The Stockton Enterprise Arcade: Incubate or Graduate? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Stockton Enterprise Arcade: Incubate or Graduate?
In February 2016, the owner of a wool and yarn products retail business in the Enterprise Arcade, a not-for-profit retail business incubator in Stockton-on-Tees, United Kingdom, needed to meet with the manager of the arcade. Based in a central and prominent position in a struggling Northeast England town, the Enterprise Arcade was opened by the local council as a part of a large renovation project. It was intended to regenerate the area and support enterprise and employment by providing small, indoor, market-sized retail spaces for self-employed retail start-ups to test their markets. After 14 months with the incubator, the owner of the wool and yarn business was expected to be ready to move out, but her business models were still unproven, and she wanted to stay longer. The manager had to balance the overall success of the Enterprise Arcade with the turnover and successful graduations of the businesses therein. How should the business owner organize her priorities and prepare to negotiate with the manager? What should the manager advise her to do? Jill Tidmarsh is affiliated with Durham University.
Swot Analysis of "The Stockton Enterprise Arcade: Incubate or Graduate?" written by Jill Tidmarsh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arcade Stockton facing as an external strategic factors. Some of the topics covered in The Stockton Enterprise Arcade: Incubate or Graduate? case study are - Strategic Management Strategies, and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the The Stockton Enterprise Arcade: Incubate or Graduate? casestudy better are - – increasing government debt because of Covid-19 spendings, increasing commodity prices, geopolitical disruptions, technology disruption, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, there is backlash against globalization,
cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of The Stockton Enterprise Arcade: Incubate or Graduate?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Stockton Enterprise Arcade: Incubate or Graduate? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arcade Stockton, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arcade Stockton 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 Stockton Enterprise Arcade: Incubate or Graduate? can be done for the following purposes –
1. Strategic planning using facts provided in The Stockton Enterprise Arcade: Incubate or Graduate? case study
2. Improving business portfolio management of Arcade Stockton
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 Arcade Stockton
Strengths The Stockton Enterprise Arcade: Incubate or Graduate? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arcade Stockton in The Stockton Enterprise Arcade: Incubate or Graduate? Harvard Business Review case study are -
Ability to lead change in Innovation & Entrepreneurship field
– Arcade Stockton 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 Arcade Stockton in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Arcade Stockton is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Arcade Stockton has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Arcade Stockton to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Arcade Stockton 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.
Diverse revenue streams
– Arcade Stockton is present in almost all the verticals within the industry. This has provided firm in The Stockton Enterprise Arcade: Incubate or Graduate? 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.
Learning organization
- Arcade Stockton 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 Arcade Stockton is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Stockton Enterprise Arcade: Incubate or Graduate? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Arcade Stockton in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Arcade Stockton in the sector have low bargaining power. The Stockton Enterprise Arcade: Incubate or Graduate? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arcade Stockton to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– The Stockton Enterprise Arcade: Incubate or Graduate? firm has clearly differentiated products in the market place. This has enabled Arcade Stockton to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Arcade Stockton to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Arcade Stockton 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.
Highly skilled collaborators
– Arcade Stockton 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 Stockton Enterprise Arcade: Incubate or Graduate? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Arcade Stockton 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 Jill Tidmarsh 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.
Weaknesses The Stockton Enterprise Arcade: Incubate or Graduate? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Stockton Enterprise Arcade: Incubate or Graduate? are -
Products dominated business model
– Even though Arcade Stockton 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 Stockton Enterprise Arcade: Incubate or Graduate? 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 The Stockton Enterprise Arcade: Incubate or Graduate? 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 Arcade Stockton 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Arcade Stockton 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.
Slow to strategic competitive environment developments
– As The Stockton Enterprise Arcade: Incubate or Graduate? HBR case study mentions - Arcade Stockton 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, Arcade Stockton 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Stockton Enterprise Arcade: Incubate or Graduate?, is just above the industry average. Arcade Stockton 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 bargaining power of channel partners
– Because of the regulatory requirements, Jill Tidmarsh suggests that, Arcade Stockton 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.
Need for greater diversity
– Arcade Stockton 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the The Stockton Enterprise Arcade: Incubate or Graduate? 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 Arcade Stockton has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Stockton Enterprise Arcade: Incubate or Graduate?, in the dynamic environment Arcade Stockton has struggled to respond to the nimble upstart competition. Arcade Stockton has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Arcade Stockton 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.
Opportunities The Stockton Enterprise Arcade: Incubate or Graduate? | 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 Stockton Enterprise Arcade: Incubate or Graduate? are -
Creating value in data economy
– The success of analytics program of Arcade Stockton has opened avenues for new revenue streams for the organization in the industry. This can help Arcade Stockton to build a more holistic ecosystem as suggested in the The Stockton Enterprise Arcade: Incubate or Graduate? case study. Arcade Stockton can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Arcade Stockton can develop new processes and procedures in Innovation & Entrepreneurship 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.
Loyalty marketing
– Arcade Stockton 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.
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. Arcade Stockton 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. Arcade Stockton 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. Arcade Stockton can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Arcade Stockton can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Arcade Stockton 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.
Buying journey improvements
– Arcade Stockton can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Stockton Enterprise Arcade: Incubate or Graduate? 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Arcade Stockton can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Arcade Stockton in the consumer business. Now Arcade Stockton can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Arcade Stockton 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 Arcade Stockton to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Arcade Stockton 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 Stockton Enterprise Arcade: Incubate or Graduate? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arcade Stockton to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Arcade Stockton 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.
Threats The Stockton Enterprise Arcade: Incubate or Graduate? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Stockton Enterprise Arcade: Incubate or Graduate? are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Arcade Stockton 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 The Stockton Enterprise Arcade: Incubate or Graduate? .
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 Arcade Stockton business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Arcade Stockton 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.
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.
Consumer confidence and its impact on Arcade Stockton 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.
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. Arcade Stockton 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.
Technology acceleration in Forth Industrial Revolution
– Arcade Stockton has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Arcade Stockton 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.
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 Stockton Enterprise Arcade: Incubate or Graduate?, Arcade Stockton 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 .
Shortening product life cycle
– it is one of the major threat that Arcade Stockton is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing wage structure of Arcade Stockton
– 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 Arcade Stockton.
Regulatory challenges
– Arcade Stockton 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 Innovation & Entrepreneurship industry regulations.
Environmental challenges
– Arcade Stockton 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. Arcade Stockton can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Weighted SWOT Analysis of The Stockton Enterprise Arcade: Incubate or Graduate? 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 Stockton Enterprise Arcade: Incubate or Graduate? 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 Stockton Enterprise Arcade: Incubate or Graduate? 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 Stockton Enterprise Arcade: Incubate or Graduate? 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 Stockton Enterprise Arcade: Incubate or Graduate? 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 Arcade Stockton needs to make to build a sustainable competitive advantage.
