Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease
Markus Steuer, director of real estate at Drechtal Pharmaceuticals, must decide where his firm should locate in the immediate future. Drechtal was currently leasing space in seven different buildings, yet the company anticipated a dramatic increase in headcount should its first oncology drug, Trianoline, be approved by Swissmedic. The potential increased demand for space initiated Steuer's investigation of whether it was optimal to continue to lease space or whether or not it should invest in its own corporate headquarters. With its current leases set to expire over the coming 24 months, it was an opportune time to consider Drechtal's options.
Swot Analysis of "Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease" written by Craig Furfine includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Drechtal Space facing as an external strategic factors. Some of the topics covered in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease case study are - Strategic Management Strategies, Financial management, Organizational structure, Strategic planning and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease casestudy better are - – talent flight as more people leaving formal jobs, increasing energy prices, increasing government debt because of Covid-19 spendings, technology disruption, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions,
competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Drechtal Space, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Drechtal Space 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease can be done for the following purposes –
1. Strategic planning using facts provided in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease case study
2. Improving business portfolio management of Drechtal Space
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Drechtal Space
Strengths Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Drechtal Space in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease Harvard Business Review case study are -
Ability to recruit top talent
– Drechtal Space is one of the leading recruiters in the industry. Managers in the Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Drechtal Space has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease firm has clearly differentiated products in the market place. This has enabled Drechtal Space to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Drechtal Space to invest into research and development (R&D) and innovation.
Ability to lead change in Finance & Accounting field
– Drechtal Space 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 Drechtal Space in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Drechtal Space 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.
Superior customer experience
– The customer experience strategy of Drechtal Space in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Drechtal Space 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Drechtal Space 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 Drechtal Space is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Drechtal Space in the sector have low bargaining power. Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Drechtal Space to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Drechtal Space is one of the most innovative firm in sector. Manager in Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Drechtal Space 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.
Operational resilience
– The operational resilience strategy in the Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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.
Weaknesses Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease are -
Skills based hiring
– The stress on hiring functional specialists at Drechtal Space 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, Drechtal Space 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.
Increasing silos among functional specialists
– The organizational structure of Drechtal Space is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Drechtal Space needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Drechtal Space to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease HBR case study mentions - Drechtal Space 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.
Capital Spending Reduction
– Even during the low interest decade, Drechtal Space 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.
Need for greater diversity
– Drechtal Space 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 cash cycle compare to competitors
Drechtal Space 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease, is just above the industry average. Drechtal Space 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Drechtal Space is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease, in the dynamic environment Drechtal Space has struggled to respond to the nimble upstart competition. Drechtal Space has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Drechtal Space 's lucrative customers.
Opportunities Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease | 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease are -
Leveraging digital technologies
– Drechtal Space 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Drechtal Space 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 Drechtal Space to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Drechtal Space has opened avenues for new revenue streams for the organization in the industry. This can help Drechtal Space to build a more holistic ecosystem as suggested in the Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease case study. Drechtal Space can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Drechtal Space is facing challenges because of the dominance of functional experts in the organization. Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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.
Loyalty marketing
– Drechtal Space has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Drechtal Space 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.
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. Drechtal Space can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Drechtal Space 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. Drechtal Space 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 Drechtal Space 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Drechtal Space 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.
Developing new processes and practices
– Drechtal Space can develop new processes and procedures in Finance & Accounting 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Drechtal Space can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Drechtal Space can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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.
Threats Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease are -
Environmental challenges
– Drechtal Space 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. Drechtal Space can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Consumer confidence and its impact on Drechtal Space 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.
Stagnating economy with rate increase
– Drechtal Space 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Drechtal Space 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Drechtal Space in the Finance & Accounting industry. The Finance & Accounting 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.
Shortening product life cycle
– it is one of the major threat that Drechtal Space is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Drechtal Space 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
– Drechtal Space has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Drechtal Space needs to keep up with the evolution of technology in the Finance & Accounting 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.
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 Drechtal Space in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Drechtal Space
– 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 Drechtal Space.
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 Drechtal Space.
Weighted SWOT Analysis of Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease 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 Drechtal Space needs to make to build a sustainable competitive advantage.
