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 - – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , wage bills are increasing,
increasing energy prices, central banks are concerned over increasing inflation, 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 -
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.
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.
Training and development
– Houston Dropbox has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dropbox - Series B Financing 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.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Houston Dropbox digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Houston Dropbox 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.
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.
Ability to lead change in Finance & Accounting field
– Houston Dropbox 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 Houston Dropbox 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
– 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.
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.
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.
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.
Highly skilled collaborators
– Houston Dropbox has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Dropbox - Series B Financing HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
Increasing silos among functional specialists
– The organizational structure of Houston Dropbox is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Houston Dropbox needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Houston Dropbox to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Houston Dropbox 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 Dropbox - Series B Financing, is just above the industry average. Houston Dropbox 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Dropbox - Series B Financing, in the dynamic environment Houston Dropbox has struggled to respond to the nimble upstart competition. Houston Dropbox has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Houston Dropbox 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 operating costs
– Compare to the competitors, firm in the HBR case study Dropbox - Series B Financing 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 Houston Dropbox 's lucrative customers.
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.
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.
Aligning sales with marketing
– It come across in the case study Dropbox - Series B Financing 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 Dropbox - Series B Financing can leverage the sales team experience to cultivate customer relationships as Houston Dropbox is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Houston Dropbox 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.
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.
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.
Developing new processes and practices
– Houston Dropbox can develop new processes and procedures in Finance & Accounting 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.
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.
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.
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 Houston Dropbox in the consumer business. Now Houston Dropbox can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Houston Dropbox can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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. Houston Dropbox can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Houston Dropbox 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.
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 -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Houston Dropbox with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Houston Dropbox has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Houston Dropbox 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.
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.
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.
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 .
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.
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.
Regulatory challenges
– Houston Dropbox 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.
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.
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 Houston Dropbox.
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.
Shortening product life cycle
– it is one of the major threat that Houston Dropbox is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.