Case Study Description of RealNetworks, Inc.: Converging Technologies/Expanding Opportunities
Highlights issues related to the impact of the Internet on industry and technology convergence. RealNetworks has succeeded in establishing its position as a market leader (over 90% market share) in the Internet streaming media segment. Can they maintain this position now that Microsoft has entered the market?
Swot Analysis of "RealNetworks, Inc.: Converging Technologies/Expanding Opportunities" written by Lynda M. Applegate, Kirk Goldman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Realnetworks Converging facing as an external strategic factors. Some of the topics covered in RealNetworks, Inc.: Converging Technologies/Expanding Opportunities case study are - Strategic Management Strategies, Entrepreneurial management, Growth strategy, Internet, IT and Technology & Operations.
Some of the macro environment factors that can be used to understand the RealNetworks, Inc.: Converging Technologies/Expanding Opportunities casestudy better are - – geopolitical disruptions, increasing transportation and logistics costs, there is backlash against globalization, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, wage bills are increasing,
increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of RealNetworks, Inc.: Converging Technologies/Expanding Opportunities
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in RealNetworks, Inc.: Converging Technologies/Expanding Opportunities case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Realnetworks Converging, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Realnetworks Converging 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities can be done for the following purposes –
1. Strategic planning using facts provided in RealNetworks, Inc.: Converging Technologies/Expanding Opportunities case study
2. Improving business portfolio management of Realnetworks Converging
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 Realnetworks Converging
Strengths RealNetworks, Inc.: Converging Technologies/Expanding Opportunities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Realnetworks Converging in RealNetworks, Inc.: Converging Technologies/Expanding Opportunities Harvard Business Review case study are -
Training and development
– Realnetworks Converging has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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.
Successful track record of launching new products
– Realnetworks Converging has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Realnetworks Converging 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.
Effective Research and Development (R&D)
– Realnetworks Converging 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Technology & Operations industry
– RealNetworks, Inc.: Converging Technologies/Expanding Opportunities firm has clearly differentiated products in the market place. This has enabled Realnetworks Converging to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Realnetworks Converging to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Realnetworks Converging 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.
Analytics focus
– Realnetworks Converging 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, Kirk Goldman 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.
Strong track record of project management
– Realnetworks Converging is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Technology & Operations field
– Realnetworks Converging 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 Realnetworks Converging in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Realnetworks Converging 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Realnetworks Converging digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Realnetworks Converging 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
– Realnetworks Converging 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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.
Weaknesses RealNetworks, Inc.: Converging Technologies/Expanding Opportunities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of RealNetworks, Inc.: Converging Technologies/Expanding Opportunities are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study RealNetworks, Inc.: Converging Technologies/Expanding Opportunities, is just above the industry average. Realnetworks Converging 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.
Capital Spending Reduction
– Even during the low interest decade, Realnetworks Converging 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.
Low market penetration in new markets
– Outside its home market of Realnetworks Converging, firm in the HBR case study RealNetworks, Inc.: Converging Technologies/Expanding Opportunities needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study RealNetworks, Inc.: Converging Technologies/Expanding Opportunities, in the dynamic environment Realnetworks Converging has struggled to respond to the nimble upstart competition. Realnetworks Converging has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Realnetworks Converging products
– To increase the profitability and margins on the products, Realnetworks Converging 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, Lynda M. Applegate, Kirk Goldman suggests that, Realnetworks Converging 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.
High cash cycle compare to competitors
Realnetworks Converging 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 Realnetworks Converging is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Realnetworks Converging needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Realnetworks Converging to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As RealNetworks, Inc.: Converging Technologies/Expanding Opportunities HBR case study mentions - Realnetworks Converging 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 Realnetworks Converging 's lucrative customers.
Aligning sales with marketing
– It come across in the case study RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities can leverage the sales team experience to cultivate customer relationships as Realnetworks Converging is planning to shift buying processes online.
Opportunities RealNetworks, Inc.: Converging Technologies/Expanding Opportunities | 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities are -
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 Realnetworks Converging 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Realnetworks Converging can use these opportunities to build new business models that can help the communities that Realnetworks Converging operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Realnetworks Converging 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 Realnetworks Converging to hire the very best people irrespective of their geographical location.
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 Realnetworks Converging in the consumer business. Now Realnetworks Converging can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Realnetworks Converging can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Realnetworks Converging 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.
Building a culture of innovation
– managers at Realnetworks Converging 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.
Learning at scale
– Online learning technologies has now opened space for Realnetworks Converging 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.
Creating value in data economy
– The success of analytics program of Realnetworks Converging has opened avenues for new revenue streams for the organization in the industry. This can help Realnetworks Converging to build a more holistic ecosystem as suggested in the RealNetworks, Inc.: Converging Technologies/Expanding Opportunities case study. Realnetworks Converging can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Realnetworks Converging 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. Realnetworks Converging 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.
Buying journey improvements
– Realnetworks Converging can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Realnetworks Converging 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, RealNetworks, Inc.: Converging Technologies/Expanding Opportunities, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Realnetworks Converging 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.
Threats RealNetworks, Inc.: Converging Technologies/Expanding Opportunities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study RealNetworks, Inc.: Converging Technologies/Expanding Opportunities are -
High dependence on third party suppliers
– Realnetworks Converging 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
– Realnetworks Converging 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.
Stagnating economy with rate increase
– Realnetworks Converging 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.
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 Realnetworks Converging business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Realnetworks Converging with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Realnetworks Converging
– 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 Realnetworks Converging.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Realnetworks Converging 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities .
Environmental challenges
– Realnetworks Converging 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. Realnetworks Converging can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study RealNetworks, Inc.: Converging Technologies/Expanding Opportunities, Realnetworks Converging 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 .
Consumer confidence and its impact on Realnetworks Converging 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 Realnetworks Converging in the Technology & Operations sector and impact the bottomline of the organization.
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. Realnetworks Converging 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.
Weighted SWOT Analysis of RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 RealNetworks, Inc.: Converging Technologies/Expanding Opportunities 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 Realnetworks Converging needs to make to build a sustainable competitive advantage.
