Integrating Avocent Corporation into Emerson Network Power SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Integrating Avocent Corporation into Emerson Network Power
This case reviews Emerson Electric's proposed acquisition of Avocent Corporation in 2009. The focus of this case is how a technology company such as Avocent, with a dramatically different business model compared to its acquirer, should be integrated into a large, multi-industry conglomerate like Emerson. Underlying this managerial question is a broader strategy question-under what conditions should the acquiring firm A modify its own business model and/or fold itself into its acquisition B, rather than trying to integrate B into the old business model? The case also touches upon themes related to the management of human capital during the acquisition of a technology startup.
Authors :: Prithwiraj Choudhury, Vincent M. Servello
Swot Analysis of "Integrating Avocent Corporation into Emerson Network Power" written by Prithwiraj Choudhury, Vincent M. Servello includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Avocent Emerson facing as an external strategic factors. Some of the topics covered in Integrating Avocent Corporation into Emerson Network Power case study are - Strategic Management Strategies, and Technology & Operations.
Some of the macro environment factors that can be used to understand the Integrating Avocent Corporation into Emerson Network Power casestudy better are - – central banks are concerned over increasing inflation, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Integrating Avocent Corporation into Emerson Network Power
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Integrating Avocent Corporation into Emerson Network Power case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Avocent Emerson, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Avocent Emerson 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 Integrating Avocent Corporation into Emerson Network Power can be done for the following purposes –
1. Strategic planning using facts provided in Integrating Avocent Corporation into Emerson Network Power case study
2. Improving business portfolio management of Avocent Emerson
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 Avocent Emerson
Strengths Integrating Avocent Corporation into Emerson Network Power | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Avocent Emerson in Integrating Avocent Corporation into Emerson Network Power Harvard Business Review case study are -
High switching costs
– The high switching costs that Avocent Emerson 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.
Training and development
– Avocent Emerson has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Integrating Avocent Corporation into Emerson Network Power 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 brand equity
– Avocent Emerson has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Avocent Emerson to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Avocent Emerson in the sector have low bargaining power. Integrating Avocent Corporation into Emerson Network Power has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Avocent Emerson to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Integrating Avocent Corporation into Emerson Network Power 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.
Superior customer experience
– The customer experience strategy of Avocent Emerson in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Technology & Operations industry
– Integrating Avocent Corporation into Emerson Network Power firm has clearly differentiated products in the market place. This has enabled Avocent Emerson to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Avocent Emerson to invest into research and development (R&D) and innovation.
Organizational Resilience of Avocent Emerson
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Avocent Emerson does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Avocent Emerson has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Integrating Avocent Corporation into Emerson Network Power - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Technology & Operations field
– Avocent Emerson 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 Avocent Emerson 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
– Avocent Emerson is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Avocent Emerson is one of the leading recruiters in the industry. Managers in the Integrating Avocent Corporation into Emerson Network Power are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Integrating Avocent Corporation into Emerson Network Power | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Integrating Avocent Corporation into Emerson Network Power are -
Aligning sales with marketing
– It come across in the case study Integrating Avocent Corporation into Emerson Network Power 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 Integrating Avocent Corporation into Emerson Network Power can leverage the sales team experience to cultivate customer relationships as Avocent Emerson is planning to shift buying processes online.
Products dominated business model
– Even though Avocent Emerson 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 - Integrating Avocent Corporation into Emerson Network Power should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Avocent Emerson is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Integrating Avocent Corporation into Emerson Network Power can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Integrating Avocent Corporation into Emerson Network Power, is just above the industry average. Avocent Emerson 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.
Skills based hiring
– The stress on hiring functional specialists at Avocent Emerson 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.
Interest costs
– Compare to the competition, Avocent Emerson 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 decision making process
– As mentioned earlier in the report, Avocent Emerson 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. Avocent Emerson even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on 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 Avocent Emerson supply chain. Even after few cautionary changes mentioned in the HBR case study - Integrating Avocent Corporation into Emerson Network Power, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Avocent Emerson vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Avocent Emerson is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Avocent Emerson needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Avocent Emerson to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Avocent Emerson 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Integrating Avocent Corporation into Emerson Network Power 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 Avocent Emerson 's lucrative customers.
Opportunities Integrating Avocent Corporation into Emerson Network Power | 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 Integrating Avocent Corporation into Emerson Network Power are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Avocent Emerson 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.
Better consumer reach
– The expansion of the 5G network will help Avocent Emerson to increase its market reach. Avocent Emerson will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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. Avocent Emerson 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. Avocent Emerson 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.
Manufacturing automation
– Avocent Emerson 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.
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 Avocent Emerson 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Avocent Emerson 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Avocent Emerson is facing challenges because of the dominance of functional experts in the organization. Integrating Avocent Corporation into Emerson Network Power 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.
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 Avocent Emerson in the consumer business. Now Avocent Emerson can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Avocent Emerson 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.
Using analytics as competitive advantage
– Avocent Emerson 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 Integrating Avocent Corporation into Emerson Network Power - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Avocent Emerson to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Avocent Emerson can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Integrating Avocent Corporation into Emerson Network Power 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 Avocent Emerson has opened avenues for new revenue streams for the organization in the industry. This can help Avocent Emerson to build a more holistic ecosystem as suggested in the Integrating Avocent Corporation into Emerson Network Power case study. Avocent Emerson 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. Avocent Emerson can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Integrating Avocent Corporation into Emerson Network Power External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Integrating Avocent Corporation into Emerson Network Power are -
Increasing wage structure of Avocent Emerson
– 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 Avocent Emerson.
Stagnating economy with rate increase
– Avocent Emerson 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Avocent Emerson with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Avocent Emerson business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Avocent Emerson 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.
Consumer confidence and its impact on Avocent Emerson 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.
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.
Environmental challenges
– Avocent Emerson 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. Avocent Emerson can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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. Avocent Emerson 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 Integrating Avocent Corporation into Emerson Network Power, Avocent Emerson 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Avocent Emerson 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 Avocent Emerson in the Technology & Operations sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Avocent Emerson 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.
Weighted SWOT Analysis of Integrating Avocent Corporation into Emerson Network Power 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 Integrating Avocent Corporation into Emerson Network Power 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 Integrating Avocent Corporation into Emerson Network Power 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 Integrating Avocent Corporation into Emerson Network Power 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 Integrating Avocent Corporation into Emerson Network Power 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 Avocent Emerson needs to make to build a sustainable competitive advantage.
