Zuora in 2017: Leading the Subscription Economy Revolution SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zuora in 2017: Leading the Subscription Economy Revolution
Long before Spotify had become a household name, and when Netflix was still mailing off DVDs to customers' homes, Tien Tzuo had foreseen a major transformation in the business world: from one-off sales to subscription business models. He realized that no one was making billing software to serve the complex needs of such companies, so he founded Zuora in 2007 to automate billing, commerce, and finance operations for companies built on a recurring revenue model. Initially, Zuora catered mostly to start-ups, but the world rapidly evolved. By 2017 its customers included companies such as Box, the Financial Times, Ford, GM, GE, Caterpillar, and Zendesk. In 2016, Zuora had crossed a major threshold: $100 million in annual recurring revenue. In 2017, Tzuo could see that Zuora was positioned to hit $300 million, and before then, he believed he would take Zuora public. The company was growing rapidly, and Tzuo had begun that he needed to approach this next phase of scaling more deliberately than he had with Zuora's early growth. "A company that is going from $100 million to $300 million has to be different than a company going from $30 million to $100 million," said Tzuo. "That $30 million to $100 million was a sprint; making the transition from $30 million, we were not so thoughtful. I wanted to be more thoughtful this time." In 2014, Tzuo had identified four major areas in which the company needed to transform: sales, finance, products, and people. Tzuo knew the transformation plan meant he would have to make a wave of leadership changes, managing hirings and terminations. And he would have to change his own leadership style to match the company's increasing size. Meanwhile, he had to think strategically about how Zuora could fend off challenges both from software behemoths like Salesforce.com and Oracle, and nimble upstarts. To successfully IPO, and satisfy investors over the long term, Tzuo knew that Zuora had to deliver consistency and predictability. "What's at the top of my mind is how do we build predictability into the machine?" he said. "Can we build a company that just consistently is very boring, that delivers 30 percent annual growth over the next decade?"
Authors :: Robert A. Burgelman, Robert Siegel, Julie Makinen
Swot Analysis of "Zuora in 2017: Leading the Subscription Economy Revolution" written by Robert A. Burgelman, Robert Siegel, Julie Makinen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zuora Tzuo facing as an external strategic factors. Some of the topics covered in Zuora in 2017: Leading the Subscription Economy Revolution case study are - Strategic Management Strategies, Financial markets, Growth strategy, Leadership, Leadership development, Sales, Strategic thinking, Strategy execution, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Zuora in 2017: Leading the Subscription Economy Revolution casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, there is backlash against globalization, increasing energy prices, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions,
there is increasing trade war between United States & China, wage bills are increasing, etc
Introduction to SWOT Analysis of Zuora in 2017: Leading the Subscription Economy Revolution
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zuora in 2017: Leading the Subscription Economy Revolution case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zuora Tzuo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zuora Tzuo 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 Zuora in 2017: Leading the Subscription Economy Revolution can be done for the following purposes –
1. Strategic planning using facts provided in Zuora in 2017: Leading the Subscription Economy Revolution case study
2. Improving business portfolio management of Zuora Tzuo
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 Zuora Tzuo
Strengths Zuora in 2017: Leading the Subscription Economy Revolution | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zuora Tzuo in Zuora in 2017: Leading the Subscription Economy Revolution Harvard Business Review case study are -
Sustainable margins compare to other players in Leadership & Managing People industry
– Zuora in 2017: Leading the Subscription Economy Revolution firm has clearly differentiated products in the market place. This has enabled Zuora Tzuo to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Zuora Tzuo to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Zuora Tzuo 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
– Zuora Tzuo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Zuora Tzuo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zuora Tzuo 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.
Organizational Resilience of Zuora Tzuo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zuora Tzuo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Zuora Tzuo in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Zuora Tzuo 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.
