Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture
This case deals with how Sonata Software, an Indian software company, sought growth in Western Europe through TUI Infotec, a joint venture (JV) with TUI AG, a leader in travel and tourism in Germany. It provides a vehicle for reflecting on a firm's choice of a JV as a means for entering a new overseas market while building new competencies and buttressing competitive advantage. The case opens in Bangalore in May 2010, with B. Ramaswamy, President and Managing Director of Sonata Software, preparing for a meeting with his management team to review the performance of TUI Infotec. The case traces the history of Sonata from its spinoff from its parent company to the JV design and implementation. This case challenges students to evaluate the advantages and disadvantages of this international JV, and to consider the decision of whether to continue the JV or to dissolve it when the revenue commitments made by TUI AG were set to expire in 2011.
Swot Analysis of "Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture" written by Stephanie Hurt, Vijaya Narapareddy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sonata Tui facing as an external strategic factors. Some of the topics covered in Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture case study are - Strategic Management Strategies, Joint ventures and Global Business.
Some of the macro environment factors that can be used to understand the Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, technology disruption, increasing commodity prices, increasing energy prices, cloud computing is disrupting traditional business models,
wage bills are increasing, there is backlash against globalization, etc
Introduction to SWOT Analysis of Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sonata Tui, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sonata Tui 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture can be done for the following purposes –
1. Strategic planning using facts provided in Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture case study
2. Improving business portfolio management of Sonata Tui
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sonata Tui
Strengths Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sonata Tui in Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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.
High brand equity
– Sonata Tui has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sonata Tui to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Sonata Tui is one of the leading recruiters in the industry. Managers in the Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Sonata Tui 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.
Training and development
– Sonata Tui has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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.
Strong track record of project management
– Sonata Tui 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 Global Business segment
- digital transformation varies from industry to industry. For Sonata Tui digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sonata Tui 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.
Analytics focus
– Sonata Tui 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 Stephanie Hurt, Vijaya Narapareddy 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
– Sonata Tui is present in almost all the verticals within the industry. This has provided firm in Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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.
Ability to lead change in Global Business field
– Sonata Tui 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 Sonata Tui in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Sonata Tui 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.
Sustainable margins compare to other players in Global Business industry
– Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture firm has clearly differentiated products in the market place. This has enabled Sonata Tui to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Sonata Tui to invest into research and development (R&D) and innovation.
Weaknesses Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture are -
Aligning sales with marketing
– It come across in the case study Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture can leverage the sales team experience to cultivate customer relationships as Sonata Tui is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sonata Tui is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Sonata Tui 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.
No frontier risks strategy
– After analyzing the HBR case study Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture, in the dynamic environment Sonata Tui has struggled to respond to the nimble upstart competition. Sonata Tui has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Sonata Tui 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture, is just above the industry average. Sonata Tui 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 bargaining power of channel partners
– Because of the regulatory requirements, Stephanie Hurt, Vijaya Narapareddy suggests that, Sonata Tui 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Tui has relatively successful track record of launching new products.
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 Sonata Tui supply chain. Even after few cautionary changes mentioned in the HBR case study - Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sonata Tui vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Sonata Tui 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 - Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture should strive to include more intangible value offerings along with its core products and services.
Opportunities Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture | 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture are -
Manufacturing automation
– Sonata Tui can use the latest technology developments to improve its manufacturing and designing process in Global Business 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 Global Business industry, but it has also influenced the consumer preferences. Sonata Tui can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Sonata Tui has opened avenues for new revenue streams for the organization in the industry. This can help Sonata Tui to build a more holistic ecosystem as suggested in the Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture case study. Sonata Tui 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 Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sonata Tui 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. Sonata Tui 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.
Developing new processes and practices
– Sonata Tui can develop new processes and procedures in Global Business 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.
Buying journey improvements
– Sonata Tui can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sonata Tui is facing challenges because of the dominance of functional experts in the organization. Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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.
Leveraging digital technologies
– Sonata Tui 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sonata Tui can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sonata Tui can use these opportunities to build new business models that can help the communities that Sonata Tui operates in. Secondly it can use opportunities from government spending in Global Business sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sonata Tui 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.
Building a culture of innovation
– managers at Sonata Tui 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 Global Business segment.
Learning at scale
– Online learning technologies has now opened space for Sonata Tui to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture are -
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. Sonata Tui 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.
Technology acceleration in Forth Industrial Revolution
– Sonata Tui has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Sonata Tui needs to keep up with the evolution of technology in the Global Business 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.
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.
High dependence on third party suppliers
– Sonata Tui 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.
Regulatory challenges
– Sonata Tui 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 Global Business industry regulations.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sonata Tui can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Sonata Tui is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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 Sonata Tui business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Sonata Tui 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, Sonata Tui 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture .
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. Sonata Tui needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Consumer confidence and its impact on Sonata Tui 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Software Ltd., India: Building Global Competitive Advantage through an International Joint Venture 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 Sonata Tui needs to make to build a sustainable competitive advantage.
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