Madison Avenue: Digital Media Services (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Madison Avenue: Digital Media Services (A)
Introduces a "new-economy" company, Madison Avenue, facing challenges of mega-success. In the two years since its founding, the company's revenues have grown from zero to nearly $30 million, head count has swollen from the start-up handful to more than 200, and the client base has gone from one to dozens. In the company's short life, Madison Avenue's managers have already tried four organizational forms to more efficiently and reliably meet the needs of its customers. Despite the intense, ongoing efforts to find an appropriate organizational form, employees struggle to keep pace with ever-increasing demands. Ted Samson, an implementation engineer at Madison Avenue and a reservist in the Marine Corps, expresses a collective frustration in an e-mail to his boss. The case contains a history of Madison Avenue, starting with its serendipitous creation as an outgrowth of a family business's efforts to advertise on the Web and the collateral development of an expertise in Web advertising and the evolution of the company's business model. Gives a detailed explanation of the internal processes by which Madison Avenue creates, implements, and optimizes online advertising campaigns for its clients. The case asks students to analyze how Madison Avenue currently does its work and then to design a "target condition"--based upon analysis of the company's "current condition"--of how Madison Avenue's internal processes might be redesigned in order to produce higher quality ad campaigns, at less cost, with shorter lead-times, and with greater flexibility in responding to customer needs.
Swot Analysis of "Madison Avenue: Digital Media Services (A)" written by Steven J. Spear, Jeremy B. Dann includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Madison Avenue facing as an external strategic factors. Some of the topics covered in Madison Avenue: Digital Media Services (A) case study are - Strategic Management Strategies, Growth strategy, Internet, Marketing, Organizational structure, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Madison Avenue: Digital Media Services (A) casestudy better are - – increasing commodity prices, geopolitical disruptions, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Madison Avenue: Digital Media Services (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Madison Avenue: Digital Media Services (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Madison Avenue, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Madison Avenue 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 Madison Avenue: Digital Media Services (A) can be done for the following purposes –
1. Strategic planning using facts provided in Madison Avenue: Digital Media Services (A) case study
2. Improving business portfolio management of Madison Avenue
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 Madison Avenue
Strengths Madison Avenue: Digital Media Services (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Madison Avenue in Madison Avenue: Digital Media Services (A) Harvard Business Review case study are -
Organizational Resilience of Madison Avenue
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Madison Avenue does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Madison Avenue has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Madison Avenue to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Madison Avenue is present in almost all the verticals within the industry. This has provided firm in Madison Avenue: Digital Media Services (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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Madison Avenue digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Madison Avenue 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.
Highly skilled collaborators
– Madison Avenue 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 Madison Avenue: Digital Media Services (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Madison Avenue is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Madison Avenue in the sector have low bargaining power. Madison Avenue: Digital Media Services (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Madison Avenue to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Madison Avenue is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Madison Avenue is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Madison Avenue: Digital Media Services (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Madison Avenue has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Madison Avenue 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.
Superior customer experience
– The customer experience strategy of Madison Avenue in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Madison Avenue is one of the leading recruiters in the industry. Managers in the Madison Avenue: Digital Media Services (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Madison Avenue 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 Madison Avenue: Digital Media Services (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Madison Avenue: Digital Media Services (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Madison Avenue: Digital Media Services (A) are -
Aligning sales with marketing
– It come across in the case study Madison Avenue: Digital Media Services (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 Madison Avenue: Digital Media Services (A) can leverage the sales team experience to cultivate customer relationships as Madison Avenue is planning to shift buying processes online.
High cash cycle compare to competitors
Madison Avenue 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 operating costs
– Compare to the competitors, firm in the HBR case study Madison Avenue: Digital Media Services (A) 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 Madison Avenue 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Madison Avenue 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 to strategic competitive environment developments
– As Madison Avenue: Digital Media Services (A) HBR case study mentions - Madison Avenue 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, Madison Avenue 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Steven J. Spear, Jeremy B. Dann suggests that, Madison Avenue is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High 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 Madison Avenue supply chain. Even after few cautionary changes mentioned in the HBR case study - Madison Avenue: Digital Media Services (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Madison Avenue vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Madison Avenue products
– To increase the profitability and margins on the products, Madison Avenue needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Madison Avenue 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Madison Avenue: Digital Media Services (A), is just above the industry average. Madison Avenue 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 Madison Avenue: Digital Media Services (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 Madison Avenue: Digital Media Services (A) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Madison Avenue can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Madison Avenue 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Madison Avenue can use these opportunities to build new business models that can help the communities that Madison Avenue operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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. Madison Avenue 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. Madison Avenue 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.
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 Madison Avenue 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.
Learning at scale
– Online learning technologies has now opened space for Madison Avenue 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.
Buying journey improvements
– Madison Avenue can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Madison Avenue: Digital Media Services (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.
Better consumer reach
– The expansion of the 5G network will help Madison Avenue to increase its market reach. Madison Avenue 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Madison Avenue 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 Madison Avenue to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Madison Avenue 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Madison Avenue 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.
Building a culture of innovation
– managers at Madison Avenue 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.
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 Madison Avenue in the consumer business. Now Madison Avenue can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Madison Avenue: Digital Media Services (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Madison Avenue: Digital Media Services (A) are -
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 Madison Avenue.
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.
Technology acceleration in Forth Industrial Revolution
– Madison Avenue has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Madison Avenue 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.
Regulatory challenges
– Madison Avenue 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.
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 Madison Avenue business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Madison Avenue 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 Madison Avenue with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Madison Avenue 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.
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. Madison Avenue can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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. Madison Avenue 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 Madison Avenue
– 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 Madison Avenue.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Madison Avenue 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.
Weighted SWOT Analysis of Madison Avenue: Digital Media Services (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 Madison Avenue: Digital Media Services (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 Madison Avenue: Digital Media Services (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 Madison Avenue: Digital Media Services (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 Madison Avenue: Digital Media Services (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 Madison Avenue needs to make to build a sustainable competitive advantage.