Kids & Company: Entering the U.S. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Kids & Company: Entering the U.S.
In April 2017, Victoria Sopik and Jennifer Nashmi, CEO and CFO (respectively) of Kids & Company, a Canadian childcare provider that they had co-founded in the early 2000s and developed into a nearly 100-unit enterprise, are discussing how the company should proceed with its planned U.S. expansion. Kids & Company already has five U.S. childcare centers in and around Chicago, Illinois, and one under construction in Boston, Massachusetts, but before going any further, the two leaders plan to discuss what they have learned so far from their U.S. experience, and how that should inform their strategic growth decisions moving forward. Unlike Canada, the U.S. already has other large, for-profit childcare providers, so Kids & Co. will have to grow in a more mature market, albeit one where Kids & Company's leaders still see substantial opportunity. Company leaders also believe that the company's "boutique" childcare centers, which maintain a strict focus on customer service and flexible childcare options, would be well-received by U.S. consumers, and help it stand out from the existing, more-standardized options. The question now is how, and how fast, to grow. Should it just replicate the exact model it has developed in Canada-which has proven somewhat challenging thus far in the few years it has operated in the U.S.-or adjust elements of its model? Should it look to acquire established providers, or possibly even franchise the brand?
Authors :: Boris Groysberg, Matthew Preble, Katherine Connolly Baden
Swot Analysis of "Kids & Company: Entering the U.S." written by Boris Groysberg, Matthew Preble, Katherine Connolly Baden includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Childcare Kids facing as an external strategic factors. Some of the topics covered in Kids & Company: Entering the U.S. case study are - Strategic Management Strategies, Cross-cultural management, Customers, Entrepreneurship, Growth strategy, Leadership, Organizational culture, Personnel policies, Product development, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Kids & Company: Entering the U.S. casestudy better are - – talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings,
geopolitical disruptions, increasing commodity prices, etc
Introduction to SWOT Analysis of Kids & Company: Entering the U.S.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kids & Company: Entering the U.S. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Childcare Kids, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Childcare Kids 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 Kids & Company: Entering the U.S. can be done for the following purposes –
1. Strategic planning using facts provided in Kids & Company: Entering the U.S. case study
2. Improving business portfolio management of Childcare Kids
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Childcare Kids
Strengths Kids & Company: Entering the U.S. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Childcare Kids in Kids & Company: Entering the U.S. Harvard Business Review case study are -
Ability to recruit top talent
– Childcare Kids is one of the leading recruiters in the industry. Managers in the Kids & Company: Entering the U.S. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Childcare Kids has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Childcare Kids to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Childcare Kids has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Kids & Company: Entering the U.S. 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 Childcare Kids in the sector have low bargaining power. Kids & Company: Entering the U.S. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Childcare Kids to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Childcare Kids 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 Kids & Company: Entering the U.S. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Childcare Kids has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Childcare Kids 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.
Diverse revenue streams
– Childcare Kids is present in almost all the verticals within the industry. This has provided firm in Kids & Company: Entering the U.S. 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.
High switching costs
– The high switching costs that Childcare Kids 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.
Analytics focus
– Childcare Kids 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 Boris Groysberg, Matthew Preble, Katherine Connolly Baden 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.
Ability to lead change in Strategy & Execution field
– Childcare Kids 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 Childcare Kids in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Childcare Kids 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 Kids & Company: Entering the U.S. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Childcare Kids
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Childcare Kids does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Kids & Company: Entering the U.S. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kids & Company: Entering the U.S. are -
Aligning sales with marketing
– It come across in the case study Kids & Company: Entering the U.S. 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 Kids & Company: Entering the U.S. can leverage the sales team experience to cultivate customer relationships as Childcare Kids is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Kids & Company: Entering the U.S., it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Lack of clear differentiation of Childcare Kids products
– To increase the profitability and margins on the products, Childcare Kids needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Childcare Kids, firm in the HBR case study Kids & Company: Entering the U.S. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Childcare Kids 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 - Kids & Company: Entering the U.S. should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Childcare Kids 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. Childcare Kids 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Childcare Kids is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kids & Company: Entering the U.S. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Kids & Company: Entering the U.S., in the dynamic environment Childcare Kids has struggled to respond to the nimble upstart competition. Childcare Kids has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Kids & Company: Entering the U.S. 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 Childcare Kids 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Childcare Kids 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Kids & Company: Entering the U.S., it seems that the employees of Childcare Kids 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.
Opportunities Kids & Company: Entering the U.S. | 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 Kids & Company: Entering the U.S. are -
Using analytics as competitive advantage
– Childcare Kids has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Kids & Company: Entering the U.S. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Childcare Kids to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Childcare Kids 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 Childcare Kids to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Childcare Kids can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kids & Company: Entering the U.S. 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 Childcare Kids 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 Strategy & Execution segment.
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 Childcare Kids 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.
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. Childcare Kids can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Childcare Kids 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.
Manufacturing automation
– Childcare Kids can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
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 Childcare Kids in the consumer business. Now Childcare Kids can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Childcare Kids can develop new processes and procedures in Strategy & Execution 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Childcare Kids can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Childcare Kids 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Childcare Kids can use these opportunities to build new business models that can help the communities that Childcare Kids operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Kids & Company: Entering the U.S. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kids & Company: Entering the U.S. are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Childcare Kids 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 Kids & Company: Entering the U.S. .
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. Childcare Kids 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 Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Childcare Kids can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Childcare Kids is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Childcare Kids 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.
Regulatory challenges
– Childcare Kids 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 Strategy & Execution industry regulations.
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 Childcare Kids.
Increasing wage structure of Childcare Kids
– 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 Childcare Kids.
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 Childcare Kids business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Childcare Kids with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Childcare Kids 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.
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 Childcare Kids in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Kids & Company: Entering the U.S. 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 Kids & Company: Entering the U.S. 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 Kids & Company: Entering the U.S. 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 Kids & Company: Entering the U.S. 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 Kids & Company: Entering the U.S. 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 Childcare Kids needs to make to build a sustainable competitive advantage.