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Is Your Company Ready for Open Innovation? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Is Your Company Ready for Open Innovation?


This is an MIT Sloan Management Review article. Many industrial companies are trying to profit from open innovation, which involves actively collaborating with external partners throughout the innovation process. Many companies now acquire technology from external sources in order to strengthen and speed up their internal innovation processes -an approach the authors call inbound open innovation. Companies also increasingly transfer some of their own proprietary technology to other companies by means such as licensing -an approach known as outbound open innovation. The researchers studied the role of employee attitudes in open innovation through a large-scale benchmarking study of German industrial companies. The authors conclude that employee attitudes that favor internal innovation often impede the successful implementation of open innovation strategies. But the researchers found that a group of companies that pursue both inbound and outbound open innovation achieved the highest average return on sales. However, the companies that pursued traditional closed innovation strategies had a higher average return on sales than the group of companies that transfer their own technology to others but don't acquire much technology from external sources. These findings, the authors note, suggest that a focus only on outbound innovation may be dangerous, as a company risks transferring its "crown jewels." The authors note that the results of their study underscore the need to change employee attitudes if managers aim to implement open innovation strategies; managers, they note, need to communicate their open innovation strategies to employees, have executive champions for them and devise suitable incentives and organizational structures to encourage open innovation.

Authors :: Martin Hoegl, Ulrich Lichtenthaler, Miriam Muethel

Topics :: Technology & Operations

Tags :: IT, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Is Your Company Ready for Open Innovation?" written by Martin Hoegl, Ulrich Lichtenthaler, Miriam Muethel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Innovation Outbound facing as an external strategic factors. Some of the topics covered in Is Your Company Ready for Open Innovation? case study are - Strategic Management Strategies, IT and Technology & Operations.


Some of the macro environment factors that can be used to understand the Is Your Company Ready for Open Innovation? casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, technology disruption, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, cloud computing is disrupting traditional business models, etc



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Introduction to SWOT Analysis of Is Your Company Ready for Open Innovation?


SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Is Your Company Ready for Open Innovation? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Innovation Outbound, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Innovation Outbound 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 Is Your Company Ready for Open Innovation? can be done for the following purposes –
1. Strategic planning using facts provided in Is Your Company Ready for Open Innovation? case study
2. Improving business portfolio management of Innovation Outbound
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 Innovation Outbound




Strengths Is Your Company Ready for Open Innovation? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Innovation Outbound in Is Your Company Ready for Open Innovation? Harvard Business Review case study are -

Low bargaining power of suppliers

– Suppliers of Innovation Outbound in the sector have low bargaining power. Is Your Company Ready for Open Innovation? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Innovation Outbound to manage not only supply disruptions but also source products at highly competitive prices.

Analytics focus

– Innovation Outbound 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 Martin Hoegl, Ulrich Lichtenthaler, Miriam Muethel 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 Is Your Company Ready for Open Innovation? 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 Innovation Outbound in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Successful track record of launching new products

– Innovation Outbound has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Innovation Outbound 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.

Strong track record of project management

– Innovation Outbound is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Learning organization

- Innovation Outbound 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 Innovation Outbound is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Is Your Company Ready for Open Innovation? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Diverse revenue streams

– Innovation Outbound is present in almost all the verticals within the industry. This has provided firm in Is Your Company Ready for Open Innovation? 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.

Effective Research and Development (R&D)

– Innovation Outbound 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 Is Your Company Ready for Open Innovation? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High brand equity

– Innovation Outbound has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Innovation Outbound to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– Innovation Outbound is one of the leading recruiters in the industry. Managers in the Is Your Company Ready for Open Innovation? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

High switching costs

– The high switching costs that Innovation Outbound 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.






Weaknesses Is Your Company Ready for Open Innovation? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Is Your Company Ready for Open Innovation? are -

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Innovation Outbound is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Is Your Company Ready for Open Innovation? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

High operating costs

– Compare to the competitors, firm in the HBR case study Is Your Company Ready for Open Innovation? 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 Innovation Outbound 's lucrative customers.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the Is Your Company Ready for Open Innovation? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Innovation Outbound has relatively successful track record of launching new products.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Is Your Company Ready for Open Innovation?, it seems that the employees of Innovation Outbound 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.

Need for greater diversity

– Innovation Outbound 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.

Lack of clear differentiation of Innovation Outbound products

– To increase the profitability and margins on the products, Innovation Outbound needs to provide more differentiated products than what it is currently offering in the marketplace.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Is Your Company Ready for Open Innovation?, is just above the industry average. Innovation Outbound 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 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 Innovation Outbound supply chain. Even after few cautionary changes mentioned in the HBR case study - Is Your Company Ready for Open Innovation?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Innovation Outbound vulnerable to further global disruptions in South East Asia.

Interest costs

– Compare to the competition, Innovation Outbound 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 Is Your Company Ready for Open Innovation? HBR case study mentions - Innovation Outbound 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.

High cash cycle compare to competitors

Innovation Outbound 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.




Opportunities Is Your Company Ready for Open Innovation? | 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 Is Your Company Ready for Open Innovation? are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for Innovation Outbound 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.

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 Innovation Outbound 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 Innovation Outbound has opened avenues for new revenue streams for the organization in the industry. This can help Innovation Outbound to build a more holistic ecosystem as suggested in the Is Your Company Ready for Open Innovation? case study. Innovation Outbound can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

Building a culture of innovation

– managers at Innovation Outbound 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Innovation Outbound 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.

Manufacturing automation

– Innovation Outbound 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.

Learning at scale

– Online learning technologies has now opened space for Innovation Outbound 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.

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 Innovation Outbound in the consumer business. Now Innovation Outbound can target international markets with far fewer capital restrictions requirements than the existing system.

Using analytics as competitive advantage

– Innovation Outbound 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 Is Your Company Ready for Open Innovation? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Innovation Outbound to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Better consumer reach

– The expansion of the 5G network will help Innovation Outbound to increase its market reach. Innovation Outbound 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.

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. Innovation Outbound can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Leveraging digital technologies

– Innovation Outbound 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Innovation Outbound can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.




Threats Is Your Company Ready for Open Innovation? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis


The threats mentioned in the HBR case study Is Your Company Ready for Open Innovation? are -

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. Innovation Outbound can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Environmental challenges

– Innovation Outbound 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. Innovation Outbound can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.

Consumer confidence and its impact on Innovation Outbound 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.

High dependence on third party suppliers

– Innovation Outbound 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.

Shortening product life cycle

– it is one of the major threat that Innovation Outbound 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 Is Your Company Ready for Open Innovation?, Innovation Outbound 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 Innovation Outbound.

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 international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Innovation Outbound 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 Is Your Company Ready for Open Innovation? .

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. Innovation Outbound needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.

Technology acceleration in Forth Industrial Revolution

– Innovation Outbound has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Innovation Outbound 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

– Innovation Outbound 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 Innovation Outbound with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.




Weighted SWOT Analysis of Is Your Company Ready for Open Innovation? 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 Is Your Company Ready for Open Innovation? 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 Is Your Company Ready for Open Innovation? 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 Is Your Company Ready for Open Innovation? 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 Is Your Company Ready for Open Innovation? 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 Innovation Outbound needs to make to build a sustainable competitive advantage.



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