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 - – technology disruption, cloud computing is disrupting traditional business models, increasing energy prices, geopolitical disruptions, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%,
increasing commodity prices, 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 -
Innovation driven organization
– Arcade Stockton is one of the most innovative firm in sector. Manager in The Stockton Enterprise Arcade: Incubate or Graduate? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Arcade Stockton is one of the leading recruiters in the industry. Managers in the The Stockton Enterprise Arcade: Incubate or Graduate? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Successful track record of launching new products
– Arcade Stockton has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Arcade Stockton 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.
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.
Operational resilience
– The operational resilience strategy in the The Stockton Enterprise Arcade: Incubate or Graduate? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Arcade Stockton digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Arcade Stockton 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.
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.
Training and development
– Arcade Stockton has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Stockton Enterprise Arcade: Incubate or Graduate? 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.
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 -
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Arcade Stockton is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Stockton Enterprise Arcade: Incubate or Graduate? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
Low market penetration in new markets
– Outside its home market of Arcade Stockton, firm in the HBR case study The Stockton Enterprise Arcade: Incubate or Graduate? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study The Stockton Enterprise Arcade: Incubate or Graduate?, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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.
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.
Lack of clear differentiation of Arcade Stockton products
– To increase the profitability and margins on the products, Arcade Stockton needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Arcade Stockton 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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Arcade Stockton is facing challenges because of the dominance of functional experts in the organization. The Stockton Enterprise Arcade: Incubate or Graduate? 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Arcade Stockton 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 Stockton Enterprise Arcade: Incubate or Graduate?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Arcade Stockton to increase its market reach. Arcade Stockton 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.
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.
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 Arcade Stockton to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Arcade Stockton 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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Arcade Stockton can use these opportunities to build new business models that can help the communities that Arcade Stockton operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Building a culture of innovation
– managers at Arcade Stockton 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 Innovation & Entrepreneurship segment.
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.
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 -
Stagnating economy with rate increase
– Arcade Stockton 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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Arcade Stockton in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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 .
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Arcade Stockton can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Arcade Stockton.
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.
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 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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Arcade Stockton with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.