First Virtual Holdings, Inc. (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of First Virtual Holdings, Inc. (A)
First Virtual Holdings, Inc. (FVHI) is an Internet payments company based in San Diego, CA. The company developed a technology by which consumers can securely purchase goods and services over the Internet. Each participating consumer is provided with a "VirtualPIN" number, which is used in place of a credit card number to make purchases from participating online vendors. The vendors forward the consumer's VirtualPIN number, along with the amount of the transaction to FVHI. FVHI then sends an e-mail to the consumer asking for confirmation of the transaction. When confirmation is received, FVHI processes the transaction and pays the vendor. The technology ensures that a consumer's credit card number is never sent across the Internet. The system is secure but embodies a certain amount of inconvenience as each purchase required two steps. FVHI is a good example of a company with a good technology whose main challenge is to gain the critical mass of users necessary to make the system viable. The company faces strong competition from established industry players such as software developers, banks, and credit card companies. In addition, continued consumer reluctance to embrace online commerce has hampered the company's progress.
Swot Analysis of "First Virtual Holdings, Inc. (A)" written by Sid L. Huff, Mike Wade includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fvhi Virtualpin facing as an external strategic factors. Some of the topics covered in First Virtual Holdings, Inc. (A) case study are - Strategic Management Strategies, Security & privacy and Technology & Operations.
Some of the macro environment factors that can be used to understand the First Virtual Holdings, Inc. (A) casestudy better are - – talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, technology disruption, increasing energy prices,
geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of First Virtual Holdings, Inc. (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in First Virtual Holdings, Inc. (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fvhi Virtualpin, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fvhi Virtualpin 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 First Virtual Holdings, Inc. (A) can be done for the following purposes –
1. Strategic planning using facts provided in First Virtual Holdings, Inc. (A) case study
2. Improving business portfolio management of Fvhi Virtualpin
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 Fvhi Virtualpin
Strengths First Virtual Holdings, Inc. (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fvhi Virtualpin in First Virtual Holdings, Inc. (A) Harvard Business Review case study are -
Analytics focus
– Fvhi Virtualpin 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 Sid L. Huff, Mike Wade 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.
Operational resilience
– The operational resilience strategy in the First Virtual Holdings, Inc. (A) 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.
High switching costs
– The high switching costs that Fvhi Virtualpin 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.
Ability to lead change in Technology & Operations field
– Fvhi Virtualpin 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 Fvhi Virtualpin in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Fvhi Virtualpin in the sector have low bargaining power. First Virtual Holdings, Inc. (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fvhi Virtualpin to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Fvhi Virtualpin in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Fvhi Virtualpin has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in First Virtual Holdings, Inc. (A) 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.
Organizational Resilience of Fvhi Virtualpin
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fvhi Virtualpin does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Fvhi Virtualpin has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fvhi Virtualpin to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Fvhi Virtualpin is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Fvhi Virtualpin digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fvhi Virtualpin 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.
Diverse revenue streams
– Fvhi Virtualpin is present in almost all the verticals within the industry. This has provided firm in First Virtual Holdings, Inc. (A) 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.
Weaknesses First Virtual Holdings, Inc. (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of First Virtual Holdings, Inc. (A) are -
Products dominated business model
– Even though Fvhi Virtualpin 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 - First Virtual Holdings, Inc. (A) should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study First Virtual Holdings, Inc. (A) 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 First Virtual Holdings, Inc. (A) can leverage the sales team experience to cultivate customer relationships as Fvhi Virtualpin is planning to shift buying processes online.
Lack of clear differentiation of Fvhi Virtualpin products
– To increase the profitability and margins on the products, Fvhi Virtualpin needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Fvhi Virtualpin is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Fvhi Virtualpin needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fvhi Virtualpin to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study First Virtual Holdings, Inc. (A), 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, Sid L. Huff, Mike Wade suggests that, Fvhi Virtualpin 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.
Interest costs
– Compare to the competition, Fvhi Virtualpin 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 cash cycle compare to competitors
Fvhi Virtualpin 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fvhi Virtualpin is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study First Virtual Holdings, Inc. (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Fvhi Virtualpin 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 First Virtual Holdings, Inc. (A), is just above the industry average. Fvhi Virtualpin 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 First Virtual Holdings, Inc. (A) | 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 First Virtual Holdings, Inc. (A) are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Fvhi Virtualpin 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.
Using analytics as competitive advantage
– Fvhi Virtualpin 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 First Virtual Holdings, Inc. (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fvhi Virtualpin to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Fvhi Virtualpin 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.
Creating value in data economy
– The success of analytics program of Fvhi Virtualpin has opened avenues for new revenue streams for the organization in the industry. This can help Fvhi Virtualpin to build a more holistic ecosystem as suggested in the First Virtual Holdings, Inc. (A) case study. Fvhi Virtualpin can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Fvhi Virtualpin in the consumer business. Now Fvhi Virtualpin can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Fvhi Virtualpin can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. First Virtual Holdings, Inc. (A) 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fvhi Virtualpin can use these opportunities to build new business models that can help the communities that Fvhi Virtualpin operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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 Fvhi Virtualpin 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.
Manufacturing automation
– Fvhi Virtualpin 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fvhi Virtualpin 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 Fvhi Virtualpin to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fvhi Virtualpin 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 Fvhi Virtualpin 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.
Learning at scale
– Online learning technologies has now opened space for Fvhi Virtualpin to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats First Virtual Holdings, Inc. (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study First Virtual Holdings, Inc. (A) are -
Technology acceleration in Forth Industrial Revolution
– Fvhi Virtualpin has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Fvhi Virtualpin 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.
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 Fvhi Virtualpin business can come under increasing regulations regarding data privacy, data security, etc.
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.
Increasing wage structure of Fvhi Virtualpin
– 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 Fvhi Virtualpin.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fvhi Virtualpin 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.
Consumer confidence and its impact on Fvhi Virtualpin 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.
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 Fvhi Virtualpin.
Shortening product life cycle
– it is one of the major threat that Fvhi Virtualpin is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Fvhi Virtualpin 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fvhi Virtualpin with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Fvhi Virtualpin can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study First Virtual Holdings, Inc. (A), Fvhi Virtualpin 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fvhi Virtualpin 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 First Virtual Holdings, Inc. (A) .
Weighted SWOT Analysis of First Virtual Holdings, Inc. (A) 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 First Virtual Holdings, Inc. (A) 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 First Virtual Holdings, Inc. (A) 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 First Virtual Holdings, Inc. (A) 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 First Virtual Holdings, Inc. (A) 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 Fvhi Virtualpin needs to make to build a sustainable competitive advantage.
