Case Study Description of ibibo: Grow Independently or Sell?
In 2016, the chief executive officer of the ibibo Group, one of the largest players in India's online travel sector, faced a major decision. MakeMyTrip, India's market leader in online travel, had expressed interest in acquiring the ibibo Group. Should the ibibo Group's chief executive officer accept the offer and give up partial or total control of the company, in return for growing with the market leader? Or should he continue with the business he had launched in 2007, and rely on outside investment or the parent company to fund his efforts at growing the business? It was time to evaluate his strategic options. The authors Meeta Dasgupta and S. Veena Iyer are affiliated with Management Development Institute.
Swot Analysis of "ibibo: Grow Independently or Sell?" written by Meeta Dasgupta, S. Veena Iyer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ibibo Travel facing as an external strategic factors. Some of the topics covered in ibibo: Grow Independently or Sell? case study are - Strategic Management Strategies, Mergers & acquisitions and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the ibibo: Grow Independently or Sell? casestudy better are - – increasing energy prices, increasing household debt because of falling income levels, technology disruption, increasing commodity prices, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of ibibo: Grow Independently or Sell?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ibibo: Grow Independently or Sell? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ibibo Travel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ibibo Travel 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 ibibo: Grow Independently or Sell? can be done for the following purposes –
1. Strategic planning using facts provided in ibibo: Grow Independently or Sell? case study
2. Improving business portfolio management of Ibibo Travel
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ibibo Travel
Strengths ibibo: Grow Independently or Sell? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ibibo Travel in ibibo: Grow Independently or Sell? Harvard Business Review case study are -
Effective Research and Development (R&D)
– Ibibo Travel 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 ibibo: Grow Independently or Sell? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Ibibo Travel 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 ibibo: Grow Independently or Sell? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Innovation & Entrepreneurship field
– Ibibo Travel 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 Ibibo Travel in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Ibibo Travel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ibibo Travel 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Ibibo Travel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ibibo Travel 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.
Diverse revenue streams
– Ibibo Travel is present in almost all the verticals within the industry. This has provided firm in ibibo: Grow Independently or Sell? 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.
Analytics focus
– Ibibo Travel 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 Meeta Dasgupta, S. Veena Iyer 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 Ibibo Travel 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.
High brand equity
– Ibibo Travel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ibibo Travel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Ibibo Travel is one of the most innovative firm in sector. Manager in ibibo: Grow Independently or Sell? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Ibibo Travel 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 Ibibo Travel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ibibo: Grow Independently or Sell? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Ibibo Travel 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.
Weaknesses ibibo: Grow Independently or Sell? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ibibo: Grow Independently or Sell? are -
Interest costs
– Compare to the competition, Ibibo Travel 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ibibo: Grow Independently or Sell? 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 Ibibo Travel has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study ibibo: Grow Independently or Sell? 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 ibibo: Grow Independently or Sell? can leverage the sales team experience to cultivate customer relationships as Ibibo Travel is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ibibo Travel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study ibibo: Grow Independently or Sell? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Ibibo Travel 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 - ibibo: Grow Independently or Sell? should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study ibibo: Grow Independently or Sell? 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 Ibibo Travel 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ibibo: Grow Independently or Sell?, it seems that the employees of Ibibo Travel 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.
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 Ibibo Travel supply chain. Even after few cautionary changes mentioned in the HBR case study - ibibo: Grow Independently or Sell?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ibibo Travel vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Ibibo Travel is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Ibibo Travel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ibibo Travel to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Meeta Dasgupta, S. Veena Iyer suggests that, Ibibo Travel 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ibibo: Grow Independently or Sell?, is just above the industry average. Ibibo Travel 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.
Opportunities ibibo: Grow Independently or Sell? | 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 ibibo: Grow Independently or Sell? are -
Leveraging digital technologies
– Ibibo Travel 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.
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 Ibibo Travel in the consumer business. Now Ibibo Travel can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Ibibo Travel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ibibo: Grow Independently or Sell? 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.
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. Ibibo Travel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Ibibo Travel 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.
Creating value in data economy
– The success of analytics program of Ibibo Travel has opened avenues for new revenue streams for the organization in the industry. This can help Ibibo Travel to build a more holistic ecosystem as suggested in the ibibo: Grow Independently or Sell? case study. Ibibo Travel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Ibibo Travel 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ibibo Travel 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ibibo Travel 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. Ibibo Travel 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ibibo Travel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ibibo Travel can use these opportunities to build new business models that can help the communities that Ibibo Travel operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Manufacturing automation
– Ibibo Travel can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Using analytics as competitive advantage
– Ibibo Travel 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 ibibo: Grow Independently or Sell? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ibibo Travel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats ibibo: Grow Independently or Sell? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ibibo: Grow Independently or Sell? 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 Ibibo Travel in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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. Ibibo Travel 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.
High dependence on third party suppliers
– Ibibo Travel 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.
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 Ibibo Travel.
Environmental challenges
– Ibibo Travel 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. Ibibo Travel can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship 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.
Stagnating economy with rate increase
– Ibibo Travel 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.
Increasing wage structure of Ibibo Travel
– 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 Ibibo Travel.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ibibo: Grow Independently or Sell?, Ibibo Travel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ibibo Travel 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
– Ibibo Travel has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Ibibo Travel needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
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 Ibibo Travel business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of ibibo: Grow Independently or Sell? 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 ibibo: Grow Independently or Sell? 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 ibibo: Grow Independently or Sell? 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 ibibo: Grow Independently or Sell? 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 ibibo: Grow Independently or Sell? 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 Ibibo Travel needs to make to build a sustainable competitive advantage.
