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 - – supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, technology disruption, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
central banks are concerned over increasing inflation, wage bills are increasing, 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 -
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.
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.
Ability to recruit top talent
– Banner Virtualtag is one of the leading recruiters in the industry. Managers in the First Virtual Holdings, Inc. (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Banner Virtualtag digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Banner Virtualtag 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.
Organizational Resilience of Banner Virtualtag
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Banner Virtualtag does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Cross disciplinary teams
– Horizontal connected teams at the Banner Virtualtag are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
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.
Training and development
– Banner Virtualtag has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in First Virtual Holdings, Inc. (B) 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.
Ability to lead change in Technology & Operations field
– Banner Virtualtag 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 Banner Virtualtag in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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 -
No frontier risks strategy
– After analyzing the HBR case study First Virtual Holdings, Inc. (B), 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.
Increasing silos among functional specialists
– The organizational structure of Banner Virtualtag is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Banner Virtualtag needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Banner Virtualtag to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study First Virtual Holdings, Inc. (B), in the dynamic environment Banner Virtualtag has struggled to respond to the nimble upstart competition. Banner Virtualtag has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study First Virtual Holdings, Inc. (B), is just above the industry average. Banner Virtualtag 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.
Need for greater diversity
– Banner Virtualtag 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, Banner Virtualtag 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Banner Virtualtag needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High 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.
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 -
Building a culture of innovation
– managers at Banner Virtualtag 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.
Manufacturing automation
– Banner Virtualtag 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.
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.
Learning at scale
– Online learning technologies has now opened space for Banner Virtualtag 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.
Buying journey improvements
– Banner Virtualtag can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. First Virtual Holdings, Inc. (B) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Banner Virtualtag can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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.
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. Banner Virtualtag can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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 -
Consumer confidence and its impact on Banner Virtualtag 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.
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.
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.
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.
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Banner Virtualtag 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.
High dependence on third party suppliers
– Banner Virtualtag 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.
Environmental challenges
– Banner Virtualtag 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. Banner Virtualtag can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
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.
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.