Netafim: Migrating from Products to Solutions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Netafim: Migrating from Products to Solutions
In 2005, Erez Meltzer, the president and CEO of Netafim (the world's leading manufacturer of drip irrigation equipment), was wondering whether Netafim's supply chain was strong enough to support the change in strategy he was planning for the company: migrating from selling products to selling solutions. When Meltzer stepped into office three years earlier, the company was struggling with flat sales, an out-of-date supply chain, and no global synergies. In just three years, Meltzer turned around the company, restructured its supply chain, and reinvigorated its growth. The question was whether the newly restructured supply chain would support the new strategy--one that would require new supply chain-related competencies from the organization.
Swot Analysis of "Netafim: Migrating from Products to Solutions" written by Hau Lee, Guy Michlin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Meltzer Netafim facing as an external strategic factors. Some of the topics covered in Netafim: Migrating from Products to Solutions case study are - Strategic Management Strategies, Globalization, Marketing, Reorganization, Strategy execution, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Netafim: Migrating from Products to Solutions casestudy better are - – there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing energy prices, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, etc
Introduction to SWOT Analysis of Netafim: Migrating from Products to Solutions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Netafim: Migrating from Products to Solutions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Meltzer Netafim, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Meltzer Netafim 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 Netafim: Migrating from Products to Solutions can be done for the following purposes –
1. Strategic planning using facts provided in Netafim: Migrating from Products to Solutions case study
2. Improving business portfolio management of Meltzer Netafim
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 Meltzer Netafim
Strengths Netafim: Migrating from Products to Solutions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Meltzer Netafim in Netafim: Migrating from Products to Solutions Harvard Business Review case study are -
Organizational Resilience of Meltzer Netafim
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Meltzer Netafim does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Technology & Operations field
– Meltzer Netafim 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 Meltzer Netafim in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Meltzer Netafim is one of the most innovative firm in sector. Manager in Netafim: Migrating from Products to Solutions 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 Meltzer Netafim 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.
Superior customer experience
– The customer experience strategy of Meltzer Netafim in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Meltzer Netafim 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 Meltzer Netafim is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Netafim: Migrating from Products to Solutions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Meltzer Netafim is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Meltzer Netafim digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Meltzer Netafim 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.
Sustainable margins compare to other players in Technology & Operations industry
– Netafim: Migrating from Products to Solutions firm has clearly differentiated products in the market place. This has enabled Meltzer Netafim to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Meltzer Netafim to invest into research and development (R&D) and innovation.
Training and development
– Meltzer Netafim has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Netafim: Migrating from Products to Solutions 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.
Analytics focus
– Meltzer Netafim 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 Hau Lee, Guy Michlin 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.
High switching costs
– The high switching costs that Meltzer Netafim 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 Netafim: Migrating from Products to Solutions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Netafim: Migrating from Products to Solutions are -
High operating costs
– Compare to the competitors, firm in the HBR case study Netafim: Migrating from Products to Solutions 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 Meltzer Netafim 's lucrative customers.
Products dominated business model
– Even though Meltzer Netafim 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 - Netafim: Migrating from Products to Solutions should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Meltzer Netafim 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. Meltzer Netafim 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.
Aligning sales with marketing
– It come across in the case study Netafim: Migrating from Products to Solutions 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 Netafim: Migrating from Products to Solutions can leverage the sales team experience to cultivate customer relationships as Meltzer Netafim is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Netafim: Migrating from Products to Solutions, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Netafim: Migrating from Products to Solutions, in the dynamic environment Meltzer Netafim has struggled to respond to the nimble upstart competition. Meltzer Netafim has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Netafim: Migrating from Products to Solutions, is just above the industry average. Meltzer Netafim 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 Meltzer Netafim supply chain. Even after few cautionary changes mentioned in the HBR case study - Netafim: Migrating from Products to Solutions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Meltzer Netafim vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Meltzer Netafim 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Hau Lee, Guy Michlin suggests that, Meltzer Netafim 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Netafim: Migrating from Products to Solutions, it seems that the employees of Meltzer Netafim 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.
Opportunities Netafim: Migrating from Products to Solutions | 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 Netafim: Migrating from Products to Solutions are -
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. Meltzer Netafim 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. Meltzer Netafim 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.
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. Meltzer Netafim can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Meltzer Netafim 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.
Better consumer reach
– The expansion of the 5G network will help Meltzer Netafim to increase its market reach. Meltzer Netafim 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.
Using analytics as competitive advantage
– Meltzer Netafim 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 Netafim: Migrating from Products to Solutions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Meltzer Netafim to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Meltzer Netafim can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Meltzer Netafim 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Meltzer Netafim 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 Meltzer Netafim to hire the very best people irrespective of their geographical location.
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 Meltzer Netafim 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Meltzer Netafim 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, Netafim: Migrating from Products to Solutions, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Meltzer Netafim 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Meltzer Netafim is facing challenges because of the dominance of functional experts in the organization. Netafim: Migrating from Products to Solutions 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, Meltzer Netafim 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.
Threats Netafim: Migrating from Products to Solutions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Netafim: Migrating from Products to Solutions are -
Stagnating economy with rate increase
– Meltzer Netafim 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Netafim: Migrating from Products to Solutions, Meltzer Netafim 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 .
High dependence on third party suppliers
– Meltzer Netafim 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.
Regulatory challenges
– Meltzer Netafim 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Meltzer Netafim 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.
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. Meltzer Netafim 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
– Meltzer Netafim 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. Meltzer Netafim can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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. Meltzer Netafim 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Meltzer Netafim with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Meltzer Netafim is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Meltzer Netafim 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Meltzer Netafim 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 Netafim: Migrating from Products to Solutions .
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 Meltzer Netafim business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Netafim: Migrating from Products to Solutions 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 Netafim: Migrating from Products to Solutions 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 Netafim: Migrating from Products to Solutions 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 Netafim: Migrating from Products to Solutions 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 Netafim: Migrating from Products to Solutions 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 Meltzer Netafim needs to make to build a sustainable competitive advantage.
