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 - – digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, there is increasing trade war between United States & China, geopolitical disruptions, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion,
customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, 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 -
Training and development
– Capacity Demand has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Capacity Demand digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Capacity Demand 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
- Capacity Demand 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 Capacity Demand is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
Successful track record of launching new products
– Capacity Demand has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Capacity Demand 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.
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.
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.
Superior customer experience
– The customer experience strategy of Capacity Demand in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand, in the dynamic environment Capacity Demand has struggled to respond to the nimble upstart competition. Capacity Demand has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Capital Spending Reduction
– Even during the low interest decade, Capacity Demand 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.
Low market penetration in new markets
– Outside its home market of Capacity Demand, firm in the HBR case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Capacity Demand is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand can help to provide better information regarding products and services. It can also build an online community to further reach out to potential 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.
Aligning sales with marketing
– It come across in the case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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 Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand can leverage the sales team experience to cultivate customer relationships as Capacity Demand is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand, 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.
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.
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 -
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.
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.
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.
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.
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.
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.
Developing new processes and practices
– Capacity Demand 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.
Buying journey improvements
– Capacity Demand can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Align Technology, Inc.: Matching Manufacturing Capacity to Sales Demand 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.
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.
Better consumer reach
– The expansion of the 5G network will help Capacity Demand to increase its market reach. Capacity Demand 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.
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.
Learning at scale
– Online learning technologies has now opened space for Capacity Demand to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Capacity Demand 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.
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 -
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 Capacity Demand.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Capacity Demand will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
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.
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 .
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.
High dependence on third party suppliers
– Capacity Demand 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.
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.
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 Capacity Demand in the Technology & Operations sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Capacity Demand needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Capacity Demand with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.