John Schmidt's project to convert the information system of his auto parts distribution business is in real trouble, putting his company at risk. He must decide what his decision problem is and set appropriate objectives as well as create a good set of alternatives from which to choose. This case can be used in courses on decision making as well as those that address management of information technology projects.
Swot Analysis of "SchmidtCo (A)" written by John S. Hammond includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Schmidtco Schmidt's facing as an external strategic factors. Some of the topics covered in SchmidtCo (A) case study are - Strategic Management Strategies, IT, Managing uncertainty, Negotiations, Operations management, Project management and Technology & Operations.
Some of the macro environment factors that can be used to understand the SchmidtCo (A) casestudy better are - – wage bills are increasing, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, there is increasing trade war between United States & China,
talent flight as more people leaving formal jobs, technology disruption, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SchmidtCo (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Schmidtco Schmidt's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Schmidtco Schmidt's 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 SchmidtCo (A) can be done for the following purposes –
1. Strategic planning using facts provided in SchmidtCo (A) case study
2. Improving business portfolio management of Schmidtco Schmidt's
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 Schmidtco Schmidt's
Strengths SchmidtCo (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Schmidtco Schmidt's in SchmidtCo (A) Harvard Business Review case study are -
Highly skilled collaborators
– Schmidtco Schmidt's 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 SchmidtCo (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Schmidtco Schmidt's is present in almost all the verticals within the industry. This has provided firm in SchmidtCo (A) 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.
Innovation driven organization
– Schmidtco Schmidt's is one of the most innovative firm in sector. Manager in SchmidtCo (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Technology & Operations field
– Schmidtco Schmidt's 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 Schmidtco Schmidt's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Schmidtco Schmidt's 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.
Sustainable margins compare to other players in Technology & Operations industry
– SchmidtCo (A) firm has clearly differentiated products in the market place. This has enabled Schmidtco Schmidt's to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Schmidtco Schmidt's to invest into research and development (R&D) and innovation.
Strong track record of project management
– Schmidtco Schmidt's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Schmidtco Schmidt's 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.
Analytics focus
– Schmidtco Schmidt's 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 John S. Hammond 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
– Schmidtco Schmidt's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SchmidtCo (A) 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.
Effective Research and Development (R&D)
– Schmidtco Schmidt's 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 SchmidtCo (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Schmidtco Schmidt's in the sector have low bargaining power. SchmidtCo (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Schmidtco Schmidt's to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses SchmidtCo (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SchmidtCo (A) are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study SchmidtCo (A), it seems that the employees of Schmidtco Schmidt's 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 SchmidtCo (A) 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 Schmidtco Schmidt's has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Schmidtco Schmidt's 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. Schmidtco Schmidt's 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.
High cash cycle compare to competitors
Schmidtco Schmidt's 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.
No frontier risks strategy
– After analyzing the HBR case study SchmidtCo (A), 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.
Lack of clear differentiation of Schmidtco Schmidt's products
– To increase the profitability and margins on the products, Schmidtco Schmidt's needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, John S. Hammond suggests that, Schmidtco Schmidt's 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 Schmidtco Schmidt's, firm in the HBR case study SchmidtCo (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As SchmidtCo (A) HBR case study mentions - Schmidtco Schmidt's 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 operating costs
– Compare to the competitors, firm in the HBR case study SchmidtCo (A) 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 Schmidtco Schmidt's 's lucrative customers.
Need for greater diversity
– Schmidtco Schmidt's 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 SchmidtCo (A) | 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 SchmidtCo (A) are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Schmidtco Schmidt's 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.
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 Schmidtco Schmidt's 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.
Loyalty marketing
– Schmidtco Schmidt's 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.
Manufacturing automation
– Schmidtco Schmidt's 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.
Better consumer reach
– The expansion of the 5G network will help Schmidtco Schmidt's to increase its market reach. Schmidtco Schmidt's 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.
Developing new processes and practices
– Schmidtco Schmidt's can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Schmidtco Schmidt's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. SchmidtCo (A) 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.
Using analytics as competitive advantage
– Schmidtco Schmidt's 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 SchmidtCo (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Schmidtco Schmidt's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Schmidtco Schmidt's is facing challenges because of the dominance of functional experts in the organization. SchmidtCo (A) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Schmidtco Schmidt's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Schmidtco Schmidt's can use these opportunities to build new business models that can help the communities that Schmidtco Schmidt's operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Schmidtco Schmidt's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Schmidtco Schmidt's 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, SchmidtCo (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats SchmidtCo (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SchmidtCo (A) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Schmidtco Schmidt's 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 SchmidtCo (A) .
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 Schmidtco Schmidt's business can come under increasing regulations regarding data privacy, data security, etc.
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. Schmidtco Schmidt's 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.
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 Schmidtco Schmidt's in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Schmidtco Schmidt's
– 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 Schmidtco Schmidt's.
Environmental challenges
– Schmidtco Schmidt's 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. Schmidtco Schmidt's can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Schmidtco Schmidt's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Schmidtco Schmidt's 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.
Stagnating economy with rate increase
– Schmidtco Schmidt's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Schmidtco Schmidt's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Schmidtco Schmidt's is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Weighted SWOT Analysis of SchmidtCo (A) 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 SchmidtCo (A) 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 SchmidtCo (A) 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 SchmidtCo (A) 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 SchmidtCo (A) 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 Schmidtco Schmidt's needs to make to build a sustainable competitive advantage.
