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 - – geopolitical disruptions, increasing transportation and logistics costs, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, increasing commodity prices, cloud computing is disrupting traditional business models, increasing energy prices,
increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , 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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Stockton Enterprise Arcade: Incubate or Graduate?, it seems that the employees of Arcade Stockton 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 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 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.
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.
Slow decision making process
– As mentioned earlier in the report, Arcade Stockton has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Arcade Stockton even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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 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.
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? .
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.
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.
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.
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.
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.