Case Study Description of Sika: Optimizing The APAC Epoxy Flooring Supply Chain
In mid-2017, the regional head of Operations and Supply Chain at Sika AG, a Swiss specialty chemicals leader that developed solutions for building and automotive industries, faced a new challenge in the company's epoxy flooring supply chain. She was tasked with identifying a robust solution that would both satisfy a shortened lead time and provide spare capacity to accommodate future growth. How should she proceed with these tasks? Singfat Chu is affiliated with National University of Singapore.
Swot Analysis of "Sika: Optimizing The APAC Epoxy Flooring Supply Chain" written by Singfat Chu, Bruno Oehy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Epoxy Sika facing as an external strategic factors. Some of the topics covered in Sika: Optimizing The APAC Epoxy Flooring Supply Chain case study are - Strategic Management Strategies, Manufacturing, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the Sika: Optimizing The APAC Epoxy Flooring Supply Chain casestudy better are - – increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing energy prices,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of Sika: Optimizing The APAC Epoxy Flooring Supply Chain
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sika: Optimizing The APAC Epoxy Flooring Supply Chain case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Epoxy Sika, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Epoxy Sika 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain can be done for the following purposes –
1. Strategic planning using facts provided in Sika: Optimizing The APAC Epoxy Flooring Supply Chain case study
2. Improving business portfolio management of Epoxy Sika
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Epoxy Sika
Strengths Sika: Optimizing The APAC Epoxy Flooring Supply Chain | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Epoxy Sika in Sika: Optimizing The APAC Epoxy Flooring Supply Chain Harvard Business Review case study are -
Organizational Resilience of Epoxy Sika
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Epoxy Sika does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Sika: Optimizing The APAC Epoxy Flooring Supply Chain Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- Epoxy Sika 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 Epoxy Sika is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sika: Optimizing The APAC Epoxy Flooring Supply Chain Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Epoxy Sika 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.
Sustainable margins compare to other players in Global Business industry
– Sika: Optimizing The APAC Epoxy Flooring Supply Chain firm has clearly differentiated products in the market place. This has enabled Epoxy Sika to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Epoxy Sika to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Epoxy Sika has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Epoxy Sika 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.
High brand equity
– Epoxy Sika has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Epoxy Sika to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Epoxy Sika 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 Singfat Chu, Bruno Oehy 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
– Epoxy Sika has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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.
Innovation driven organization
– Epoxy Sika is one of the most innovative firm in sector. Manager in Sika: Optimizing The APAC Epoxy Flooring Supply Chain Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Epoxy Sika 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Epoxy Sika 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Sika: Optimizing The APAC Epoxy Flooring Supply Chain | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sika: Optimizing The APAC Epoxy Flooring Supply Chain are -
High cash cycle compare to competitors
Epoxy Sika 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.
Lack of clear differentiation of Epoxy Sika products
– To increase the profitability and margins on the products, Epoxy Sika needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Sika: Optimizing The APAC Epoxy Flooring Supply Chain HBR case study mentions - Epoxy Sika 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Epoxy Sika 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Epoxy Sika is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 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 Epoxy Sika supply chain. Even after few cautionary changes mentioned in the HBR case study - Sika: Optimizing The APAC Epoxy Flooring Supply Chain, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Epoxy Sika vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Sika: Optimizing The APAC Epoxy Flooring Supply Chain, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Increasing silos among functional specialists
– The organizational structure of Epoxy Sika is dominated by functional specialists. It is not different from other players in the Global Business segment. Epoxy Sika needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Epoxy Sika to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Epoxy Sika 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Singfat Chu, Bruno Oehy suggests that, Epoxy Sika 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sika: Optimizing The APAC Epoxy Flooring Supply Chain, is just above the industry average. Epoxy Sika 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.
Opportunities Sika: Optimizing The APAC Epoxy Flooring Supply Chain | 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Epoxy Sika 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, Sika: Optimizing The APAC Epoxy Flooring Supply Chain, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Epoxy Sika 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.
Leveraging digital technologies
– Epoxy Sika 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 Epoxy Sika 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Epoxy Sika 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. Epoxy Sika 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 Epoxy Sika in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Epoxy Sika can develop new processes and procedures in Global Business 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.
Better consumer reach
– The expansion of the 5G network will help Epoxy Sika to increase its market reach. Epoxy Sika 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.
Buying journey improvements
– Epoxy Sika can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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.
Loyalty marketing
– Epoxy Sika 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, Epoxy Sika can use these opportunities to build new business models that can help the communities that Epoxy Sika operates in. Secondly it can use opportunities from government spending in Global Business sector.
Using analytics as competitive advantage
– Epoxy Sika 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Epoxy Sika to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Epoxy Sika 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.
Threats Sika: Optimizing The APAC Epoxy Flooring Supply Chain External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sika: Optimizing The APAC Epoxy Flooring Supply Chain are -
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 Epoxy Sika business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Epoxy Sika 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.
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. Epoxy Sika 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Epoxy Sika in the Global Business industry. The Global Business 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.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Epoxy Sika can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Epoxy Sika with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Epoxy Sika.
Increasing wage structure of Epoxy Sika
– 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 Epoxy Sika.
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.
Shortening product life cycle
– it is one of the major threat that Epoxy Sika is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Epoxy Sika 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
– Epoxy Sika 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 Global Business industry regulations.
Weighted SWOT Analysis of Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 Epoxy Sika needs to make to build a sustainable competitive advantage.