Note on Managing High-Risk Outsourcing In Local Governments SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Note on Managing High-Risk Outsourcing In Local Governments
Outsourcing is a strategy used by many municipalities in an effort to provide high quality public services at a low cost. The underlying theory is that by having an external vendor provide a service, the city or town can take advantage of the vendor's experience and economies of scale. The result will be comparable or better quality services than could be provided by the municipality itself, at a reduced cost to the taxpayers, while still allowing the vendor to earn a profit. Unfortunately, theory and reality sometimes diverge. This note discusses why this can happen and what can be done about it.
Swot Analysis of "Note on Managing High-Risk Outsourcing In Local Governments" written by David W. Young includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vendor Theory facing as an external strategic factors. Some of the topics covered in Note on Managing High-Risk Outsourcing In Local Governments case study are - Strategic Management Strategies, Operations management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Note on Managing High-Risk Outsourcing In Local Governments casestudy better are - – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, central banks are concerned over increasing inflation, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, etc
Introduction to SWOT Analysis of Note on Managing High-Risk Outsourcing In Local Governments
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Note on Managing High-Risk Outsourcing In Local Governments case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vendor Theory, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vendor Theory 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 Note on Managing High-Risk Outsourcing In Local Governments can be done for the following purposes –
1. Strategic planning using facts provided in Note on Managing High-Risk Outsourcing In Local Governments case study
2. Improving business portfolio management of Vendor Theory
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Vendor Theory
Strengths Note on Managing High-Risk Outsourcing In Local Governments | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vendor Theory in Note on Managing High-Risk Outsourcing In Local Governments Harvard Business Review case study are -
Innovation driven organization
– Vendor Theory is one of the most innovative firm in sector. Manager in Note on Managing High-Risk Outsourcing In Local Governments Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Finance & Accounting field
– Vendor Theory 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 Vendor Theory in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Vendor Theory is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Vendor Theory has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Note on Managing High-Risk Outsourcing In Local Governments 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.
High switching costs
– The high switching costs that Vendor Theory 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.
Successful track record of launching new products
– Vendor Theory has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vendor Theory has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Organizational Resilience of Vendor Theory
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vendor Theory does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Finance & Accounting industry
– Note on Managing High-Risk Outsourcing In Local Governments firm has clearly differentiated products in the market place. This has enabled Vendor Theory to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Vendor Theory to invest into research and development (R&D) and innovation.
High brand equity
– Vendor Theory has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vendor Theory to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Vendor Theory in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Note on Managing High-Risk Outsourcing In Local Governments 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Vendor Theory digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vendor Theory 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.
Weaknesses Note on Managing High-Risk Outsourcing In Local Governments | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Note on Managing High-Risk Outsourcing In Local Governments are -
Increasing silos among functional specialists
– The organizational structure of Vendor Theory is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Vendor Theory needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vendor Theory to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Note on Managing High-Risk Outsourcing In Local Governments 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 Vendor Theory has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Note on Managing High-Risk Outsourcing In Local Governments, is just above the industry average. Vendor Theory needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Note on Managing High-Risk Outsourcing In Local Governments 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 Vendor Theory 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Note on Managing High-Risk Outsourcing In Local Governments, in the dynamic environment Vendor Theory has struggled to respond to the nimble upstart competition. Vendor Theory has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Vendor Theory supply chain. Even after few cautionary changes mentioned in the HBR case study - Note on Managing High-Risk Outsourcing In Local Governments, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vendor Theory vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Note on Managing High-Risk Outsourcing In Local Governments, it seems that the employees of Vendor Theory 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.
Aligning sales with marketing
– It come across in the case study Note on Managing High-Risk Outsourcing In Local Governments 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 Note on Managing High-Risk Outsourcing In Local Governments can leverage the sales team experience to cultivate customer relationships as Vendor Theory is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Vendor Theory, firm in the HBR case study Note on Managing High-Risk Outsourcing In Local Governments needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Vendor Theory 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. Vendor Theory 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.
Products dominated business model
– Even though Vendor Theory 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 - Note on Managing High-Risk Outsourcing In Local Governments should strive to include more intangible value offerings along with its core products and services.
Opportunities Note on Managing High-Risk Outsourcing In Local Governments | 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 Note on Managing High-Risk Outsourcing In Local Governments are -
Loyalty marketing
– Vendor Theory 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Vendor Theory can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Vendor Theory has opened avenues for new revenue streams for the organization in the industry. This can help Vendor Theory to build a more holistic ecosystem as suggested in the Note on Managing High-Risk Outsourcing In Local Governments case study. Vendor Theory can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Vendor Theory in the consumer business. Now Vendor Theory can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Vendor Theory 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 Note on Managing High-Risk Outsourcing In Local Governments - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Vendor Theory to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vendor Theory in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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 Vendor Theory 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vendor Theory 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 Vendor Theory to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Vendor Theory 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vendor Theory 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.
Buying journey improvements
– Vendor Theory can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Note on Managing High-Risk Outsourcing In Local Governments 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Vendor Theory 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, Note on Managing High-Risk Outsourcing In Local Governments, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Vendor Theory 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.
Threats Note on Managing High-Risk Outsourcing In Local Governments External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Note on Managing High-Risk Outsourcing In Local Governments are -
Environmental challenges
– Vendor Theory 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. Vendor Theory can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Note on Managing High-Risk Outsourcing In Local Governments, Vendor Theory may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Technology acceleration in Forth Industrial Revolution
– Vendor Theory has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Vendor Theory needs to keep up with the evolution of technology in the Finance & Accounting 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. Vendor Theory 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.
Regulatory challenges
– Vendor Theory 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 Finance & Accounting industry regulations.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Vendor Theory can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vendor Theory with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Vendor Theory needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Vendor Theory.
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 Vendor Theory in the Finance & Accounting sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vendor Theory in the Finance & Accounting industry. The Finance & Accounting 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.
Increasing wage structure of Vendor Theory
– 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 Vendor Theory.
Stagnating economy with rate increase
– Vendor Theory 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.
Weighted SWOT Analysis of Note on Managing High-Risk Outsourcing In Local Governments 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 Note on Managing High-Risk Outsourcing In Local Governments 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 Note on Managing High-Risk Outsourcing In Local Governments 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 Note on Managing High-Risk Outsourcing In Local Governments 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 Note on Managing High-Risk Outsourcing In Local Governments 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 Vendor Theory needs to make to build a sustainable competitive advantage.
