Skutis: Negotiating Production in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Skutis: Negotiating Production in China
In August 2015, a law student in Singapore came up with the idea for his first scooter when he needed a simple and economical mode of transport to get from his apartment to university. The student, who was Norwegian, and his Singaporean partner registered and incorporated Skutis Corporation Pte Ltd (Skutis) within only five days. The Skutis e-scooter emitted no fumes or noise and featured a quick folding design for easy storage. As new entrants in the industry, they felt confident that their combined study skills (law and business) would help them design and produce a more durable and dynamic scooter than those currently available. However, by April 2017, Skutis had already encountered major difficulties dealing with a Chinese manufacturer of its products. After 20 months of experience in the market, the two entrepreneurs were planning their company's strategy for the future. Having experienced the lows and highs of the Chinese production market, they were searching for ways to make their business more profitable and develop a long-term trustworthy relationship with a reliable manufacturer who would produce their designs. Stephen Grainger is affiliated with University of Notre Dame Australia.
Swot Analysis of "Skutis: Negotiating Production in China" written by Stephen Grainger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Skutis Scooter facing as an external strategic factors. Some of the topics covered in Skutis: Negotiating Production in China case study are - Strategic Management Strategies, Negotiations and Global Business.
Some of the macro environment factors that can be used to understand the Skutis: Negotiating Production in China casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, technology disruption, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies,
increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Skutis: Negotiating Production in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Skutis: Negotiating Production in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Skutis Scooter, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Skutis Scooter 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 Skutis: Negotiating Production in China can be done for the following purposes –
1. Strategic planning using facts provided in Skutis: Negotiating Production in China case study
2. Improving business portfolio management of Skutis Scooter
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 Skutis Scooter
Strengths Skutis: Negotiating Production in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Skutis Scooter in Skutis: Negotiating Production in China Harvard Business Review case study are -
Diverse revenue streams
– Skutis Scooter is present in almost all the verticals within the industry. This has provided firm in Skutis: Negotiating Production in China 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.
Training and development
– Skutis Scooter has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Skutis: Negotiating Production in China 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.
Effective Research and Development (R&D)
– Skutis Scooter 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 Skutis: Negotiating Production in China - 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 Skutis Scooter 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.
Learning organization
- Skutis Scooter 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 Skutis Scooter is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Skutis: Negotiating Production in China Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Global Business industry
– Skutis: Negotiating Production in China firm has clearly differentiated products in the market place. This has enabled Skutis Scooter to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Skutis Scooter to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Skutis Scooter has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Skutis Scooter 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.
Low bargaining power of suppliers
– Suppliers of Skutis Scooter in the sector have low bargaining power. Skutis: Negotiating Production in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Skutis Scooter to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Skutis Scooter 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.
Organizational Resilience of Skutis Scooter
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Skutis Scooter does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Skutis Scooter is one of the leading recruiters in the industry. Managers in the Skutis: Negotiating Production in China 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 Global Business field
– Skutis Scooter 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 Skutis Scooter in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Skutis: Negotiating Production in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Skutis: Negotiating Production in China are -
Need for greater diversity
– Skutis Scooter 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Skutis: Negotiating Production in China has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Skutis Scooter 's lucrative customers.
Slow to strategic competitive environment developments
– As Skutis: Negotiating Production in China HBR case study mentions - Skutis Scooter 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.
Increasing silos among functional specialists
– The organizational structure of Skutis Scooter is dominated by functional specialists. It is not different from other players in the Global Business segment. Skutis Scooter needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Skutis Scooter to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Skutis: Negotiating Production in China, it seems that the employees of Skutis Scooter don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Skutis Scooter 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, Stephen Grainger suggests that, Skutis Scooter 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 cash cycle compare to competitors
Skutis Scooter 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 Skutis Scooter 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.
Products dominated business model
– Even though Skutis Scooter 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 - Skutis: Negotiating Production in China should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Skutis Scooter 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. Skutis Scooter 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 Skutis: Negotiating Production in China | 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 Skutis: Negotiating Production in China are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Skutis Scooter 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, Skutis: Negotiating Production in China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Skutis Scooter to increase its market reach. Skutis Scooter 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.
Leveraging digital technologies
– Skutis Scooter 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Skutis Scooter 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 Skutis Scooter to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Skutis Scooter 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.
Manufacturing automation
– Skutis Scooter 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.
Creating value in data economy
– The success of analytics program of Skutis Scooter has opened avenues for new revenue streams for the organization in the industry. This can help Skutis Scooter to build a more holistic ecosystem as suggested in the Skutis: Negotiating Production in China case study. Skutis Scooter can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Skutis Scooter can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Skutis Scooter can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Skutis Scooter can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Skutis: Negotiating Production in China 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Skutis Scooter can use these opportunities to build new business models that can help the communities that Skutis Scooter operates in. Secondly it can use opportunities from government spending in Global Business sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Skutis Scooter 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.
Loyalty marketing
– Skutis Scooter 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.
Threats Skutis: Negotiating Production in China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Skutis: Negotiating Production in China are -
Consumer confidence and its impact on Skutis Scooter 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.
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 Skutis Scooter in the Global Business sector and impact the bottomline of the organization.
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 Skutis Scooter.
Environmental challenges
– Skutis Scooter 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. Skutis Scooter can take advantage of this fund but it will also bring new competitors in the Global Business 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 Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Skutis Scooter can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Skutis Scooter 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.
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 Skutis Scooter business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Skutis Scooter 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.
Technology acceleration in Forth Industrial Revolution
– Skutis Scooter has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Skutis Scooter 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.
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. Skutis Scooter needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Skutis Scooter with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Weighted SWOT Analysis of Skutis: Negotiating Production in China 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 Skutis: Negotiating Production in China 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 Skutis: Negotiating Production in China 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 Skutis: Negotiating Production in China 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 Skutis: Negotiating Production in China 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 Skutis Scooter needs to make to build a sustainable competitive advantage.
