Madison Avenue: Digital Media Services (B) 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 (B)
In late 1999, Madison Avenue was experiencing phenomenal growth in sales, clients, employees, and services provided. The stress and strain on the firm's employees was considerable and threatened to jeopardize the high-quality, active-ad management for which the firm was developing a positive reputation. From late 1999 through July 2000, the firm embarked on a number of initiatives to improve its internal processes so that it could scale successfully, meet the needs of its customers, maintain the quality of the services it provided, and improve efficiency enough to generate operating profits. The case describes the many efforts made within Madison Avenue to improve its processes.
Swot Analysis of "Madison Avenue: Digital Media Services (B)" written by Steven J. Spear, Anne D. Karshis includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Avenue Madison facing as an external strategic factors. Some of the topics covered in Madison Avenue: Digital Media Services (B) case study are - Strategic Management Strategies, Change management, Growth strategy, Internet, Marketing, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Madison Avenue: Digital Media Services (B) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, there is backlash against globalization, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, geopolitical disruptions, challanges to central banks by blockchain based private currencies,
increasing commodity prices, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Madison Avenue: Digital Media Services (B)
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 (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Avenue Madison, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Avenue Madison 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 (B) can be done for the following purposes –
1. Strategic planning using facts provided in Madison Avenue: Digital Media Services (B) case study
2. Improving business portfolio management of Avenue Madison
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 Avenue Madison
Strengths Madison Avenue: Digital Media Services (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Avenue Madison in Madison Avenue: Digital Media Services (B) Harvard Business Review case study are -
Learning organization
- Avenue Madison 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 Avenue Madison is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Madison Avenue: Digital Media Services (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Avenue Madison has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Madison Avenue: Digital Media Services (B) 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.
Innovation driven organization
– Avenue Madison is one of the most innovative firm in sector. Manager in Madison Avenue: Digital Media Services (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Avenue Madison are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Avenue Madison in the sector have low bargaining power. Madison Avenue: Digital Media Services (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Avenue Madison to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Avenue Madison has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Avenue Madison to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Avenue Madison 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 (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Avenue Madison is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Technology & Operations industry
– Madison Avenue: Digital Media Services (B) firm has clearly differentiated products in the market place. This has enabled Avenue Madison to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Avenue Madison to invest into research and development (R&D) and innovation.
Organizational Resilience of Avenue Madison
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Avenue Madison does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Avenue Madison digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Avenue Madison 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.
Successful track record of launching new products
– Avenue Madison has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Avenue Madison 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.
Weaknesses Madison Avenue: Digital Media Services (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Madison Avenue: Digital Media Services (B) are -
High cash cycle compare to competitors
Avenue Madison 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.
Need for greater diversity
– Avenue Madison 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 Avenue Madison products
– To increase the profitability and margins on the products, Avenue Madison needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Avenue Madison is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Avenue Madison needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Avenue Madison to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Madison Avenue: Digital Media Services (B) HBR case study mentions - Avenue Madison 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Madison Avenue: Digital Media Services (B), in the dynamic environment Avenue Madison has struggled to respond to the nimble upstart competition. Avenue Madison has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Avenue Madison 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. Avenue Madison 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.
Interest costs
– Compare to the competition, Avenue Madison 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.
Capital Spending Reduction
– Even during the low interest decade, Avenue Madison 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.
Products dominated business model
– Even though Avenue Madison 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 - Madison Avenue: Digital Media Services (B) 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 Madison Avenue: Digital Media Services (B) 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 (B) can leverage the sales team experience to cultivate customer relationships as Avenue Madison is planning to shift buying processes online.
Opportunities Madison Avenue: Digital Media Services (B) | 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 (B) are -
Creating value in data economy
– The success of analytics program of Avenue Madison has opened avenues for new revenue streams for the organization in the industry. This can help Avenue Madison to build a more holistic ecosystem as suggested in the Madison Avenue: Digital Media Services (B) case study. Avenue Madison 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 Avenue Madison in the consumer business. Now Avenue Madison can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Avenue Madison 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Avenue Madison can use these opportunities to build new business models that can help the communities that Avenue Madison operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Leveraging digital technologies
– Avenue Madison 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.
Better consumer reach
– The expansion of the 5G network will help Avenue Madison to increase its market reach. Avenue Madison 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. Avenue Madison 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. Avenue Madison 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Avenue Madison 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 Avenue Madison to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Avenue Madison 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Avenue Madison can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Madison Avenue: Digital Media Services (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Avenue Madison 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Avenue Madison can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Avenue Madison can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Madison Avenue: Digital Media Services (B) 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 (B) are -
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 Avenue Madison in the Technology & Operations sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Avenue Madison with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Avenue Madison has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Avenue Madison 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.
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. Avenue Madison needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Consumer confidence and its impact on Avenue Madison 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Avenue Madison 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Madison Avenue: Digital Media Services (B), Avenue Madison 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 .
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. Avenue Madison 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.
Regulatory challenges
– Avenue Madison 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.
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, Avenue Madison 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 Madison Avenue: Digital Media Services (B) .
Increasing wage structure of Avenue Madison
– 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 Avenue Madison.
Environmental challenges
– Avenue Madison 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. Avenue Madison can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Weighted SWOT Analysis of Madison Avenue: Digital Media Services (B) 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 (B) 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 (B) 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 (B) 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 (B) 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 Avenue Madison needs to make to build a sustainable competitive advantage.