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 - – geopolitical disruptions, technology disruption, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing energy prices, increasing commodity prices, supply chains are disrupted by pandemic ,
cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, 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 -
Ability to lead change in Global Business field
– Epoxy Sika 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 Epoxy Sika in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Epoxy Sika digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Epoxy Sika 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.
Strong track record of project management
– Epoxy Sika is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Epoxy Sika 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.
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.
Diverse revenue streams
– Epoxy Sika is present in almost all the verticals within the industry. This has provided firm in Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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.
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.
Low bargaining power of suppliers
– Suppliers of Epoxy Sika in the sector have low bargaining power. Sika: Optimizing The APAC Epoxy Flooring Supply Chain has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Epoxy Sika to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
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 -
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.
Skills based hiring
– The stress on hiring functional specialists at Epoxy Sika 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.
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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 Epoxy Sika has relatively successful track record of launching new products.
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.
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.
Aligning sales with marketing
– It come across in the case study Sika: Optimizing The APAC Epoxy Flooring Supply Chain that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Sika: Optimizing The APAC Epoxy Flooring Supply Chain can leverage the sales team experience to cultivate customer relationships as Epoxy Sika is planning to shift buying processes online.
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.
Low market penetration in new markets
– Outside its home market of Epoxy Sika, firm in the HBR case study Sika: Optimizing The APAC Epoxy Flooring Supply Chain needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Epoxy Sika 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. Epoxy Sika 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.
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 -
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Epoxy Sika 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 Epoxy Sika to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Epoxy Sika can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Manufacturing automation
– Epoxy Sika can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Building a culture of innovation
– managers at Epoxy Sika 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 Global Business segment.
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.
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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Epoxy Sika is facing challenges because of the dominance of functional experts in the organization. Sika: Optimizing The APAC Epoxy Flooring Supply Chain 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.
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 -
Technology acceleration in Forth Industrial Revolution
– Epoxy Sika has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Epoxy Sika needs to keep up with the evolution of technology in the Global Business 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.
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.
High dependence on third party suppliers
– Epoxy Sika 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 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Epoxy Sika 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 Sika: Optimizing The APAC Epoxy Flooring Supply Chain .
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.
Environmental challenges
– Epoxy Sika 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. Epoxy Sika can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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. Epoxy Sika needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
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 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.
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.