The High Stakes of Low-Cost Competition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The High Stakes of Low-Cost Competition
Low-cost competitors are on the offensive in many industries, from airlines to B2B capital equipment markets, eating away at the market share traditionally enjoyed by premium companies. Dealing with low-cost competition first requires understanding how radically the business model has changed: fewer companies are doing it all, but rather specializing in either product development or delivery or customer relationships. While there may be good reasons for adopting a more focused business strategy, companies need to realize how the interplay between premium and low-cost rivals is, in fact, fuelling the threat, which needs to be craftily managed. Using a multitude of real business examples, the author insists that companies today must learn how to take on low-cost competitors in the good-enough segment, develop hard-to-copy performance leadership products, and build deep and lasting relationships with their customers. A dual-pronged strategy - one that both challenges low-cost competitors in the good-enough segment, while also competing as a premium player using either performance leadership or relational value options - can serve to beat low-cost competitors at their own game.
Swot Analysis of "The High Stakes of Low-Cost Competition" written by Adrian Ryans includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Low Cost facing as an external strategic factors. Some of the topics covered in The High Stakes of Low-Cost Competition case study are - Strategic Management Strategies, Change management and Technology & Operations.
Some of the macro environment factors that can be used to understand the The High Stakes of Low-Cost Competition casestudy better are - – challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing energy prices, there is backlash against globalization, increasing commodity prices,
cloud computing is disrupting traditional business models, wage bills are increasing, etc
Introduction to SWOT Analysis of The High Stakes of Low-Cost Competition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The High Stakes of Low-Cost Competition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Low Cost, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Low Cost 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 The High Stakes of Low-Cost Competition can be done for the following purposes –
1. Strategic planning using facts provided in The High Stakes of Low-Cost Competition case study
2. Improving business portfolio management of Low Cost
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 Low Cost
Strengths The High Stakes of Low-Cost Competition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Low Cost in The High Stakes of Low-Cost Competition Harvard Business Review case study are -
Training and development
– Low Cost has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The High Stakes of Low-Cost Competition 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 Technology & Operations industry
– The High Stakes of Low-Cost Competition firm has clearly differentiated products in the market place. This has enabled Low Cost to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Low Cost to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Low Cost has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Low Cost 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.
Low bargaining power of suppliers
– Suppliers of Low Cost in the sector have low bargaining power. The High Stakes of Low-Cost Competition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Low Cost to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Low Cost is one of the leading recruiters in the industry. Managers in the The High Stakes of Low-Cost Competition are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Low Cost 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 The High Stakes of Low-Cost Competition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Low Cost 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 Low Cost is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The High Stakes of Low-Cost Competition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Low Cost
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Low Cost does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Low Cost in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Low Cost is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Low Cost is present in almost all the verticals within the industry. This has provided firm in The High Stakes of Low-Cost Competition 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.
Innovation driven organization
– Low Cost is one of the most innovative firm in sector. Manager in The High Stakes of Low-Cost Competition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses The High Stakes of Low-Cost Competition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The High Stakes of Low-Cost Competition are -
Interest costs
– Compare to the competition, Low Cost 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Low Cost is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The High Stakes of Low-Cost Competition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As The High Stakes of Low-Cost Competition HBR case study mentions - Low Cost 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, Low Cost 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The High Stakes of Low-Cost Competition, in the dynamic environment Low Cost has struggled to respond to the nimble upstart competition. Low Cost has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The High Stakes of Low-Cost Competition 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 Low Cost has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Adrian Ryans suggests that, Low Cost 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.
Aligning sales with marketing
– It come across in the case study The High Stakes of Low-Cost Competition 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 The High Stakes of Low-Cost Competition can leverage the sales team experience to cultivate customer relationships as Low Cost is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The High Stakes of Low-Cost Competition, is just above the industry average. Low Cost 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 operating costs
– Compare to the competitors, firm in the HBR case study The High Stakes of Low-Cost Competition 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 Low Cost 's lucrative customers.
Products dominated business model
– Even though Low Cost 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 - The High Stakes of Low-Cost Competition should strive to include more intangible value offerings along with its core products and services.
Opportunities The High Stakes of Low-Cost Competition | 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 The High Stakes of Low-Cost Competition are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Low Cost 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, The High Stakes of Low-Cost Competition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Low Cost can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Low Cost 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.
Loyalty marketing
– Low Cost 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Low Cost is facing challenges because of the dominance of functional experts in the organization. The High Stakes of Low-Cost Competition 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Low Cost 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.
Buying journey improvements
– Low Cost can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The High Stakes of Low-Cost Competition 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.
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 Low Cost in the consumer business. Now Low Cost can target international markets with far fewer capital restrictions requirements than the existing system.
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 Low Cost 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.
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. Low Cost can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Low Cost 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.
Building a culture of innovation
– managers at Low Cost 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.
Using analytics as competitive advantage
– Low Cost 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 The High Stakes of Low-Cost Competition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Low Cost to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats The High Stakes of Low-Cost Competition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The High Stakes of Low-Cost Competition are -
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. Low Cost 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.
Stagnating economy with rate increase
– Low Cost 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.
Shortening product life cycle
– it is one of the major threat that Low Cost is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Low Cost
– 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 Low Cost.
Consumer confidence and its impact on Low Cost 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.
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 Low Cost business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Low Cost 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. Low Cost can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Low Cost with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The High Stakes of Low-Cost Competition, Low Cost 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 Low Cost.
Technology acceleration in Forth Industrial Revolution
– Low Cost has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Low Cost 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
– Low Cost 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.
Weighted SWOT Analysis of The High Stakes of Low-Cost Competition 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 The High Stakes of Low-Cost Competition 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 The High Stakes of Low-Cost Competition 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 The High Stakes of Low-Cost Competition 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 The High Stakes of Low-Cost Competition 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 Low Cost needs to make to build a sustainable competitive advantage.
