XUMA is a Silicon Valley start-up that builds customized eBusiness software suites for its corporate clients. This market is crowded with large players, including the major consulting and systems integration companies. To date, building these suites has been a very labor intensive process, which starts essentially from scratch with each new customer. As a result, the suites are expensive and time consuming to develop, and the companies that construct them function largely as "body shops." XUMA is attempting a very different approach. Its founders believe that the software components that make up eBusiness suites have become much like the hardware components that make up a computer; self-contained, modular, and easy to interconnect. They therefore seek to make XUMA an "assembly line" for eBusiness solutions, putting together these components (using proprietary software "glue") rapidly and cheaply. If they succeed at this, they will have divorced the price they can charge for their solutions from the cost of building them.
Swot Analysis of "XUMA" written by Andrew McAfee, Kerry Herman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xuma Suites facing as an external strategic factors. Some of the topics covered in XUMA case study are - Strategic Management Strategies, Disruptive innovation, Entrepreneurship, Intellectual property, Internet, IT, Manufacturing and Technology & Operations.
Some of the macro environment factors that can be used to understand the XUMA casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, increasing transportation and logistics costs, increasing commodity prices, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in XUMA case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xuma Suites, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xuma Suites 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 XUMA can be done for the following purposes –
1. Strategic planning using facts provided in XUMA case study
2. Improving business portfolio management of Xuma Suites
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 Xuma Suites
Strengths XUMA | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xuma Suites in XUMA Harvard Business Review case study are -
Diverse revenue streams
– Xuma Suites is present in almost all the verticals within the industry. This has provided firm in XUMA 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Xuma Suites digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xuma Suites 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.
Successful track record of launching new products
– Xuma Suites has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xuma Suites 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.
Superior customer experience
– The customer experience strategy of Xuma Suites in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Xuma Suites 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 XUMA HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Technology & Operations field
– Xuma Suites 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 Xuma Suites in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Xuma Suites 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 Andrew McAfee, Kerry Herman 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.
Training and development
– Xuma Suites has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in XUMA 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.
Strong track record of project management
– Xuma Suites 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
– XUMA firm has clearly differentiated products in the market place. This has enabled Xuma Suites to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Xuma Suites to invest into research and development (R&D) and innovation.
High brand equity
– Xuma Suites has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xuma Suites to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Xuma Suites is one of the leading recruiters in the industry. Managers in the XUMA are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses XUMA | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of XUMA are -
Interest costs
– Compare to the competition, Xuma Suites 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.
Need for greater diversity
– Xuma Suites 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.
Capital Spending Reduction
– Even during the low interest decade, Xuma Suites 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study XUMA, is just above the industry average. Xuma Suites 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.
Low market penetration in new markets
– Outside its home market of Xuma Suites, firm in the HBR case study XUMA needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Xuma Suites has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study XUMA, it seems that the employees of Xuma Suites 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the XUMA 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 Xuma Suites has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew McAfee, Kerry Herman suggests that, Xuma Suites 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 Xuma Suites is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Xuma Suites needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xuma Suites to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xuma Suites is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study XUMA can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities XUMA | 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 XUMA are -
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 Xuma Suites in the consumer business. Now Xuma Suites can target international markets with far fewer capital restrictions requirements than the existing system.
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 Xuma Suites 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.
Developing new processes and practices
– Xuma Suites 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xuma Suites 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, XUMA, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xuma Suites 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 Xuma Suites to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Xuma Suites has opened avenues for new revenue streams for the organization in the industry. This can help Xuma Suites to build a more holistic ecosystem as suggested in the XUMA case study. Xuma Suites can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xuma Suites 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.
Building a culture of innovation
– managers at Xuma Suites 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
– Xuma Suites 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 XUMA - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xuma Suites to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xuma Suites 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Xuma Suites can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Xuma Suites can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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. Xuma Suites can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Xuma Suites can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. XUMA 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.
Threats XUMA External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study XUMA are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Xuma Suites 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 XUMA .
Shortening product life cycle
– it is one of the major threat that Xuma Suites is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Xuma Suites in the Technology & Operations sector and impact the bottomline of the organization.
Regulatory challenges
– Xuma Suites 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.
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. Xuma Suites can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Xuma Suites business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Xuma Suites 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. Xuma Suites can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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. Xuma Suites needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
Increasing wage structure of Xuma Suites
– 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 Xuma Suites.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study XUMA, Xuma Suites 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 .
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.
Technology acceleration in Forth Industrial Revolution
– Xuma Suites has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Xuma Suites 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.
Weighted SWOT Analysis of XUMA 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 XUMA 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 XUMA 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 XUMA 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 XUMA 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 Xuma Suites needs to make to build a sustainable competitive advantage.
