Technical Note: Lease vs. Buy Decisions for Technology SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Technical Note: Lease vs. Buy Decisions for Technology
This technical note illustrates the fundamentals of lease vs. buy decisions in technology and how they differ from the typical capital equipment lease vs. buy decision. This note is designed for instructors, and provides them with a background for an introductory lecture on information technology (IT) leasing. It can also function as a companion to the Kellogg cases "AMG, Inc. & Forsythe Solutions: Lease vs. Buy Decisions" and "Shilling & Smith Acquisition of Xteria Inc.: Data Center Technology Leasing."
Authors :: Mark Jeffery, Susan Deutsch, Paolo Cuomo
Swot Analysis of "Technical Note: Lease vs. Buy Decisions for Technology" written by Mark Jeffery, Susan Deutsch, Paolo Cuomo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lease Buy facing as an external strategic factors. Some of the topics covered in Technical Note: Lease vs. Buy Decisions for Technology case study are - Strategic Management Strategies, International business, IT and Technology & Operations.
Some of the macro environment factors that can be used to understand the Technical Note: Lease vs. Buy Decisions for Technology casestudy better are - – cloud computing is disrupting traditional business models, there is backlash against globalization, technology disruption, increasing transportation and logistics costs, 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%,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Technical Note: Lease vs. Buy Decisions for Technology
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Technical Note: Lease vs. Buy Decisions for Technology case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lease Buy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lease Buy 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 Technical Note: Lease vs. Buy Decisions for Technology can be done for the following purposes –
1. Strategic planning using facts provided in Technical Note: Lease vs. Buy Decisions for Technology case study
2. Improving business portfolio management of Lease Buy
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 Lease Buy
Strengths Technical Note: Lease vs. Buy Decisions for Technology | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lease Buy in Technical Note: Lease vs. Buy Decisions for Technology Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Lease Buy in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Lease Buy 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 Mark Jeffery, Susan Deutsch, Paolo Cuomo 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 switching costs
– The high switching costs that Lease Buy has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Lease Buy has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Technical Note: Lease vs. Buy Decisions for Technology 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.
Cross disciplinary teams
– Horizontal connected teams at the Lease Buy 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.
Successful track record of launching new products
– Lease Buy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lease Buy 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Lease Buy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lease Buy 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.
Highly skilled collaborators
– Lease Buy 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 Technical Note: Lease vs. Buy Decisions for Technology HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Lease Buy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lease Buy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Technical Note: Lease vs. Buy Decisions for Technology 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.
Ability to lead change in Technology & Operations field
– Lease Buy 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 Lease Buy in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Lease Buy
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lease Buy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Technical Note: Lease vs. Buy Decisions for Technology | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Technical Note: Lease vs. Buy Decisions for Technology are -
High cash cycle compare to competitors
Lease Buy 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.
Increasing silos among functional specialists
– The organizational structure of Lease Buy is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Lease Buy needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lease Buy to focus more on services rather than just following the product oriented approach.
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 Lease Buy supply chain. Even after few cautionary changes mentioned in the HBR case study - Technical Note: Lease vs. Buy Decisions for Technology, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lease Buy vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Technical Note: Lease vs. Buy Decisions for Technology 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 Technical Note: Lease vs. Buy Decisions for Technology can leverage the sales team experience to cultivate customer relationships as Lease Buy is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Technical Note: Lease vs. Buy Decisions for Technology, 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.
Interest costs
– Compare to the competition, Lease Buy 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Mark Jeffery, Susan Deutsch, Paolo Cuomo suggests that, Lease Buy 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.
Lack of clear differentiation of Lease Buy products
– To increase the profitability and margins on the products, Lease Buy needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Lease Buy, firm in the HBR case study Technical Note: Lease vs. Buy Decisions for Technology needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Lease Buy 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.
Need for greater diversity
– Lease Buy 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.
Opportunities Technical Note: Lease vs. Buy Decisions for Technology | 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 Technical Note: Lease vs. Buy Decisions for Technology are -
Loyalty marketing
– Lease Buy 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.
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. Lease Buy 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. Lease Buy 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lease Buy can use these opportunities to build new business models that can help the communities that Lease Buy operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Manufacturing automation
– Lease Buy 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.
Building a culture of innovation
– managers at Lease Buy can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lease Buy is facing challenges because of the dominance of functional experts in the organization. Technical Note: Lease vs. Buy Decisions for Technology 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.
Better consumer reach
– The expansion of the 5G network will help Lease Buy to increase its market reach. Lease Buy 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lease Buy 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.
Using analytics as competitive advantage
– Lease Buy 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 Technical Note: Lease vs. Buy Decisions for Technology - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lease Buy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lease Buy 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, Technical Note: Lease vs. Buy Decisions for Technology, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Lease Buy 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.
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. Lease Buy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Lease Buy 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.
Threats Technical Note: Lease vs. Buy Decisions for Technology External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Technical Note: Lease vs. Buy Decisions for Technology are -
Stagnating economy with rate increase
– Lease Buy 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.
High dependence on third party suppliers
– Lease Buy 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.
Regulatory challenges
– Lease Buy 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lease Buy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
Increasing wage structure of Lease Buy
– 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 Lease Buy.
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 Lease Buy in the Technology & Operations sector and impact the bottomline of the organization.
Consumer confidence and its impact on Lease Buy 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.
Technology acceleration in Forth Industrial Revolution
– Lease Buy has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Lease Buy 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.
Shortening product life cycle
– it is one of the major threat that Lease Buy is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Technical Note: Lease vs. Buy Decisions for Technology, Lease Buy 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lease Buy 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 Technical Note: Lease vs. Buy Decisions for Technology .
Weighted SWOT Analysis of Technical Note: Lease vs. Buy Decisions for Technology 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 Technical Note: Lease vs. Buy Decisions for Technology 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 Technical Note: Lease vs. Buy Decisions for Technology 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 Technical Note: Lease vs. Buy Decisions for Technology 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 Technical Note: Lease vs. Buy Decisions for Technology 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 Lease Buy needs to make to build a sustainable competitive advantage.
