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 - – wage bills are increasing, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing transportation and logistics costs, there is increasing trade war between United States & China, technology disruption,
talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, 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 -
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.
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.
Organizational Resilience of Arcade Stockton
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Arcade Stockton does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
Effective Research and Development (R&D)
– Arcade Stockton 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 The Stockton Enterprise Arcade: Incubate or Graduate? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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.
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.
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 -
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 Arcade Stockton supply chain. Even after few cautionary changes mentioned in the HBR case study - The Stockton Enterprise Arcade: Incubate or Graduate?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Arcade Stockton vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Arcade Stockton is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Arcade Stockton needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arcade Stockton to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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.
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 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.
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.
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.
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 -
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.
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.
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.
Manufacturing automation
– Arcade Stockton 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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Arcade Stockton needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.