Ability to recruit top talent
– Zuora Tzuo is one of the leading recruiters in the industry. Managers in the Zuora in 2017: Leading the Subscription Economy Revolution are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Leadership & Managing People field
– Zuora Tzuo 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 Zuora Tzuo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Zuora Tzuo is present in almost all the verticals within the industry. This has provided firm in Zuora in 2017: Leading the Subscription Economy Revolution 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
– Zuora Tzuo is one of the most innovative firm in sector. Manager in Zuora in 2017: Leading the Subscription Economy Revolution Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Zuora Tzuo 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 Zuora in 2017: Leading the Subscription Economy Revolution HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Zuora in 2017: Leading the Subscription Economy Revolution | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zuora in 2017: Leading the Subscription Economy Revolution are -
High bargaining power of channel partners
– Because of the regulatory requirements, Robert A. Burgelman, Robert Siegel, Julie Makinen suggests that, Zuora Tzuo 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zuora Tzuo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Zuora in 2017: Leading the Subscription Economy Revolution can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Zuora Tzuo 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.
Skills based hiring
– The stress on hiring functional specialists at Zuora Tzuo 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zuora in 2017: Leading the Subscription Economy Revolution, is just above the industry average. Zuora Tzuo 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Zuora in 2017: Leading the Subscription Economy Revolution 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 Zuora Tzuo has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zuora in 2017: Leading the Subscription Economy Revolution, in the dynamic environment Zuora Tzuo has struggled to respond to the nimble upstart competition. Zuora Tzuo has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Zuora Tzuo 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 - Zuora in 2017: Leading the Subscription Economy Revolution should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Zuora Tzuo products
– To increase the profitability and margins on the products, Zuora Tzuo needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Zuora Tzuo 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. Zuora Tzuo 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 strategic competitive environment developments
– As Zuora in 2017: Leading the Subscription Economy Revolution HBR case study mentions - Zuora Tzuo 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.
Opportunities Zuora in 2017: Leading the Subscription Economy Revolution | 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 Zuora in 2017: Leading the Subscription Economy Revolution are -
Creating value in data economy
– The success of analytics program of Zuora Tzuo has opened avenues for new revenue streams for the organization in the industry. This can help Zuora Tzuo to build a more holistic ecosystem as suggested in the Zuora in 2017: Leading the Subscription Economy Revolution case study. Zuora Tzuo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Zuora Tzuo to increase its market reach. Zuora Tzuo 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.
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. Zuora Tzuo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Zuora Tzuo 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 Zuora Tzuo to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Zuora Tzuo 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.
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 Zuora Tzuo in the consumer business. Now Zuora Tzuo can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Zuora Tzuo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zuora in 2017: Leading the Subscription Economy Revolution 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.
Using analytics as competitive advantage
– Zuora Tzuo 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 Zuora in 2017: Leading the Subscription Economy Revolution - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Zuora Tzuo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zuora Tzuo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Zuora Tzuo 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.
Learning at scale
– Online learning technologies has now opened space for Zuora Tzuo 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.
Loyalty marketing
– Zuora Tzuo 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zuora Tzuo 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.
Threats Zuora in 2017: Leading the Subscription Economy Revolution External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zuora in 2017: Leading the Subscription Economy Revolution 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. Zuora Tzuo needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Zuora Tzuo in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Zuora Tzuo 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zuora Tzuo 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.
Environmental challenges
– Zuora Tzuo 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. Zuora Tzuo 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Zuora Tzuo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zuora Tzuo 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 Zuora in 2017: Leading the Subscription Economy Revolution .
Increasing wage structure of Zuora Tzuo
– 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 Zuora Tzuo.
Technology acceleration in Forth Industrial Revolution
– Zuora Tzuo has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Zuora Tzuo needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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 Zuora Tzuo.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zuora Tzuo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Zuora Tzuo is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Zuora in 2017: Leading the Subscription Economy Revolution 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 Zuora in 2017: Leading the Subscription Economy Revolution 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 Zuora in 2017: Leading the Subscription Economy Revolution 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 Zuora in 2017: Leading the Subscription Economy Revolution 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 Zuora in 2017: Leading the Subscription Economy Revolution 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 Zuora Tzuo needs to make to build a sustainable competitive advantage.
