In 2005, Teruo Yabe is asked to revive Tessei, the 669-person JR-East subsidiary responsible for cleaning its Shinkansen (""bullet"") trains. Operational mistakes, customer complaints, safety issues, and employee turnover are at or near all-time highs, even as the demands on Tessei continued to grow. Given previous leaders' failed attempts to fix Tessei's problems with increased managerial monitoring and controls, Yabe seeks a creative approach to overcome the motivation, capability, and coordination challenges facing his organization. Like many contemporary leaders, he selects transparency as his tool. He is, however, unique in adopting a highly nuanced approach to implementing transparency. In the process, he not only leads a fantastic organizational turnaround but even helps to make otherwise ""dirty"" work more meaningful for Tessei front-line employees. The case therefore presents students, particularly in leadership, organizational behavior, operations management, and service operations courses, with an opportunity to think through how a well-crafted transparency strategy can act as a powerful leadership tool.
Swot Analysis of "Trouble at Tessei" written by Ethan S. Bernstein, Ryan W. Buell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tessei Yabe facing as an external strategic factors. Some of the topics covered in Trouble at Tessei case study are - Strategic Management Strategies, Leadership, Motivating people, Product development, Supply chain, Transparency and Technology & Operations.
Some of the macro environment factors that can be used to understand the Trouble at Tessei casestudy better are - – there is backlash against globalization, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, increasing transportation and logistics costs,
geopolitical disruptions, increasing energy prices, etc
Introduction to SWOT Analysis of Trouble at Tessei
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Trouble at Tessei case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tessei Yabe, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tessei Yabe 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 Trouble at Tessei can be done for the following purposes –
1. Strategic planning using facts provided in Trouble at Tessei case study
2. Improving business portfolio management of Tessei Yabe
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 Tessei Yabe
Strengths Trouble at Tessei | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tessei Yabe in Trouble at Tessei Harvard Business Review case study are -
High switching costs
– The high switching costs that Tessei Yabe 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.
Low bargaining power of suppliers
– Suppliers of Tessei Yabe in the sector have low bargaining power. Trouble at Tessei has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tessei Yabe to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Tessei Yabe is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Tessei Yabe is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Trouble at Tessei Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Tessei Yabe has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Trouble at Tessei 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.
Diverse revenue streams
– Tessei Yabe is present in almost all the verticals within the industry. This has provided firm in Trouble at Tessei 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.
Sustainable margins compare to other players in Technology & Operations industry
– Trouble at Tessei firm has clearly differentiated products in the market place. This has enabled Tessei Yabe to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Tessei Yabe to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Tessei Yabe has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tessei Yabe 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
– Tessei Yabe is one of the most innovative firm in sector. Manager in Trouble at Tessei 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
– Tessei Yabe 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 Tessei Yabe in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Tessei Yabe 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 Ethan S. Bernstein, Ryan W. Buell 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.
Ability to recruit top talent
– Tessei Yabe is one of the leading recruiters in the industry. Managers in the Trouble at Tessei are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Trouble at Tessei 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 Trouble at Tessei | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Trouble at Tessei are -
High operating costs
– Compare to the competitors, firm in the HBR case study Trouble at Tessei 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 Tessei Yabe 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Tessei Yabe needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Trouble at Tessei HBR case study mentions - Tessei Yabe 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 Tessei Yabe is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Tessei Yabe needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tessei Yabe to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Trouble at Tessei, it seems that the employees of Tessei Yabe 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.
Aligning sales with marketing
– It come across in the case study Trouble at Tessei 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 Trouble at Tessei can leverage the sales team experience to cultivate customer relationships as Tessei Yabe is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Ethan S. Bernstein, Ryan W. Buell suggests that, Tessei Yabe 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.
Slow decision making process
– As mentioned earlier in the report, Tessei Yabe 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. Tessei Yabe 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Trouble at Tessei 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 Tessei Yabe has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Tessei Yabe 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Trouble at Tessei, is just above the industry average. Tessei Yabe 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.
Opportunities Trouble at Tessei | 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 Trouble at Tessei are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tessei Yabe 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.
Buying journey improvements
– Tessei Yabe can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Trouble at Tessei 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.
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. Tessei Yabe 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. Tessei Yabe 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tessei Yabe 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 Tessei Yabe to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tessei Yabe can use these opportunities to build new business models that can help the communities that Tessei Yabe operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Manufacturing automation
– Tessei Yabe 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.
Leveraging digital technologies
– Tessei Yabe 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 Tessei Yabe 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.
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 Tessei Yabe in the consumer business. Now Tessei Yabe can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Tessei Yabe 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 Trouble at Tessei - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tessei Yabe to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Tessei Yabe to increase its market reach. Tessei Yabe 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
– Tessei Yabe 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tessei Yabe 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.
Threats Trouble at Tessei External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Trouble at Tessei are -
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 Tessei Yabe business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Tessei Yabe has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Tessei Yabe 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.
Increasing wage structure of Tessei Yabe
– 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 Tessei Yabe.
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 Tessei Yabe.
Shortening product life cycle
– it is one of the major threat that Tessei Yabe is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Tessei Yabe in the Technology & Operations sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Tessei Yabe 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.
Environmental challenges
– Tessei Yabe 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. Tessei Yabe can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tessei Yabe 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. Tessei Yabe needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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. Tessei Yabe 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tessei Yabe 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 Trouble at Tessei .
Regulatory challenges
– Tessei Yabe 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.
Weighted SWOT Analysis of Trouble at Tessei 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 Trouble at Tessei 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 Trouble at Tessei 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 Trouble at Tessei 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 Trouble at Tessei 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 Tessei Yabe needs to make to build a sustainable competitive advantage.