Laree is a German company that manufactures and supplies the fasteners that are used in construction to attach glass to the walls of buildings. Its executives must decide whether to accept a contract that could be a great opportunity to open a new market for the company or result in a significant loss of money.This case is based on the "Berfest AG" case by the same authors.This case replaces The Berfest case from the same authors (AD-314).
Authors :: Miguel Angel Arino Martin, Franz Heukamp
Swot Analysis of "Laree Verbindungen GmbH" written by Miguel Angel Arino Martin, Franz Heukamp includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Berfest Laree facing as an external strategic factors. Some of the topics covered in Laree Verbindungen GmbH case study are - Strategic Management Strategies, International business and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Laree Verbindungen GmbH casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, technology disruption, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Laree Verbindungen GmbH
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Laree Verbindungen GmbH case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Berfest Laree, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Berfest Laree 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 Laree Verbindungen GmbH can be done for the following purposes –
1. Strategic planning using facts provided in Laree Verbindungen GmbH case study
2. Improving business portfolio management of Berfest Laree
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 Berfest Laree
Strengths Laree Verbindungen GmbH | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Berfest Laree in Laree Verbindungen GmbH Harvard Business Review case study are -
Learning organization
- Berfest Laree 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 Berfest Laree is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Laree Verbindungen GmbH Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Berfest Laree is one of the leading recruiters in the industry. Managers in the Laree Verbindungen GmbH are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Berfest Laree has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Laree Verbindungen GmbH 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.
Successful track record of launching new products
– Berfest Laree has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Berfest Laree 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.
Superior customer experience
– The customer experience strategy of Berfest Laree in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Berfest Laree
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Berfest Laree does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Berfest Laree 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 Miguel Angel Arino Martin, Franz Heukamp 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Berfest Laree digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Berfest Laree 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.
Diverse revenue streams
– Berfest Laree is present in almost all the verticals within the industry. This has provided firm in Laree Verbindungen GmbH 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.
Innovation driven organization
– Berfest Laree is one of the most innovative firm in sector. Manager in Laree Verbindungen GmbH Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Berfest Laree in the sector have low bargaining power. Laree Verbindungen GmbH has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Berfest Laree to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Berfest Laree has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Berfest Laree to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Laree Verbindungen GmbH | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Laree Verbindungen GmbH are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Laree Verbindungen GmbH HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Berfest Laree has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Berfest Laree is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Berfest Laree needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Berfest Laree to focus more on services rather than just following the product oriented approach.
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 Berfest Laree supply chain. Even after few cautionary changes mentioned in the HBR case study - Laree Verbindungen GmbH, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Berfest Laree vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Berfest Laree 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 - Laree Verbindungen GmbH should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Laree Verbindungen GmbH 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 Berfest Laree 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Berfest Laree 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. Berfest Laree 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.
Lack of clear differentiation of Berfest Laree products
– To increase the profitability and margins on the products, Berfest Laree needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Berfest Laree is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Laree Verbindungen GmbH 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 Laree Verbindungen GmbH, in the dynamic environment Berfest Laree has struggled to respond to the nimble upstart competition. Berfest Laree has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Berfest Laree has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Berfest Laree, firm in the HBR case study Laree Verbindungen GmbH needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Laree Verbindungen GmbH | 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 Laree Verbindungen GmbH are -
Building a culture of innovation
– managers at Berfest Laree 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 Leadership & Managing People segment.
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 Berfest Laree in the consumer business. Now Berfest Laree can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Berfest Laree is facing challenges because of the dominance of functional experts in the organization. Laree Verbindungen GmbH 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Berfest Laree 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 Berfest Laree to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Berfest Laree can use these opportunities to build new business models that can help the communities that Berfest Laree operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Leveraging digital technologies
– Berfest Laree 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.
Using analytics as competitive advantage
– Berfest Laree 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 Laree Verbindungen GmbH - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Berfest Laree to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Berfest Laree can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Laree Verbindungen GmbH 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.
Better consumer reach
– The expansion of the 5G network will help Berfest Laree to increase its market reach. Berfest Laree 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
– Berfest Laree 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.
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 Berfest Laree 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Berfest Laree 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 Berfest Laree can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Laree Verbindungen GmbH External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Laree Verbindungen GmbH are -
High dependence on third party suppliers
– Berfest Laree 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Laree Verbindungen GmbH, Berfest Laree 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 .
Environmental challenges
– Berfest Laree 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. Berfest Laree can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
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
– Berfest Laree 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 Leadership & Managing People industry regulations.
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 Berfest Laree business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Berfest Laree 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.
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. Berfest Laree needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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. Berfest Laree 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.
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 Berfest Laree.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Berfest Laree 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.
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 Berfest Laree in the Leadership & Managing People sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Laree Verbindungen GmbH 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 Laree Verbindungen GmbH 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 Laree Verbindungen GmbH 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 Laree Verbindungen GmbH 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 Laree Verbindungen GmbH 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 Berfest Laree needs to make to build a sustainable competitive advantage.
