First Virtual Holdings, Inc. (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of First Virtual Holdings, Inc. (B)
First Virtual Holdings, Inc. (FVHI) is an Internet payments company based in San Diego, CA. FVHI's original offering, an Internet payments system based on consumers' receiving and using a "VirtualPIN" number for online purchases instead of a credit card number, had not been successful. Consumer apathy to the system, coupled with vendor disinterest, have prevented them from attaining the critical mass necessary to make the system viable. In response to the failure of their payments system, FVHI decided to change their focus. The company developed an interactive advertising banner, about the size of a regular web advertising banner. The "VirtualTAG" functions like a mini web page within a page. Users can click through pages in the banner without leaving the page on which the banner was found. The VirtualTAG can have multiple uses such as to provide information or facilitate transactions. FVHI intends to develop and license the VirtualTAG to web page administrators. They also intend to incorporate the VurtualTAG into e-mail messages. VirtualTAGs may be used as a form of "mass" interactive Internet advertising, although the company is quick to point out that the technology will only be used with targeted and consenting consumers. FVHI's ideas and technology regarding Internet advertising provide a useful vehicle for discussing trends in online commerce and Internet privacy issues.
Swot Analysis of "First Virtual Holdings, Inc. (B)" written by Sid L. Huff, Mike Wade includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Banner Virtualtag facing as an external strategic factors. Some of the topics covered in First Virtual Holdings, Inc. (B) case study are - Strategic Management Strategies, Security & privacy and Technology & Operations.
Some of the macro environment factors that can be used to understand the First Virtual Holdings, Inc. (B) casestudy better are - – challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, central banks are concerned over increasing inflation,
wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of First Virtual Holdings, Inc. (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in First Virtual Holdings, Inc. (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Banner Virtualtag, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Banner Virtualtag 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 First Virtual Holdings, Inc. (B) can be done for the following purposes –
1. Strategic planning using facts provided in First Virtual Holdings, Inc. (B) case study
2. Improving business portfolio management of Banner Virtualtag
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 Banner Virtualtag
Strengths First Virtual Holdings, Inc. (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Banner Virtualtag in First Virtual Holdings, Inc. (B) Harvard Business Review case study are -
Successful track record of launching new products
– Banner Virtualtag has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Banner Virtualtag 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.
Strong track record of project management
– Banner Virtualtag 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
– First Virtual Holdings, Inc. (B) firm has clearly differentiated products in the market place. This has enabled Banner Virtualtag to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Banner Virtualtag to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the First Virtual Holdings, Inc. (B) 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.
Analytics focus
– Banner Virtualtag 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 Sid L. Huff, Mike Wade 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.
Diverse revenue streams
– Banner Virtualtag is present in almost all the verticals within the industry. This has provided firm in First Virtual Holdings, Inc. (B) 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.
Learning organization
- Banner Virtualtag 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 Banner Virtualtag is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in First Virtual Holdings, Inc. (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Banner Virtualtag in the sector have low bargaining power. First Virtual Holdings, Inc. (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Banner Virtualtag to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Banner Virtualtag in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Banner Virtualtag has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Banner Virtualtag to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Banner Virtualtag 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 First Virtual Holdings, Inc. (B) - 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
– Banner Virtualtag is one of the most innovative firm in sector. Manager in First Virtual Holdings, Inc. (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses First Virtual Holdings, Inc. (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of First Virtual Holdings, Inc. (B) are -
High bargaining power of channel partners
– Because of the regulatory requirements, Sid L. Huff, Mike Wade suggests that, Banner Virtualtag 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.
Low market penetration in new markets
– Outside its home market of Banner Virtualtag, firm in the HBR case study First Virtual Holdings, Inc. (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Banner Virtualtag products
– To increase the profitability and margins on the products, Banner Virtualtag needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Banner Virtualtag supply chain. Even after few cautionary changes mentioned in the HBR case study - First Virtual Holdings, Inc. (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Banner Virtualtag vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Banner Virtualtag 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. Banner Virtualtag 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, Banner Virtualtag is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study First Virtual Holdings, Inc. (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As First Virtual Holdings, Inc. (B) HBR case study mentions - Banner Virtualtag 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.
High cash cycle compare to competitors
Banner Virtualtag 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.
Products dominated business model
– Even though Banner Virtualtag 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 - First Virtual Holdings, Inc. (B) should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study First Virtual Holdings, Inc. (B) 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 Banner Virtualtag 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the First Virtual Holdings, Inc. (B) 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 Banner Virtualtag has relatively successful track record of launching new products.
Opportunities First Virtual Holdings, Inc. (B) | 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 First Virtual Holdings, Inc. (B) are -
Developing new processes and practices
– Banner Virtualtag 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.
Using analytics as competitive advantage
– Banner Virtualtag 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 First Virtual Holdings, Inc. (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Banner Virtualtag 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 Banner Virtualtag has opened avenues for new revenue streams for the organization in the industry. This can help Banner Virtualtag to build a more holistic ecosystem as suggested in the First Virtual Holdings, Inc. (B) case study. Banner Virtualtag can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Banner Virtualtag in the consumer business. Now Banner Virtualtag can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Banner Virtualtag is facing challenges because of the dominance of functional experts in the organization. First Virtual Holdings, Inc. (B) 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.
Leveraging digital technologies
– Banner Virtualtag 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Banner Virtualtag 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, First Virtual Holdings, Inc. (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Banner Virtualtag can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Banner Virtualtag 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 Banner Virtualtag to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Banner Virtualtag has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Banner Virtualtag 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.
Better consumer reach
– The expansion of the 5G network will help Banner Virtualtag to increase its market reach. Banner Virtualtag 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.
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. Banner Virtualtag 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. Banner Virtualtag 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.
Threats First Virtual Holdings, Inc. (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study First Virtual Holdings, Inc. (B) 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 Banner Virtualtag.
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. Banner Virtualtag needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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 Banner Virtualtag business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Banner Virtualtag has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Banner Virtualtag 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.
Stagnating economy with rate increase
– Banner Virtualtag 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.
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.
Shortening product life cycle
– it is one of the major threat that Banner Virtualtag is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Banner Virtualtag with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Banner Virtualtag 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
– Banner Virtualtag 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 wage structure of Banner Virtualtag
– 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 Banner Virtualtag.
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 Banner Virtualtag in the Technology & Operations sector and impact the bottomline of the organization.
Weighted SWOT Analysis of First Virtual Holdings, Inc. (B) 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 First Virtual Holdings, Inc. (B) 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 First Virtual Holdings, Inc. (B) 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 First Virtual Holdings, Inc. (B) 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 First Virtual Holdings, Inc. (B) 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 Banner Virtualtag needs to make to build a sustainable competitive advantage.
