Explores the usage and technology of instant messaging (IM). IM enables two or more users to communicate almost instantaneously over the Internet with short, private text messages. Most IM service providers chose to remain proprietary and, therefore, a user of most IM services could not communicate with a user employing a different IM service: both users had to use the same service to communicate. Although AOL had dominated the consumer IM market since its launch in 1997, Microsoft and Yahoo! seemed to be closing in on AOL's lead. Consumers complained about the lack of interoperability between IM services. In addition to being used in the home, IM was becoming more common in the workplace. According to IDC, about 76.3 million people worldwide used IM at work in 2003. The majority of users (about 53.9 million) used the consumer IM services offered by AOL, Microsoft, and Yahoo! The other 22.4 million used services purchased by their employers. In 2004, there were two competing standards in the enterprise IM arena: Extensible Messaging and Presence Protocol (XMPP) and the Session Initiation Protocol for Instant Messaging and Presence Leveraging Extensions (SIMPLE).
Swot Analysis of "Instant Messaging" written by David B. Yoffie, Debbie Freier includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Im Messaging facing as an external strategic factors. Some of the topics covered in Instant Messaging case study are - Strategic Management Strategies, Internet, IT, Networking and Technology & Operations.
Some of the macro environment factors that can be used to understand the Instant Messaging casestudy better are - – talent flight as more people leaving formal jobs, increasing energy prices, increasing transportation and logistics costs, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%,
technology disruption, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Instant Messaging
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Instant Messaging case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Im Messaging, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Im Messaging 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 Instant Messaging can be done for the following purposes –
1. Strategic planning using facts provided in Instant Messaging case study
2. Improving business portfolio management of Im Messaging
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 Im Messaging
Strengths Instant Messaging | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Im Messaging in Instant Messaging Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Im Messaging 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.
High brand equity
– Im Messaging has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Im Messaging to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Im Messaging has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Instant Messaging 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.
Strong track record of project management
– Im Messaging 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 recruit top talent
– Im Messaging is one of the leading recruiters in the industry. Managers in the Instant Messaging are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Im Messaging 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.
Sustainable margins compare to other players in Technology & Operations industry
– Instant Messaging firm has clearly differentiated products in the market place. This has enabled Im Messaging to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Im Messaging to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Instant Messaging 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.
Successful track record of launching new products
– Im Messaging has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Im Messaging 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.
Innovation driven organization
– Im Messaging is one of the most innovative firm in sector. Manager in Instant Messaging Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Im Messaging digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Im Messaging 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.
Effective Research and Development (R&D)
– Im Messaging 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 Instant Messaging - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Instant Messaging | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Instant Messaging are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Instant Messaging 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 Im Messaging has relatively successful track record of launching new products.
High cash cycle compare to competitors
Im Messaging 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.
Lack of clear differentiation of Im Messaging products
– To increase the profitability and margins on the products, Im Messaging needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Im Messaging 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Instant Messaging, in the dynamic environment Im Messaging has struggled to respond to the nimble upstart competition. Im Messaging has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Im Messaging 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.
Aligning sales with marketing
– It come across in the case study Instant Messaging 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 Instant Messaging can leverage the sales team experience to cultivate customer relationships as Im Messaging is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Instant Messaging 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 Im Messaging 's lucrative customers.
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 Im Messaging supply chain. Even after few cautionary changes mentioned in the HBR case study - Instant Messaging, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Im Messaging vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Instant Messaging, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Im Messaging is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Im Messaging needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Im Messaging to focus more on services rather than just following the product oriented approach.
Opportunities Instant Messaging | 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 Instant Messaging are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Im Messaging can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Im Messaging 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 Im Messaging to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Im Messaging has opened avenues for new revenue streams for the organization in the industry. This can help Im Messaging to build a more holistic ecosystem as suggested in the Instant Messaging case study. Im Messaging can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Im Messaging 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, Instant Messaging, 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
– Im Messaging 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.
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. Im Messaging can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Im Messaging can use these opportunities to build new business models that can help the communities that Im Messaging operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Building a culture of innovation
– managers at Im Messaging 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.
Better consumer reach
– The expansion of the 5G network will help Im Messaging to increase its market reach. Im Messaging 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.
Buying journey improvements
– Im Messaging can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Instant Messaging 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.
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 Im Messaging in the consumer business. Now Im Messaging can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Im Messaging 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
– Im Messaging 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.
Threats Instant Messaging External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Instant Messaging are -
Increasing wage structure of Im Messaging
– 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 Im Messaging.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Im Messaging with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Im Messaging in the Technology & Operations sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Im Messaging 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 Instant Messaging .
Technology acceleration in Forth Industrial Revolution
– Im Messaging has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Im Messaging 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 Im Messaging is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Im Messaging.
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. Im Messaging 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.
Stagnating economy with rate increase
– Im Messaging 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 Im Messaging 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. Im Messaging can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Consumer confidence and its impact on Im Messaging 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.
Weighted SWOT Analysis of Instant Messaging 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 Instant Messaging 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 Instant Messaging 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 Instant Messaging 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 Instant Messaging 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 Im Messaging needs to make to build a sustainable competitive advantage.