Online Reverse Auctions: Common Myths versus Evolving Reality SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Online Reverse Auctions: Common Myths versus Evolving Reality
Business-to-Business (B2B) online reverse auctions have become a popular way to source products and services. Due to their relative newness and conflicting reports, however, several myths and misconceptions about them still exist. Investigates the truth behind five common myths associated with reverse auctions and, based on insights obtained from 30 case study companies, provides prescriptive evidence and direction for supply managers regarding how not to fall victim to these myths. Presents useful guidance to achieve the following realities: First, while a lower price is one objective in reverse auctions, it is often not the most important, and can easily be complemented with non-price attributes; Second, commodity items are usually easier candidates for reverse auctions, but non-commodity items can also be bid successfully; Third, reverse auctions can frequently hurt buyer-supplier relationships, but there are many ways to prevent this from happening; Fourth, while first-time bidding events generally result in higher savings, continued cost advantages are possible; and Fifth, even though there is a decline in reverse auctions usage, they are here for the long run.
Swot Analysis of "Online Reverse Auctions: Common Myths versus Evolving Reality" written by Tobias Schoenherr, Vincent A. Mabert includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Auctions Reverse facing as an external strategic factors. Some of the topics covered in Online Reverse Auctions: Common Myths versus Evolving Reality case study are - Strategic Management Strategies, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Online Reverse Auctions: Common Myths versus Evolving Reality casestudy better are - – increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, geopolitical disruptions, there is backlash against globalization, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Online Reverse Auctions: Common Myths versus Evolving Reality
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Online Reverse Auctions: Common Myths versus Evolving Reality case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Auctions Reverse, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Auctions Reverse 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 Online Reverse Auctions: Common Myths versus Evolving Reality can be done for the following purposes –
1. Strategic planning using facts provided in Online Reverse Auctions: Common Myths versus Evolving Reality case study
2. Improving business portfolio management of Auctions Reverse
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 Auctions Reverse
Strengths Online Reverse Auctions: Common Myths versus Evolving Reality | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Auctions Reverse in Online Reverse Auctions: Common Myths versus Evolving Reality Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Auctions Reverse in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Auctions Reverse 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 Online Reverse Auctions: Common Myths versus Evolving Reality HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Auctions Reverse has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Online Reverse Auctions: Common Myths versus Evolving Reality 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.
High switching costs
– The high switching costs that Auctions Reverse 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 Auctions Reverse digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Auctions Reverse 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.
Low bargaining power of suppliers
– Suppliers of Auctions Reverse in the sector have low bargaining power. Online Reverse Auctions: Common Myths versus Evolving Reality has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Auctions Reverse to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Online Reverse Auctions: Common Myths versus Evolving Reality 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.
Ability to lead change in Technology & Operations field
– Auctions Reverse 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 Auctions Reverse in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Auctions Reverse is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Auctions Reverse has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Auctions Reverse 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.
Organizational Resilience of Auctions Reverse
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Auctions Reverse does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Auctions Reverse 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.
Weaknesses Online Reverse Auctions: Common Myths versus Evolving Reality | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Online Reverse Auctions: Common Myths versus Evolving Reality are -
High cash cycle compare to competitors
Auctions Reverse 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.
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 Auctions Reverse supply chain. Even after few cautionary changes mentioned in the HBR case study - Online Reverse Auctions: Common Myths versus Evolving Reality, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Auctions Reverse vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Auctions Reverse 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.
Slow decision making process
– As mentioned earlier in the report, Auctions Reverse 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. Auctions Reverse 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Auctions Reverse 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.
Lack of clear differentiation of Auctions Reverse products
– To increase the profitability and margins on the products, Auctions Reverse needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Online Reverse Auctions: Common Myths versus Evolving Reality, is just above the industry average. Auctions Reverse 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Tobias Schoenherr, Vincent A. Mabert suggests that, Auctions Reverse 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.
Products dominated business model
– Even though Auctions Reverse 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 - Online Reverse Auctions: Common Myths versus Evolving Reality should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Auctions Reverse 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.
Slow to strategic competitive environment developments
– As Online Reverse Auctions: Common Myths versus Evolving Reality HBR case study mentions - Auctions Reverse 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.
Opportunities Online Reverse Auctions: Common Myths versus Evolving Reality | 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 Online Reverse Auctions: Common Myths versus Evolving Reality are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Auctions Reverse 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, Online Reverse Auctions: Common Myths versus Evolving Reality, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Auctions Reverse can use these opportunities to build new business models that can help the communities that Auctions Reverse operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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 Auctions Reverse in the consumer business. Now Auctions Reverse can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Auctions Reverse 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 Online Reverse Auctions: Common Myths versus Evolving Reality - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Auctions Reverse to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Auctions Reverse 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 Auctions Reverse can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Auctions Reverse 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. Auctions Reverse 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 Auctions Reverse 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 Auctions Reverse to hire the very best people irrespective of their geographical location.
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. Auctions Reverse can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Auctions Reverse 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.
Developing new processes and practices
– Auctions Reverse 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Auctions Reverse 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Auctions Reverse can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Online Reverse Auctions: Common Myths versus Evolving Reality External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Online Reverse Auctions: Common Myths versus Evolving Reality are -
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. Auctions Reverse 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, Auctions Reverse 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 Online Reverse Auctions: Common Myths versus Evolving Reality .
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.
High dependence on third party suppliers
– Auctions Reverse 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.
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.
Regulatory challenges
– Auctions Reverse 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Online Reverse Auctions: Common Myths versus Evolving Reality, Auctions Reverse 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 .
Technology acceleration in Forth Industrial Revolution
– Auctions Reverse has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Auctions Reverse 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.
Stagnating economy with rate increase
– Auctions Reverse 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Auctions Reverse 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.
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 Auctions Reverse in the Technology & Operations sector and impact the bottomline of the organization.
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 Auctions Reverse business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Auctions Reverse is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Online Reverse Auctions: Common Myths versus Evolving Reality 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 Online Reverse Auctions: Common Myths versus Evolving Reality 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 Online Reverse Auctions: Common Myths versus Evolving Reality 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 Online Reverse Auctions: Common Myths versus Evolving Reality 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 Online Reverse Auctions: Common Myths versus Evolving Reality 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 Auctions Reverse needs to make to build a sustainable competitive advantage.
