Case Study Description of WideOpenWest: Financing the Knology Acquisition
In the spring of 2012, a U.S. Internet, cable television, and telephone service provider-owned by a private equity group-approached a bank holding company to participate as a co-manager in a highly leveraged transaction in the cable industry. The transaction was the buyout of a smaller publicly traded cable company. The deal would require additional equity investment from the private equity group and a restructuring of the debt of both companies. Although the involved companies' management teams were excited about the opportunity, they knew that executing the deal would not be easy; the level of leverage would be the highest of any deal in the cable industry-or any industry-since before the 2007 economic downturn. James Parrino is affiliated with University of Florida.
Swot Analysis of "WideOpenWest: Financing the Knology Acquisition" written by James Parrino includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cable Equity facing as an external strategic factors. Some of the topics covered in WideOpenWest: Financing the Knology Acquisition case study are - Strategic Management Strategies, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the WideOpenWest: Financing the Knology Acquisition casestudy better are - – increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%,
there is backlash against globalization, geopolitical disruptions, etc
Introduction to SWOT Analysis of WideOpenWest: Financing the Knology Acquisition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in WideOpenWest: Financing the Knology Acquisition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cable Equity, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cable Equity 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 WideOpenWest: Financing the Knology Acquisition can be done for the following purposes –
1. Strategic planning using facts provided in WideOpenWest: Financing the Knology Acquisition case study
2. Improving business portfolio management of Cable Equity
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 Cable Equity
Strengths WideOpenWest: Financing the Knology Acquisition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cable Equity in WideOpenWest: Financing the Knology Acquisition Harvard Business Review case study are -
Learning organization
- Cable Equity 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 Cable Equity is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in WideOpenWest: Financing the Knology Acquisition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Cable Equity 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 James Parrino 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.
Training and development
– Cable Equity has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in WideOpenWest: Financing the Knology Acquisition 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.
Highly skilled collaborators
– Cable Equity 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 WideOpenWest: Financing the Knology Acquisition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Cable Equity in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Cable Equity is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Cable Equity digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cable Equity 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.
Innovation driven organization
– Cable Equity is one of the most innovative firm in sector. Manager in WideOpenWest: Financing the Knology Acquisition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Finance & Accounting industry
– WideOpenWest: Financing the Knology Acquisition firm has clearly differentiated products in the market place. This has enabled Cable Equity to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cable Equity to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the WideOpenWest: Financing the Knology Acquisition 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.
Successful track record of launching new products
– Cable Equity has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cable Equity 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 Cable Equity
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cable Equity does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses WideOpenWest: Financing the Knology Acquisition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of WideOpenWest: Financing the Knology Acquisition are -
High operating costs
– Compare to the competitors, firm in the HBR case study WideOpenWest: Financing the Knology Acquisition 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 Cable Equity 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study WideOpenWest: Financing the Knology Acquisition, is just above the industry average. Cable Equity 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the WideOpenWest: Financing the Knology Acquisition 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 Cable Equity has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study WideOpenWest: Financing the Knology Acquisition 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 WideOpenWest: Financing the Knology Acquisition can leverage the sales team experience to cultivate customer relationships as Cable Equity is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study WideOpenWest: Financing the Knology Acquisition, it seems that the employees of Cable Equity 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.
Low market penetration in new markets
– Outside its home market of Cable Equity, firm in the HBR case study WideOpenWest: Financing the Knology Acquisition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Cable Equity 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cable Equity is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study WideOpenWest: Financing the Knology Acquisition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Cable Equity 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.
Interest costs
– Compare to the competition, Cable Equity 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cable Equity 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.
Opportunities WideOpenWest: Financing the Knology Acquisition | 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 WideOpenWest: Financing the Knology Acquisition are -
Building a culture of innovation
– managers at Cable Equity 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cable Equity 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, WideOpenWest: Financing the Knology Acquisition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cable Equity 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.
Creating value in data economy
– The success of analytics program of Cable Equity has opened avenues for new revenue streams for the organization in the industry. This can help Cable Equity to build a more holistic ecosystem as suggested in the WideOpenWest: Financing the Knology Acquisition case study. Cable Equity can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Cable Equity 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.
Learning at scale
– Online learning technologies has now opened space for Cable Equity 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cable Equity 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 Cable Equity to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cable Equity is facing challenges because of the dominance of functional experts in the organization. WideOpenWest: Financing the Knology Acquisition 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
– Cable Equity can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. WideOpenWest: Financing the Knology Acquisition 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.
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 Cable Equity in the consumer business. Now Cable Equity can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Cable Equity to increase its market reach. Cable Equity 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.
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 Cable Equity 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.
Manufacturing automation
– Cable Equity 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.
Threats WideOpenWest: Financing the Knology Acquisition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study WideOpenWest: Financing the Knology Acquisition are -
Environmental challenges
– Cable Equity 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. Cable Equity can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cable Equity 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.
Technology acceleration in Forth Industrial Revolution
– Cable Equity has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cable Equity 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.
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 Cable Equity in the Finance & Accounting 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. Cable Equity needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cable Equity with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Cable Equity 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cable Equity 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 WideOpenWest: Financing the Knology Acquisition .
Shortening product life cycle
– it is one of the major threat that Cable Equity is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study WideOpenWest: Financing the Knology Acquisition, Cable Equity 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 .
Stagnating economy with rate increase
– Cable Equity 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.
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 Cable Equity business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Cable Equity 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.
Weighted SWOT Analysis of WideOpenWest: Financing the Knology Acquisition 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 WideOpenWest: Financing the Knology Acquisition 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 WideOpenWest: Financing the Knology Acquisition 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 WideOpenWest: Financing the Knology Acquisition 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 WideOpenWest: Financing the Knology Acquisition 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 Cable Equity needs to make to build a sustainable competitive advantage.