Dropbox - Series B Financing SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Dropbox - Series B Financing
In mid-2011, as global markets corrected amid worldwide economic uncertainty, Drew Houston, co-founder and CEO of Dropbox, the fast-growing file synchronization and sharing company, found himself in a difficult, albeit enviable, situation. Houston, who had already raised over $7 million through two rounds of venture funding (one seed round and a Series A round) and developed a large and growing user base, began receiving significant investor interest. With positive cash flows and profitability achieved, additional financing was not necessarily needed. However, in order to pursue future strategic efforts, Houston knew that additional cash was essential. After all, Houston and his team had already successfully executed the freemium business model but they had a greater vision-one that included a "path" to one billion users. In order to achieve this goal, the team delineated a number of strategic initiatives: extending their popular consumer product to the enterprise segment; opening up a platform upon which to allow third-party developers to add services and applications in order to build scale; augmenting the consumer side through distribution partnerships; and finally, finding a way to transition itself from a web-based company to one that could service cross-platform mobile devices. The team also realized that they would need a robust balance sheet to compete with well-established industry leaders such as Google, Apple, Amazon, and Microsoft. They would also need to focus on strategic hiring initiatives and key acquisitions in order to carry out these goals. This case describes Dropbox's path from inception up to its Series B round of financing. Specifically, it focuses on the team's strategic decisions as well as questions surrounding the execution of each initiative. Additional considerations include how much financing to raise, at what valuation, which terms were most important, and with whom to partner.
Authors :: Ilya A. Strebulaev, Theresia Gouw Ranzetta, Jaclyn C. Foroughi
Swot Analysis of "Dropbox - Series B Financing" written by Ilya A. Strebulaev, Theresia Gouw Ranzetta, Jaclyn C. Foroughi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Houston Dropbox facing as an external strategic factors. Some of the topics covered in Dropbox - Series B Financing case study are - Strategic Management Strategies, Entrepreneurial finance, Financial analysis, Financial management, Strategic planning, Technology and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Dropbox - Series B Financing casestudy better are - – increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, increasing energy prices, geopolitical disruptions, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Dropbox - Series B Financing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dropbox - Series B Financing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Houston Dropbox, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Houston Dropbox 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 Dropbox - Series B Financing can be done for the following purposes –
1. Strategic planning using facts provided in Dropbox - Series B Financing case study
2. Improving business portfolio management of Houston Dropbox
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 Houston Dropbox
Strengths Dropbox - Series B Financing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Houston Dropbox in Dropbox - Series B Financing Harvard Business Review case study are -
Innovation driven organization
– Houston Dropbox is one of the most innovative firm in sector. Manager in Dropbox - Series B Financing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Houston Dropbox 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.
Analytics focus
– Houston Dropbox 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 Ilya A. Strebulaev, Theresia Gouw Ranzetta, Jaclyn C. Foroughi 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.
Effective Research and Development (R&D)
– Houston Dropbox 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 Dropbox - Series B Financing - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Dropbox - Series B Financing 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.
Diverse revenue streams
– Houston Dropbox is present in almost all the verticals within the industry. This has provided firm in Dropbox - Series B Financing 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.
Strong track record of project management
– Houston Dropbox is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Houston Dropbox is one of the leading recruiters in the industry. Managers in the Dropbox - Series B Financing are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Houston Dropbox 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 Houston Dropbox is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dropbox - Series B Financing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Houston Dropbox has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Houston Dropbox to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Dropbox - Series B Financing firm has clearly differentiated products in the market place. This has enabled Houston Dropbox to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Houston Dropbox to invest into research and development (R&D) and innovation.
Organizational Resilience of Houston Dropbox
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Houston Dropbox does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Dropbox - Series B Financing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dropbox - Series B Financing are -
Products dominated business model
– Even though Houston Dropbox 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 - Dropbox - Series B Financing should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Dropbox - Series B Financing, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ilya A. Strebulaev, Theresia Gouw Ranzetta, Jaclyn C. Foroughi suggests that, Houston Dropbox 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.
Interest costs
– Compare to the competition, Houston Dropbox has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Dropbox - Series B Financing HBR case study mentions - Houston Dropbox 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Houston Dropbox is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Dropbox - Series B Financing can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Houston Dropbox, firm in the HBR case study Dropbox - Series B Financing needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Dropbox - Series B Financing 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 Houston Dropbox has relatively successful track record of launching new products.
Lack of clear differentiation of Houston Dropbox products
– To increase the profitability and margins on the products, Houston Dropbox needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Houston Dropbox 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. Houston Dropbox 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.
High cash cycle compare to competitors
Houston Dropbox 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.
Opportunities Dropbox - Series B Financing | 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 Dropbox - Series B Financing are -
Creating value in data economy
– The success of analytics program of Houston Dropbox has opened avenues for new revenue streams for the organization in the industry. This can help Houston Dropbox to build a more holistic ecosystem as suggested in the Dropbox - Series B Financing case study. Houston Dropbox can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Houston Dropbox 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. Houston Dropbox 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Houston Dropbox 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Houston Dropbox 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 Houston Dropbox to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Houston Dropbox is facing challenges because of the dominance of functional experts in the organization. Dropbox - Series B Financing 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.
Buying journey improvements
– Houston Dropbox can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dropbox - Series B Financing 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, Houston Dropbox can use these opportunities to build new business models that can help the communities that Houston Dropbox operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Houston Dropbox 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.
Building a culture of innovation
– managers at Houston Dropbox 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 Finance & Accounting segment.
Manufacturing automation
– Houston Dropbox can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Using analytics as competitive advantage
– Houston Dropbox 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 Dropbox - Series B Financing - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Houston Dropbox to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Houston Dropbox 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.
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. Houston Dropbox can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Dropbox - Series B Financing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dropbox - Series B Financing are -
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. Houston Dropbox can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Houston Dropbox 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Houston Dropbox 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 Dropbox - Series B Financing .
Environmental challenges
– Houston Dropbox 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. Houston Dropbox can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Houston Dropbox
– 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 Houston Dropbox.
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. Houston Dropbox needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Houston Dropbox 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dropbox - Series B Financing, Houston Dropbox 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 .
Consumer confidence and its impact on Houston Dropbox 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 Houston Dropbox 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 Houston Dropbox 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.
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. Houston Dropbox 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.
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 Dropbox - Series B Financing 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 Dropbox - Series B Financing 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 Dropbox - Series B Financing 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 Dropbox - Series B Financing 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 Dropbox - Series B Financing 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 Houston Dropbox needs to make to build a sustainable competitive advantage.
