be used to understand the KKBOX.com casestudy better are - – increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies,
supply chains are disrupted by pandemic , there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in KKBOX.com case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kkbox Kkbox.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kkbox Kkbox.com 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 KKBOX.com can be done for the following purposes –
1. Strategic planning using facts provided in KKBOX.com case study
2. Improving business portfolio management of Kkbox Kkbox.com
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 Kkbox Kkbox.com
Strengths KKBOX.com | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kkbox Kkbox.com in KKBOX.com Harvard Business Review case study are -
Successful track record of launching new products
– Kkbox Kkbox.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kkbox Kkbox.com 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.
Learning organization
- Kkbox Kkbox.com 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 Kkbox Kkbox.com is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in KKBOX.com Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Kkbox Kkbox.com has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kkbox Kkbox.com to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Kkbox Kkbox.com is one of the leading recruiters in the industry. Managers in the KKBOX.com 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 Kkbox Kkbox.com 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.
Training and development
– Kkbox Kkbox.com has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in KKBOX.com 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.
Low bargaining power of suppliers
– Suppliers of Kkbox Kkbox.com in the sector have low bargaining power. KKBOX.com has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kkbox Kkbox.com to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Kkbox Kkbox.com
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kkbox Kkbox.com does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Kkbox Kkbox.com digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kkbox Kkbox.com 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.
Analytics focus
– Kkbox Kkbox.com 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 Soe-Tsyr Yuan, Darren Meister 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.
Cross disciplinary teams
– Horizontal connected teams at the Kkbox Kkbox.com 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.
Sustainable margins compare to other players in Technology & Operations industry
– KKBOX.com firm has clearly differentiated products in the market place. This has enabled Kkbox Kkbox.com to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Kkbox Kkbox.com to invest into research and development (R&D) and innovation.
Weaknesses KKBOX.com | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of KKBOX.com are -
Capital Spending Reduction
– Even during the low interest decade, Kkbox Kkbox.com has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Soe-Tsyr Yuan, Darren Meister suggests that, Kkbox Kkbox.com 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.
Increasing silos among functional specialists
– The organizational structure of Kkbox Kkbox.com is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Kkbox Kkbox.com needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kkbox Kkbox.com to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study KKBOX.com 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 KKBOX.com can leverage the sales team experience to cultivate customer relationships as Kkbox Kkbox.com is planning to shift buying processes online.
Products dominated business model
– Even though Kkbox Kkbox.com 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 - KKBOX.com should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the KKBOX.com 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 Kkbox Kkbox.com has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study KKBOX.com, is just above the industry average. Kkbox Kkbox.com 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.
Slow decision making process
– As mentioned earlier in the report, Kkbox Kkbox.com 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. Kkbox Kkbox.com 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Kkbox Kkbox.com 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.
High operating costs
– Compare to the competitors, firm in the HBR case study KKBOX.com 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 Kkbox Kkbox.com 's lucrative customers.
High cash cycle compare to competitors
Kkbox Kkbox.com 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.
Opportunities KKBOX.com | 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 KKBOX.com are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Kkbox Kkbox.com 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.
Building a culture of innovation
– managers at Kkbox Kkbox.com can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Using analytics as competitive advantage
– Kkbox Kkbox.com 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 KKBOX.com - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kkbox Kkbox.com 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 Kkbox Kkbox.com has opened avenues for new revenue streams for the organization in the industry. This can help Kkbox Kkbox.com to build a more holistic ecosystem as suggested in the KKBOX.com case study. Kkbox Kkbox.com can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Kkbox Kkbox.com can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Kkbox Kkbox.com can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. KKBOX.com 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.
Better consumer reach
– The expansion of the 5G network will help Kkbox Kkbox.com to increase its market reach. Kkbox Kkbox.com 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kkbox Kkbox.com can use these opportunities to build new business models that can help the communities that Kkbox Kkbox.com operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Developing new processes and practices
– Kkbox Kkbox.com 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.
Leveraging digital technologies
– Kkbox Kkbox.com 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.
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. Kkbox Kkbox.com can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Kkbox Kkbox.com 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.
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 Kkbox Kkbox.com 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.
Threats KKBOX.com External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study KKBOX.com are -
Technology acceleration in Forth Industrial Revolution
– Kkbox Kkbox.com has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Kkbox Kkbox.com 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.
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.
Stagnating economy with rate increase
– Kkbox Kkbox.com 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.
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.
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. Kkbox Kkbox.com 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
– Kkbox Kkbox.com 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kkbox Kkbox.com 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 KKBOX.com .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kkbox Kkbox.com with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Kkbox Kkbox.com 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.
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 Kkbox Kkbox.com in the Technology & Operations sector and impact the bottomline of the organization.
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 Kkbox Kkbox.com.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kkbox Kkbox.com 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.
Environmental challenges
– Kkbox Kkbox.com 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. Kkbox Kkbox.com can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Weighted SWOT Analysis of KKBOX.com 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 KKBOX.com 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 KKBOX.com 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 KKBOX.com 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 KKBOX.com 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 Kkbox Kkbox.com needs to make to build a sustainable competitive advantage.