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 - – talent flight as more people leaving formal jobs, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google,
increasing energy prices, increasing transportation and logistics costs, 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 -
Diverse revenue streams
– Cable Equity is present in almost all the verticals within the industry. This has provided firm in WideOpenWest: Financing the Knology Acquisition 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.
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.
Low bargaining power of suppliers
– Suppliers of Cable Equity in the sector have low bargaining power. WideOpenWest: Financing the Knology Acquisition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cable Equity to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Cable Equity 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.
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.
High brand equity
– Cable Equity has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cable Equity to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Cable Equity are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Cable Equity is one of the leading recruiters in the industry. Managers in the WideOpenWest: Financing the Knology Acquisition are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 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.
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.
Products dominated business model
– Even though Cable Equity 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 - WideOpenWest: Financing the Knology Acquisition should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Cable Equity products
– To increase the profitability and margins on the products, Cable Equity needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Cable Equity supply chain. Even after few cautionary changes mentioned in the HBR case study - WideOpenWest: Financing the Knology Acquisition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cable Equity vulnerable to further global disruptions in South East Asia.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Cable Equity is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cable Equity needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cable Equity to focus more on services rather than just following the product oriented approach.
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.
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.
Slow to strategic competitive environment developments
– As WideOpenWest: Financing the Knology Acquisition HBR case study mentions - Cable Equity 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.
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 -
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.
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. Cable Equity 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. Cable Equity 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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cable Equity 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.
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.
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.
Loyalty marketing
– Cable Equity 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.
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.
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. Cable Equity can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 -
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 .
High dependence on third party suppliers
– Cable Equity high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Cable Equity is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Cable Equity in the Finance & Accounting sector and impact the bottomline of the organization.
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 .
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.
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.
Increasing wage structure of Cable Equity
– 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 Cable Equity.
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 Cable Equity.
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.
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.
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. Cable Equity can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.