Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry
What happens when firms in an oligopolistic industry find themselves lagging behind in a potentially dominant technology? If R&D costs are significant and catch-up is key, technology laggards must turn to each other and open up their innovation processes in order to survive. This article uses a real options framework to explain the motives of bitter rivals to engage in collaborative relationships in order to catch up with industry leaders in specific technologies. It shows that ex ante, their interests converge and this lays the foundation of "catch-up alliances": competitors open up to catch up. However, they often bring vastly different resources to the alliance and, in the process of cooperation, what they learn may cause their interests to diverge. Furthermore, some participants may discount a technology trajectory on the basis of what they learn, and terminate efforts in that area. Therefore, the "road not taken" may be a valuable outcome of the open innovation alliance. This article uses the case of a global alliance in hybrid electric drivetrain automotive technology as the study context, and it analyzes the implications for managers facing similar decisions.
Swot Analysis of "Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry" written by Marcelo Cano-Kollmann, Snehal Awate, T J Hannigan, Ram Mudambi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Catch Laggards facing as an external strategic factors. Some of the topics covered in Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry case study are - Strategic Management Strategies, Creativity, Research & development and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry casestudy better are - – cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing household debt because of falling income levels, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion,
increasing energy prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Catch Laggards, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Catch Laggards 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry can be done for the following purposes –
1. Strategic planning using facts provided in Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry case study
2. Improving business portfolio management of Catch Laggards
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Catch Laggards
Strengths Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Catch Laggards in Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry firm has clearly differentiated products in the market place. This has enabled Catch Laggards to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Catch Laggards to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Catch Laggards 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Catch Laggards 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
– Catch Laggards is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Catch Laggards has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Catch Laggards to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Catch Laggards is one of the most innovative firm in sector. Manager in Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Catch Laggards
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Catch Laggards does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Catch Laggards 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Catch Laggards in the sector have low bargaining power. Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Catch Laggards to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Catch Laggards is one of the leading recruiters in the industry. Managers in the Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Catch Laggards 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 Marcelo Cano-Kollmann, Snehal Awate, T J Hannigan, Ram Mudambi 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.
Training and development
– Catch Laggards has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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.
Weaknesses Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry are -
High bargaining power of channel partners
– Because of the regulatory requirements, Marcelo Cano-Kollmann, Snehal Awate, T J Hannigan, Ram Mudambi suggests that, Catch Laggards is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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 Catch Laggards has relatively successful track record of launching new products.
Lack of clear differentiation of Catch Laggards products
– To increase the profitability and margins on the products, Catch Laggards needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Catch Laggards 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.
Slow to strategic competitive environment developments
– As Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry HBR case study mentions - Catch Laggards 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.
Low market penetration in new markets
– Outside its home market of Catch Laggards, firm in the HBR case study Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry, in the dynamic environment Catch Laggards has struggled to respond to the nimble upstart competition. Catch Laggards has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry, is just above the industry average. Catch Laggards 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.
Need for greater diversity
– Catch Laggards 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.
Slow decision making process
– As mentioned earlier in the report, Catch Laggards 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. Catch Laggards 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Catch Laggards 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.
Opportunities Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry | 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Catch Laggards 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.
Using analytics as competitive advantage
– Catch Laggards 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Catch Laggards to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Catch Laggards 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 Innovation & Entrepreneurship segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Catch Laggards 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, Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Catch Laggards can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Catch Laggards can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Catch Laggards can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Catch Laggards 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.
Learning at scale
– Online learning technologies has now opened space for Catch Laggards 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.
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 Catch Laggards 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Catch Laggards can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Catch Laggards can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Catch Laggards can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Catch Laggards in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Threats Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry are -
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. Catch Laggards needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Catch Laggards 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.
Environmental challenges
– Catch Laggards 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. Catch Laggards can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Catch Laggards 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.
High dependence on third party suppliers
– Catch Laggards 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Catch Laggards 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Catch Laggards in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Consumer confidence and its impact on Catch Laggards 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.
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 Catch Laggards.
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.
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 Catch Laggards business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Catch Laggards 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 Innovation & Entrepreneurship industry regulations.
Increasing wage structure of Catch Laggards
– 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 Catch Laggards.
Weighted SWOT Analysis of Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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 Burying the Hatchet for Catch-Up: Open Innovation among Industry Laggards in the Automotive Industry 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 Catch Laggards needs to make to build a sustainable competitive advantage.
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