Case Study Description of ToyWorld, Inc.: Information Technology Planning
ToyWorld, a fast growing retailer, was revitalizing its information technology (IT) infrastructure and called in AT&T to help plan for the future. Five strategic alternatives for use of information and communications technology were identified through value chain analysis and use of proprietary AT&T methodology. While two could be implemented by ToyWorld action alone, two would require external cooperation, and one represented an entirely new (but related) line of business.
Swot Analysis of "ToyWorld, Inc.: Information Technology Planning" written by Lynda M. Applegate includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Toyworld Information facing as an external strategic factors. Some of the topics covered in ToyWorld, Inc.: Information Technology Planning case study are - Strategic Management Strategies, IT, Joint ventures, Operations management, Strategic planning and Technology & Operations.
Some of the macro environment factors that can be used to understand the ToyWorld, Inc.: Information Technology Planning casestudy better are - – increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies,
increasing energy prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of ToyWorld, Inc.: Information Technology Planning
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ToyWorld, Inc.: Information Technology Planning case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toyworld Information, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toyworld Information 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 ToyWorld, Inc.: Information Technology Planning can be done for the following purposes –
1. Strategic planning using facts provided in ToyWorld, Inc.: Information Technology Planning case study
2. Improving business portfolio management of Toyworld Information
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 Toyworld Information
Strengths ToyWorld, Inc.: Information Technology Planning | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toyworld Information in ToyWorld, Inc.: Information Technology Planning Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the ToyWorld, Inc.: Information Technology Planning 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.
High brand equity
– Toyworld Information has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Toyworld Information to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Toyworld Information 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 ToyWorld, Inc.: Information Technology Planning HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Toyworld Information has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Toyworld Information 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
– Toyworld Information is one of the leading recruiters in the industry. Managers in the ToyWorld, Inc.: Information Technology Planning are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Toyworld Information 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 Lynda M. Applegate 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.
Innovation driven organization
– Toyworld Information is one of the most innovative firm in sector. Manager in ToyWorld, Inc.: Information Technology Planning Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Toyworld Information 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.
Strong track record of project management
– Toyworld Information is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Toyworld Information is present in almost all the verticals within the industry. This has provided firm in ToyWorld, Inc.: Information Technology Planning 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.
Low bargaining power of suppliers
– Suppliers of Toyworld Information in the sector have low bargaining power. ToyWorld, Inc.: Information Technology Planning has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toyworld Information to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Technology & Operations industry
– ToyWorld, Inc.: Information Technology Planning firm has clearly differentiated products in the market place. This has enabled Toyworld Information to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Toyworld Information to invest into research and development (R&D) and innovation.
Weaknesses ToyWorld, Inc.: Information Technology Planning | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ToyWorld, Inc.: Information Technology Planning are -
Aligning sales with marketing
– It come across in the case study ToyWorld, Inc.: Information Technology Planning 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 ToyWorld, Inc.: Information Technology Planning can leverage the sales team experience to cultivate customer relationships as Toyworld Information is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ToyWorld, Inc.: Information Technology Planning 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 Toyworld Information has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As ToyWorld, Inc.: Information Technology Planning HBR case study mentions - Toyworld Information 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.
Increasing silos among functional specialists
– The organizational structure of Toyworld Information is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Toyworld Information needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Toyworld Information to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study ToyWorld, Inc.: Information Technology Planning 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 Toyworld Information 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Toyworld Information, firm in the HBR case study ToyWorld, Inc.: Information Technology Planning needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Lynda M. Applegate suggests that, Toyworld Information 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.
Need for greater diversity
– Toyworld Information 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ToyWorld, Inc.: Information Technology Planning, is just above the industry average. Toyworld Information 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.
Lack of clear differentiation of Toyworld Information products
– To increase the profitability and margins on the products, Toyworld Information needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Toyworld Information 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.
Opportunities ToyWorld, Inc.: Information Technology Planning | 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 ToyWorld, Inc.: Information Technology Planning are -
Developing new processes and practices
– Toyworld Information 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.
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 Toyworld Information in the consumer business. Now Toyworld Information can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Toyworld Information to increase its market reach. Toyworld Information 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.
Loyalty marketing
– Toyworld Information 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.
Leveraging digital technologies
– Toyworld Information 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.
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 Toyworld Information 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.
Building a culture of innovation
– managers at Toyworld Information 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.
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. Toyworld Information 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. Toyworld Information 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.
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. Toyworld Information can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Toyworld Information 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Toyworld Information 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, ToyWorld, Inc.: Information Technology Planning, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Toyworld Information can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ToyWorld, Inc.: Information Technology Planning 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Toyworld Information 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 Toyworld Information to hire the very best people irrespective of their geographical location.
Threats ToyWorld, Inc.: Information Technology Planning External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ToyWorld, Inc.: Information Technology Planning are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Toyworld Information 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 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. Toyworld Information needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Consumer confidence and its impact on Toyworld Information 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.
Regulatory challenges
– Toyworld Information 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 Toyworld Information
– 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 Toyworld Information.
Technology acceleration in Forth Industrial Revolution
– Toyworld Information has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Toyworld Information 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.
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.
High dependence on third party suppliers
– Toyworld Information 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.
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. Toyworld Information 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.
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 Toyworld Information business can come under increasing regulations regarding data privacy, data security, etc.
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. Toyworld Information can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toyworld Information 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 ToyWorld, Inc.: Information Technology Planning .
Weighted SWOT Analysis of ToyWorld, Inc.: Information Technology Planning 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 ToyWorld, Inc.: Information Technology Planning 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 ToyWorld, Inc.: Information Technology Planning 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 ToyWorld, Inc.: Information Technology Planning 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 ToyWorld, Inc.: Information Technology Planning 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 Toyworld Information needs to make to build a sustainable competitive advantage.