Case Study Description of Summit Maritime: Facility Location and Layout Design
In September 2017, the managing director of Summit Maritime Pvt. Limited, a marine consulting firm and luxury boat manufacturer in Kochi, India, faced a dilemma. He needed to relocate a production facility and set up a service factory, where boats would be both manufactured and displayed. The managing director needed to decide on the optimal location for the new facility by considering multiple factors. He also needed to design a preliminary layout for the new facility. How should he decide on the optimal facility location and layout to restructure his growing business operations and ensure the company's future? Joshin John and Neetha J. Eappen are affiliated with Rajagiri Business School. Rajiv Kumar Srivastava is affiliated with Indian Institute of Management Lucknow.
Authors :: Joshin John, Rajiv Kumar Srivastava, Neetha J. Eappen
Swot Analysis of "Summit Maritime: Facility Location and Layout Design" written by Joshin John, Rajiv Kumar Srivastava, Neetha J. Eappen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Facility Layout facing as an external strategic factors. Some of the topics covered in Summit Maritime: Facility Location and Layout Design case study are - Strategic Management Strategies, and Technology & Operations.
Some of the macro environment factors that can be used to understand the Summit Maritime: Facility Location and Layout Design casestudy better are - – technology disruption, there is backlash against globalization, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing commodity prices, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%,
increasing energy prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Summit Maritime: Facility Location and Layout Design
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Summit Maritime: Facility Location and Layout Design case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Facility Layout, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Facility Layout 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 Summit Maritime: Facility Location and Layout Design can be done for the following purposes –
1. Strategic planning using facts provided in Summit Maritime: Facility Location and Layout Design case study
2. Improving business portfolio management of Facility Layout
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Facility Layout
Strengths Summit Maritime: Facility Location and Layout Design | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Facility Layout in Summit Maritime: Facility Location and Layout Design Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Facility Layout in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Facility Layout is one of the most innovative firm in sector. Manager in Summit Maritime: Facility Location and Layout Design 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
– Facility Layout has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Facility Layout to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Facility Layout are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Facility Layout is present in almost all the verticals within the industry. This has provided firm in Summit Maritime: Facility Location and Layout Design 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.
Ability to recruit top talent
– Facility Layout is one of the leading recruiters in the industry. Managers in the Summit Maritime: Facility Location and Layout Design are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Facility Layout in the sector have low bargaining power. Summit Maritime: Facility Location and Layout Design has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Facility Layout to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Facility Layout 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 Facility Layout is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Summit Maritime: Facility Location and Layout Design Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Facility Layout 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.
Strong track record of project management
– Facility Layout is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Facility Layout digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Facility Layout 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.
Operational resilience
– The operational resilience strategy in the Summit Maritime: Facility Location and Layout Design 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.
Weaknesses Summit Maritime: Facility Location and Layout Design | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Summit Maritime: Facility Location and Layout Design are -
Increasing silos among functional specialists
– The organizational structure of Facility Layout is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Facility Layout needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Facility Layout to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Facility Layout 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Facility Layout is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Summit Maritime: Facility Location and Layout Design can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Facility Layout products
– To increase the profitability and margins on the products, Facility Layout needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Summit Maritime: Facility Location and Layout Design 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 Facility Layout 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Facility Layout, firm in the HBR case study Summit Maritime: Facility Location and Layout Design needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Summit Maritime: Facility Location and Layout Design 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 Summit Maritime: Facility Location and Layout Design can leverage the sales team experience to cultivate customer relationships as Facility Layout is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Summit Maritime: Facility Location and Layout Design, is just above the industry average. Facility Layout 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, Joshin John, Rajiv Kumar Srivastava, Neetha J. Eappen suggests that, Facility Layout is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Facility Layout 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.
Skills based hiring
– The stress on hiring functional specialists at Facility Layout 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.
Opportunities Summit Maritime: Facility Location and Layout Design | 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 Summit Maritime: Facility Location and Layout Design are -
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. Facility Layout can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Facility Layout can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Summit Maritime: Facility Location and Layout Design 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.
Building a culture of innovation
– managers at Facility Layout 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 Technology & Operations segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Facility Layout 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 Facility Layout has opened avenues for new revenue streams for the organization in the industry. This can help Facility Layout to build a more holistic ecosystem as suggested in the Summit Maritime: Facility Location and Layout Design case study. Facility Layout can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Facility Layout can develop new processes and procedures in Technology & Operations 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 Facility Layout in the consumer business. Now Facility Layout can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Facility Layout 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, Summit Maritime: Facility Location and Layout Design, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Facility Layout 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Facility Layout 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 Facility Layout to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Facility Layout to increase its market reach. Facility Layout 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 Technology & Operations industry, but it has also influenced the consumer preferences. Facility Layout can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Facility Layout to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Summit Maritime: Facility Location and Layout Design External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Summit Maritime: Facility Location and Layout Design are -
Consumer confidence and its impact on Facility Layout 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.
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 Facility Layout business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Facility Layout high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Facility Layout 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 Technology & Operations industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Facility Layout in the Technology & Operations industry. The Technology & Operations 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.
Shortening product life cycle
– it is one of the major threat that Facility Layout is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Facility Layout 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.
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 Facility Layout in the Technology & Operations sector and impact the bottomline of the organization.
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 Facility Layout.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Facility Layout 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 Summit Maritime: Facility Location and Layout Design .
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. Facility Layout 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.
Increasing wage structure of Facility Layout
– 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 Facility Layout.
Weighted SWOT Analysis of Summit Maritime: Facility Location and Layout Design 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 Summit Maritime: Facility Location and Layout Design 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 Summit Maritime: Facility Location and Layout Design 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 Summit Maritime: Facility Location and Layout Design 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 Summit Maritime: Facility Location and Layout Design 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 Facility Layout needs to make to build a sustainable competitive advantage.