Case Study Description of ABC Shipyard: The Facility Layout
In October 2014, the chief operating officer of ABC Shipyard was trying to decide how to respond to a request from a renowned marine logistics company for five large naval bulk carriers. The shipyard could manufacture the ships, but with its current layout and throughput, the ships could not be completed within the requested two-year delivery time. A modular approach was necessary to build large and complex products such as ships, complicating the required flow of material between the shops and affecting the spatial resources needed. Could ABC Shipyard's existing facility layout be improved, and would the change increase throughput, allowing the new ships to be built within the required two years? Vijaya Dixit and Jitendra R. Sharma are affiliated with Institute of Management Technology, Nagpur. Piyush Raj is affiliated with National Institute of Industrial Engineering.
Authors :: Vijaya Dixit, Piyush Raj, Jitendra R. Sharma
Swot Analysis of "ABC Shipyard: The Facility Layout" written by Vijaya Dixit, Piyush Raj, Jitendra R. Sharma includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ships Shipyard facing as an external strategic factors. Some of the topics covered in ABC Shipyard: The Facility Layout case study are - Strategic Management Strategies, Presentations and Technology & Operations.
Some of the macro environment factors that can be used to understand the ABC Shipyard: The Facility Layout casestudy better are - – increasing commodity prices, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation,
supply chains are disrupted by pandemic , increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of ABC Shipyard: The Facility Layout
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ABC Shipyard: The Facility Layout case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ships Shipyard, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ships Shipyard 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 ABC Shipyard: The Facility Layout can be done for the following purposes –
1. Strategic planning using facts provided in ABC Shipyard: The Facility Layout case study
2. Improving business portfolio management of Ships Shipyard
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 Ships Shipyard
Strengths ABC Shipyard: The Facility Layout | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ships Shipyard in ABC Shipyard: The Facility Layout Harvard Business Review case study are -
Ability to lead change in Technology & Operations field
– Ships Shipyard 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 Ships Shipyard in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Ships Shipyard 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.
Superior customer experience
– The customer experience strategy of Ships Shipyard in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Ships Shipyard has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ships Shipyard to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Ships Shipyard has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ships Shipyard 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.
Low bargaining power of suppliers
– Suppliers of Ships Shipyard in the sector have low bargaining power. ABC Shipyard: The Facility Layout has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ships Shipyard to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Technology & Operations industry
– ABC Shipyard: The Facility Layout firm has clearly differentiated products in the market place. This has enabled Ships Shipyard to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Ships Shipyard to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Ships Shipyard 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.
Organizational Resilience of Ships Shipyard
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ships Shipyard does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Ships Shipyard digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ships Shipyard 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.
Operational resilience
– The operational resilience strategy in the ABC Shipyard: The Facility Layout 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.
Training and development
– Ships Shipyard has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in ABC Shipyard: The Facility Layout 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.
Weaknesses ABC Shipyard: The Facility Layout | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ABC Shipyard: The Facility Layout are -
Slow decision making process
– As mentioned earlier in the report, Ships Shipyard 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. Ships Shipyard 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.
Products dominated business model
– Even though Ships Shipyard has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - ABC Shipyard: The Facility Layout should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Ships Shipyard 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 ABC Shipyard: The Facility Layout HBR case study mentions - Ships Shipyard 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.
No frontier risks strategy
– After analyzing the HBR case study ABC Shipyard: The Facility Layout, 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Vijaya Dixit, Piyush Raj, Jitendra R. Sharma suggests that, Ships Shipyard 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
Ships Shipyard 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.
Interest costs
– Compare to the competition, Ships Shipyard 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.
High operating costs
– Compare to the competitors, firm in the HBR case study ABC Shipyard: The Facility Layout 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 Ships Shipyard '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 Ships Shipyard supply chain. Even after few cautionary changes mentioned in the HBR case study - ABC Shipyard: The Facility Layout, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ships Shipyard vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Ships Shipyard has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities ABC Shipyard: The Facility Layout | 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 ABC Shipyard: The Facility Layout 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 Ships Shipyard 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.
Using analytics as competitive advantage
– Ships Shipyard 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 ABC Shipyard: The Facility Layout - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ships Shipyard to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ships Shipyard is facing challenges because of the dominance of functional experts in the organization. ABC Shipyard: The Facility Layout case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Ships Shipyard 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.
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. Ships Shipyard can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Ships Shipyard can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ABC Shipyard: The Facility Layout 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.
Creating value in data economy
– The success of analytics program of Ships Shipyard has opened avenues for new revenue streams for the organization in the industry. This can help Ships Shipyard to build a more holistic ecosystem as suggested in the ABC Shipyard: The Facility Layout case study. Ships Shipyard can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ships Shipyard can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Ships Shipyard in the consumer business. Now Ships Shipyard can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Ships Shipyard 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ships Shipyard 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ships Shipyard can use these opportunities to build new business models that can help the communities that Ships Shipyard 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 Ships Shipyard 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 Ships Shipyard to hire the very best people irrespective of their geographical location.
Threats ABC Shipyard: The Facility Layout External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ABC Shipyard: The Facility Layout 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 Ships Shipyard 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. Ships Shipyard can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Ships Shipyard 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.
Shortening product life cycle
– it is one of the major threat that Ships Shipyard 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 Ships Shipyard in the Technology & Operations sector and impact the bottomline of the organization.
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. Ships Shipyard needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Ships Shipyard.
High dependence on third party suppliers
– Ships Shipyard 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.
Environmental challenges
– Ships Shipyard 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. Ships Shipyard can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ships Shipyard 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 ABC Shipyard: The Facility Layout .
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. Ships Shipyard 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.
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.
Stagnating economy with rate increase
– Ships Shipyard 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.
Weighted SWOT Analysis of ABC Shipyard: The Facility Layout 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 ABC Shipyard: The Facility Layout 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 ABC Shipyard: The Facility Layout 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 ABC Shipyard: The Facility Layout 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 ABC Shipyard: The Facility Layout 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 Ships Shipyard needs to make to build a sustainable competitive advantage.
