Case Study Description of Sofame Technologies Inc.: Reorganizing for Growth
In late 2015, the chairman of Sofame Technologies Inc. (Sofame), a Montreal-based manufacturer and marketer of energy-recapture systems, faced a dilemma. The firm, which transformed the waste heat generated by hot water and exhaust gases into usable energy, had struggled for more than a decade as it coped with low gas prices and a failed carbon credits management subsidiary. Sofame had just been delisted from the stock market and was precariously close to bankruptcy. However, the chairman continued to see value in Sofame and was considering a restructuring plan that involved the acquisition of a New York-based boilermaker that could save the firm. In addition to the financial viability of the acquisition and the difficulty of raising funds, he also needed to consider other issues, including the fact that, as the chairman of a Canadian Crown corporation, he could not preside over a firm undergoing the bankruptcy process.
Swot Analysis of "Sofame Technologies Inc.: Reorganizing for Growth" written by Simon Parker, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sofame Chairman facing as an external strategic factors. Some of the topics covered in Sofame Technologies Inc.: Reorganizing for Growth case study are - Strategic Management Strategies, Mergers & acquisitions, Reorganization and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Sofame Technologies Inc.: Reorganizing for Growth casestudy better are - – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , there is backlash against globalization, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing energy prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Sofame Technologies Inc.: Reorganizing for Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sofame Technologies Inc.: Reorganizing for Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sofame Chairman, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sofame Chairman 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 Sofame Technologies Inc.: Reorganizing for Growth can be done for the following purposes –
1. Strategic planning using facts provided in Sofame Technologies Inc.: Reorganizing for Growth case study
2. Improving business portfolio management of Sofame Chairman
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sofame Chairman
Strengths Sofame Technologies Inc.: Reorganizing for Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sofame Chairman in Sofame Technologies Inc.: Reorganizing for Growth Harvard Business Review case study are -
Training and development
– Sofame Chairman has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sofame Technologies Inc.: Reorganizing for Growth 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.
Low bargaining power of suppliers
– Suppliers of Sofame Chairman in the sector have low bargaining power. Sofame Technologies Inc.: Reorganizing for Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sofame Chairman to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Sofame Chairman
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sofame Chairman does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Sofame Chairman has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sofame Chairman 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.
Ability to lead change in Leadership & Managing People field
– Sofame Chairman 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 Sofame Chairman in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Sofame Chairman 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 Sofame Chairman is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sofame Technologies Inc.: Reorganizing for Growth Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Sofame Chairman is one of the most innovative firm in sector. Manager in Sofame Technologies Inc.: Reorganizing for Growth Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Sofame Chairman has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sofame Chairman to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Sofame Technologies Inc.: Reorganizing for Growth 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.
Superior customer experience
– The customer experience strategy of Sofame Chairman in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Sofame Chairman 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.
Effective Research and Development (R&D)
– Sofame Chairman 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 Sofame Technologies Inc.: Reorganizing for Growth - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Sofame Technologies Inc.: Reorganizing for Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sofame Technologies Inc.: Reorganizing for Growth are -
Aligning sales with marketing
– It come across in the case study Sofame Technologies Inc.: Reorganizing for Growth that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Sofame Technologies Inc.: Reorganizing for Growth can leverage the sales team experience to cultivate customer relationships as Sofame Chairman is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Simon Parker, Ken Mark suggests that, Sofame Chairman 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Sofame Chairman 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 Sofame Technologies Inc.: Reorganizing for Growth HBR case study mentions - Sofame Chairman 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sofame Chairman is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sofame Technologies Inc.: Reorganizing for Growth can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Sofame Chairman 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Sofame Technologies Inc.: Reorganizing for Growth 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 Sofame Chairman 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Sofame Chairman has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Sofame Chairman 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.
Slow decision making process
– As mentioned earlier in the report, Sofame Chairman 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. Sofame Chairman 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 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 Sofame Chairman supply chain. Even after few cautionary changes mentioned in the HBR case study - Sofame Technologies Inc.: Reorganizing for Growth, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sofame Chairman vulnerable to further global disruptions in South East Asia.
Opportunities Sofame Technologies Inc.: Reorganizing for Growth | 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 Sofame Technologies Inc.: Reorganizing for Growth are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sofame Chairman in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sofame Chairman can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Sofame Chairman can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sofame Technologies Inc.: Reorganizing for Growth 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sofame Chairman 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.
Leveraging digital technologies
– Sofame Chairman 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Sofame Chairman can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Sofame Chairman can develop new processes and procedures in Leadership & Managing People 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.
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 Sofame Chairman in the consumer business. Now Sofame Chairman can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Sofame Chairman can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Creating value in data economy
– The success of analytics program of Sofame Chairman has opened avenues for new revenue streams for the organization in the industry. This can help Sofame Chairman to build a more holistic ecosystem as suggested in the Sofame Technologies Inc.: Reorganizing for Growth case study. Sofame Chairman can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sofame Chairman can use these opportunities to build new business models that can help the communities that Sofame Chairman operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Better consumer reach
– The expansion of the 5G network will help Sofame Chairman to increase its market reach. Sofame Chairman 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.
Loyalty marketing
– Sofame Chairman 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.
Threats Sofame Technologies Inc.: Reorganizing for Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sofame Technologies Inc.: Reorganizing for Growth are -
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. Sofame Chairman 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.
Shortening product life cycle
– it is one of the major threat that Sofame Chairman is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Sofame Chairman needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sofame Chairman with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sofame Chairman in the Leadership & Managing People industry. The Leadership & Managing People 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.
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.
High dependence on third party suppliers
– Sofame Chairman 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.
Environmental challenges
– Sofame Chairman 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. Sofame Chairman can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sofame Technologies Inc.: Reorganizing for Growth, Sofame Chairman may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Sofame Chairman business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sofame Chairman 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 Sofame Technologies Inc.: Reorganizing for Growth .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Sofame Chairman in the Leadership & Managing People sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Sofame Technologies Inc.: Reorganizing for Growth 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 Sofame Technologies Inc.: Reorganizing for Growth 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 Sofame Technologies Inc.: Reorganizing for Growth 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 Sofame Technologies Inc.: Reorganizing for Growth 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 Sofame Technologies Inc.: Reorganizing for Growth 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 Sofame Chairman needs to make to build a sustainable competitive advantage.