Innovation Sourcing Excellence: Three Purchasing Capabilities for Success SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Innovation Sourcing Excellence: Three Purchasing Capabilities for Success
Innovation sourcing has become more critical across many industries. As global value chains have become more fragmented, change and opportunity comes from all sides. As a result, companies need to excel at capturing innovation opportunities with existing and potential supply chain members. This article describes a simple framework with three essential innovation sourcing capabilities needed to excel in purchasing: (1) Purchasing needs to explore unmet needs and anticipate future competitive advantages by working closely with other functions and clients; (2) it needs to explore external opportunities beyond first-tier suppliers; and (3) it needs to involve suppliers in innovation projects that consistently deliver results over time. Our framework has been developed based on a combined qualitative and quantitative research methodology that took into account practices and results at the purchasing and company levels. The framework will help C-level managers and purchasing teams benchmark their progress in innovation sourcing and understand what steps need to be taken to achieve excellence.
Swot Analysis of "Innovation Sourcing Excellence: Three Purchasing Capabilities for Success" written by Herve Legenvre, Jury Gualandris includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Purchasing Sourcing facing as an external strategic factors. Some of the topics covered in Innovation Sourcing Excellence: Three Purchasing Capabilities for Success case study are - Strategic Management Strategies, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Innovation Sourcing Excellence: Three Purchasing Capabilities for Success casestudy better are - – cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%,
there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Innovation Sourcing Excellence: Three Purchasing Capabilities for Success
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Innovation Sourcing Excellence: Three Purchasing Capabilities for Success case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Purchasing Sourcing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Purchasing Sourcing 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success can be done for the following purposes –
1. Strategic planning using facts provided in Innovation Sourcing Excellence: Three Purchasing Capabilities for Success case study
2. Improving business portfolio management of Purchasing Sourcing
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Purchasing Sourcing
Strengths Innovation Sourcing Excellence: Three Purchasing Capabilities for Success | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Purchasing Sourcing in Innovation Sourcing Excellence: Three Purchasing Capabilities for Success Harvard Business Review case study are -
Analytics focus
– Purchasing Sourcing 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 Herve Legenvre, Jury Gualandris 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.
Ability to lead change in Technology & Operations field
– Purchasing Sourcing 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 Purchasing Sourcing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Purchasing Sourcing 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 Purchasing Sourcing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Innovation Sourcing Excellence: Three Purchasing Capabilities for Success Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Purchasing Sourcing 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Purchasing Sourcing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Purchasing Sourcing 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.
Ability to recruit top talent
– Purchasing Sourcing is one of the leading recruiters in the industry. Managers in the Innovation Sourcing Excellence: Three Purchasing Capabilities for Success are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Purchasing Sourcing in the sector have low bargaining power. Innovation Sourcing Excellence: Three Purchasing Capabilities for Success has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Purchasing Sourcing to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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.
Strong track record of project management
– Purchasing Sourcing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Technology & Operations industry
– Innovation Sourcing Excellence: Three Purchasing Capabilities for Success firm has clearly differentiated products in the market place. This has enabled Purchasing Sourcing to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Purchasing Sourcing to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Purchasing Sourcing is present in almost all the verticals within the industry. This has provided firm in Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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.
Weaknesses Innovation Sourcing Excellence: Three Purchasing Capabilities for Success | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Innovation Sourcing Excellence: Three Purchasing Capabilities for Success are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Purchasing Sourcing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Innovation Sourcing Excellence: Three Purchasing Capabilities for Success HBR case study mentions - Purchasing Sourcing 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.
Need for greater diversity
– Purchasing Sourcing 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success, is just above the industry average. Purchasing Sourcing 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.
Lack of clear differentiation of Purchasing Sourcing products
– To increase the profitability and margins on the products, Purchasing Sourcing needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Purchasing Sourcing is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Purchasing Sourcing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Purchasing Sourcing to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Purchasing Sourcing 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Purchasing Sourcing has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Purchasing Sourcing, firm in the HBR case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success, it seems that the employees of Purchasing Sourcing 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Purchasing Sourcing 's lucrative customers.
Opportunities Innovation Sourcing Excellence: Three Purchasing Capabilities for Success | 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success are -
Using analytics as competitive advantage
– Purchasing Sourcing 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Purchasing Sourcing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Purchasing Sourcing 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, Innovation Sourcing Excellence: Three Purchasing Capabilities for Success, 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 Purchasing Sourcing to increase its market reach. Purchasing Sourcing 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
– Purchasing Sourcing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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.
Learning at scale
– Online learning technologies has now opened space for Purchasing Sourcing 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
– Purchasing Sourcing 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Purchasing Sourcing 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. Purchasing Sourcing 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.
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 Purchasing Sourcing in the consumer business. Now Purchasing Sourcing can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Purchasing Sourcing can develop new processes and procedures in Technology & Operations 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Purchasing Sourcing 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.
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. Purchasing Sourcing can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Purchasing Sourcing has opened avenues for new revenue streams for the organization in the industry. This can help Purchasing Sourcing to build a more holistic ecosystem as suggested in the Innovation Sourcing Excellence: Three Purchasing Capabilities for Success case study. Purchasing Sourcing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Purchasing Sourcing 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Purchasing Sourcing in the Technology & Operations industry. The Technology & Operations 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
– Purchasing Sourcing 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. Purchasing Sourcing can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Regulatory challenges
– Purchasing Sourcing 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 Technology & Operations industry regulations.
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. Purchasing Sourcing 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Purchasing Sourcing 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Innovation Sourcing Excellence: Three Purchasing Capabilities for Success, Purchasing Sourcing may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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 Purchasing Sourcing business can come under increasing regulations regarding data privacy, data security, etc.
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 Purchasing Sourcing.
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.
High dependence on third party suppliers
– Purchasing Sourcing 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.
Shortening product life cycle
– it is one of the major threat that Purchasing Sourcing is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Purchasing Sourcing in the Technology & Operations sector and impact the bottomline of the organization.
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. Purchasing Sourcing needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Innovation Sourcing Excellence: Three Purchasing Capabilities for Success 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 Purchasing Sourcing needs to make to build a sustainable competitive advantage.