Case Study Description of Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand
Align Technology is a four-year-old medical products company that has invented a new product requiring new manufacturing processes. Demand for the new product has grown more slowly than initial forecasts predicted, and the cost structure is preventing the company from becoming profitable. The manufacturing process involves six different operations located in California, Pakistan, and Mexico. The first dilemma requires downsizing the capacity until the demand grows. Increasing capacity in the future requires consideration of the time lags, costs, and incremental units of added capacity inherent in each of the six processes. Given the uncertainty of accurate sales forecasts as the company carries out new marketing initiatives, the manufacturing organization has been challenged to create a capacity plan to meet demand while lowering its fixed costs.
Swot Analysis of "Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand" written by H. Kent Bowen, Jonathan P. Groberg includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Capacity Demand facing as an external strategic factors. Some of the topics covered in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand case study are - Strategic Management Strategies, Manufacturing and Technology & Operations.
Some of the macro environment factors that can be used to understand the Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand casestudy better are - – central banks are concerned over increasing inflation, increasing household debt because of falling income levels, wage bills are increasing, there is backlash against globalization, there is increasing trade war between United States & China, increasing commodity prices, talent flight as more people leaving formal jobs,
geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Capacity Demand, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Capacity Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand can be done for the following purposes –
1. Strategic planning using facts provided in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand case study
2. Improving business portfolio management of Capacity Demand
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 Capacity Demand
Strengths Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Capacity Demand in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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.
Effective Research and Development (R&D)
– Capacity Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Capacity Demand is one of the most innovative firm in sector. Manager in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Capacity Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Capacity Demand 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 H. Kent Bowen, Jonathan P. Groberg 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.
High brand equity
– Capacity Demand has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Capacity Demand to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Capacity Demand in the sector have low bargaining power. Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Capacity Demand to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Capacity Demand is present in almost all the verticals within the industry. This has provided firm in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 switching costs
– The high switching costs that Capacity Demand 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.
Strong track record of project management
– Capacity Demand is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Technology & Operations field
– Capacity Demand 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 Capacity Demand in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Technology & Operations industry
– Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand firm has clearly differentiated products in the market place. This has enabled Capacity Demand to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Capacity Demand to invest into research and development (R&D) and innovation.
Weaknesses Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand are -
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 Capacity Demand supply chain. Even after few cautionary changes mentioned in the HBR case study - Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Capacity Demand vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Capacity Demand 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.
Slow to strategic competitive environment developments
– As Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand HBR case study mentions - Capacity Demand 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.
Need for greater diversity
– Capacity Demand has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Capacity Demand 's lucrative customers.
Lack of clear differentiation of Capacity Demand products
– To increase the profitability and margins on the products, Capacity Demand needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand, is just above the industry average. Capacity Demand 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Capacity Demand has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Capacity Demand is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Capacity Demand needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Capacity Demand to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Capacity Demand 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.
Slow decision making process
– As mentioned earlier in the report, Capacity Demand 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. Capacity Demand 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.
Opportunities Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand | 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Capacity Demand can use these opportunities to build new business models that can help the communities that Capacity Demand operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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 Capacity Demand in the consumer business. Now Capacity Demand can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Capacity Demand 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.
Building a culture of innovation
– managers at Capacity Demand 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Capacity Demand is facing challenges because of the dominance of functional experts in the organization. Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Capacity Demand 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.
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. Capacity Demand can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Capacity Demand 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 Capacity Demand to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Capacity Demand 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, Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Capacity Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Capacity Demand to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Capacity Demand 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Capacity Demand 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.
Creating value in data economy
– The success of analytics program of Capacity Demand has opened avenues for new revenue streams for the organization in the industry. This can help Capacity Demand to build a more holistic ecosystem as suggested in the Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand case study. Capacity Demand can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand are -
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.
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 Capacity Demand business can come under increasing regulations regarding data privacy, data security, etc.
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. Capacity Demand needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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. Capacity Demand 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
– Capacity Demand 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. Capacity Demand can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Capacity Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand .
Technology acceleration in Forth Industrial Revolution
– Capacity Demand has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Capacity Demand 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.
Regulatory challenges
– Capacity Demand 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.
Consumer confidence and its impact on Capacity Demand 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.
Shortening product life cycle
– it is one of the major threat that Capacity Demand is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand, Capacity Demand 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Capacity Demand 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.
Increasing wage structure of Capacity Demand
– 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 Capacity Demand.
Weighted SWOT Analysis of Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Capacity Demand needs to make to build a sustainable competitive advantage.
