Xsigo had started on strong footing. Krishnamurthi was a former top Juniper Networks engineer and he had founded Xsigo with his two brothers, one of whom was also a former Juniper engineer, while the other had worked at Sun Microsystems. Right off the bat, the company garnered the attention of top Silicon Valley venture capitalists such as Kleiner Perkins Caufield & Byers and Greylock Partners, raising $10 million in its first round. Even Juniper board members were eager to invest in Xsigo once hearing about the company. But just six months after the company launched, Xsigo had to "reset" its technology. Other technology issues plagued the start-up as well such as skewed product timing estimates and the requirement for unplanned product features to be added. Amidst the technology challenges, Krishnamurthi's father was diagnosed with Leukemia, affecting his and his brothers' attention to the company. All of these issues caused the company to delay its product launch. As the company was gaining some traction, the team was dealt a third blow-a new competitor called Nuova, backed by Cisco Systems, had begun poaching Xsigo's engineers, allegedly offering them $1 million to $1.5 million guaranteed payouts. Krishnamurthi anxiously waited in his office for his senior team to arrive. They had to put their heads together to determine how to get the product development back on schedule, given the latest damage caused by the hemorrhaging of Xsigo's engineers. Given the company's latest setback, Krishnamurthi also needed to determine how best to communicate with Xsigo's Board and its investors.
Authors :: Victoria Chang, Mark Leslie, Andrew Rachleff
Swot Analysis of "Xsigo Systems" written by Victoria Chang, Mark Leslie, Andrew Rachleff includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xsigo Krishnamurthi facing as an external strategic factors. Some of the topics covered in Xsigo Systems case study are - Strategic Management Strategies, Leadership, Product development, Technology and Technology & Operations.
Some of the macro environment factors that can be used to understand the Xsigo Systems casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing energy prices, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, increasing transportation and logistics costs, geopolitical disruptions, increasing commodity prices,
wage bills are increasing, increasing government debt because of Covid-19 spendings, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Xsigo Systems case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xsigo Krishnamurthi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xsigo Krishnamurthi 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 Xsigo Systems can be done for the following purposes –
1. Strategic planning using facts provided in Xsigo Systems case study
2. Improving business portfolio management of Xsigo Krishnamurthi
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 Xsigo Krishnamurthi
Strengths Xsigo Systems | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xsigo Krishnamurthi in Xsigo Systems Harvard Business Review case study are -
Highly skilled collaborators
– Xsigo Krishnamurthi 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 Xsigo Systems HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Xsigo Krishnamurthi 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 Victoria Chang, Mark Leslie, Andrew Rachleff 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.
Training and development
– Xsigo Krishnamurthi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Xsigo Systems 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.
Ability to lead change in Technology & Operations field
– Xsigo Krishnamurthi 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 Xsigo Krishnamurthi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Xsigo Krishnamurthi is one of the leading recruiters in the industry. Managers in the Xsigo Systems are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Xsigo Krishnamurthi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xsigo Krishnamurthi 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.
High switching costs
– The high switching costs that Xsigo Krishnamurthi 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.
High brand equity
– Xsigo Krishnamurthi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xsigo Krishnamurthi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Xsigo Krishnamurthi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xsigo Krishnamurthi 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.
Sustainable margins compare to other players in Technology & Operations industry
– Xsigo Systems firm has clearly differentiated products in the market place. This has enabled Xsigo Krishnamurthi to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Xsigo Krishnamurthi to invest into research and development (R&D) and innovation.
Organizational Resilience of Xsigo Krishnamurthi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Xsigo Krishnamurthi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Xsigo Krishnamurthi in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Xsigo Systems | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Xsigo Systems are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xsigo Krishnamurthi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Xsigo Systems can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Xsigo Systems, in the dynamic environment Xsigo Krishnamurthi has struggled to respond to the nimble upstart competition. Xsigo Krishnamurthi 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, Xsigo Krishnamurthi 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.
Slow to strategic competitive environment developments
– As Xsigo Systems HBR case study mentions - Xsigo Krishnamurthi 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Xsigo Krishnamurthi 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.
Aligning sales with marketing
– It come across in the case study Xsigo Systems 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 Xsigo Systems can leverage the sales team experience to cultivate customer relationships as Xsigo Krishnamurthi is planning to shift buying processes online.
Lack of clear differentiation of Xsigo Krishnamurthi products
– To increase the profitability and margins on the products, Xsigo Krishnamurthi needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Victoria Chang, Mark Leslie, Andrew Rachleff suggests that, Xsigo Krishnamurthi 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Xsigo Systems, is just above the industry average. Xsigo Krishnamurthi 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 cash cycle compare to competitors
Xsigo Krishnamurthi 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Xsigo Systems, it seems that the employees of Xsigo Krishnamurthi 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.
Opportunities Xsigo Systems | 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 Xsigo Systems are -
Leveraging digital technologies
– Xsigo Krishnamurthi 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.
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. Xsigo Krishnamurthi 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. Xsigo Krishnamurthi 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xsigo Krishnamurthi 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xsigo Krishnamurthi 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 Xsigo Krishnamurthi to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xsigo Krishnamurthi is facing challenges because of the dominance of functional experts in the organization. Xsigo Systems 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.
Buying journey improvements
– Xsigo Krishnamurthi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Xsigo Systems 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.
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 Xsigo Krishnamurthi 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.
Creating value in data economy
– The success of analytics program of Xsigo Krishnamurthi has opened avenues for new revenue streams for the organization in the industry. This can help Xsigo Krishnamurthi to build a more holistic ecosystem as suggested in the Xsigo Systems case study. Xsigo Krishnamurthi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Xsigo Krishnamurthi 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xsigo Krishnamurthi 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, Xsigo Systems, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xsigo Krishnamurthi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Xsigo Krishnamurthi 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.
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. Xsigo Krishnamurthi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Xsigo Systems External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Xsigo Systems are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Xsigo Krishnamurthi 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 Xsigo Systems .
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 Xsigo Krishnamurthi 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 Xsigo Krishnamurthi is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Xsigo Systems, Xsigo Krishnamurthi 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 .
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 Xsigo Krishnamurthi.
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. Xsigo Krishnamurthi 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 wage structure of Xsigo Krishnamurthi
– 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 Xsigo Krishnamurthi.
Environmental challenges
– Xsigo Krishnamurthi 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. Xsigo Krishnamurthi can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xsigo Krishnamurthi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Xsigo Krishnamurthi 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.
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. Xsigo Krishnamurthi needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Xsigo Systems 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 Xsigo Systems 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 Xsigo Systems 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 Xsigo Systems 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 Xsigo Systems 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 Xsigo Krishnamurthi needs to make to build a sustainable competitive advantage.
