Thriving in an Increasingly Digital Ecosystem SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Thriving in an Increasingly Digital Ecosystem
This is an MIT Sloan Management Review article. The business world is rapidly digitizing, breaking down industry barriers and creating new opportunities while destroying long-successful business models. Given the amount of turmoil digital disruption is causing, authors Peter Weill and Stephanie L. Woerner of the MIT Center for Information Systems Research say it's time for companies to evaluate these threats and opportunities and create new business options for the more-connected future of digital ecosystems. In recent research, board members at large companies estimated that 32% of their company's revenue would be under threat from digital disruption in the next five years; 60% of board members felt their boards should spend significantly more time on this issue next year. Despite the threats from companies including Uber, Airbnb and Amazon, increasing digitization offers opportunities for companies to leverage strong customer relationships and increase cross-selling, the authors argue. The authors offer a framework, supported by examples, for helping managers think about their competitive environments. "The combination of moving from value chains to ecosystems and increasing consumer knowledge,"the authors write, "provides business leaders with four distinct business models, each with associated capabilities and relationships."Companies can choose to operate as (1) suppliers, (2) omnichannel businesses, (3) modular producers or (4) ecosystem drivers. The authors found that businesses focused narrowly on value chains were at a disadvantage compared with those that thought more broadly about their business ecosystems. Companies that had 50% or more of their revenues from digital ecosystems and understood their end customers better than their average competitor saw 32% higher revenue growth and 27% higher profit margins than their industry averages. As they prepare for growing digital disruption, companies have two major decisions to make. First, they need to decide the extent to which they want to control the value chain or become part of a more complex ecosystem. Second, they need to decide how much they want to invest in knowing their end customers. Companies with ecosystem drivers as their dominant business model had the highest margins and growth of all the four options in the companies the authors studied.
Swot Analysis of "Thriving in an Increasingly Digital Ecosystem" written by Peter Weill, Stephanie Woerner includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ecosystems Authors facing as an external strategic factors. Some of the topics covered in Thriving in an Increasingly Digital Ecosystem case study are - Strategic Management Strategies, Disruptive innovation, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the Thriving in an Increasingly Digital Ecosystem casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing commodity prices, increasing energy prices,
increasing household debt because of falling income levels, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Thriving in an Increasingly Digital Ecosystem
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Thriving in an Increasingly Digital Ecosystem case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ecosystems Authors, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ecosystems Authors 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 Thriving in an Increasingly Digital Ecosystem can be done for the following purposes –
1. Strategic planning using facts provided in Thriving in an Increasingly Digital Ecosystem case study
2. Improving business portfolio management of Ecosystems Authors
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 Ecosystems Authors
Strengths Thriving in an Increasingly Digital Ecosystem | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ecosystems Authors in Thriving in an Increasingly Digital Ecosystem Harvard Business Review case study are -
Successful track record of launching new products
– Ecosystems Authors has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ecosystems Authors 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.
Highly skilled collaborators
– Ecosystems Authors 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 Thriving in an Increasingly Digital Ecosystem HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Ecosystems Authors is present in almost all the verticals within the industry. This has provided firm in Thriving in an Increasingly Digital Ecosystem case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Ecosystems Authors is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Ecosystems Authors 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.
Cross disciplinary teams
– Horizontal connected teams at the Ecosystems Authors 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.
Effective Research and Development (R&D)
– Ecosystems Authors has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Thriving in an Increasingly Digital Ecosystem - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Ecosystems Authors 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 Ecosystems Authors is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Thriving in an Increasingly Digital Ecosystem Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Thriving in an Increasingly Digital Ecosystem 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Ecosystems Authors digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ecosystems Authors 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.
Ability to lead change in Global Business field
– Ecosystems Authors 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 Ecosystems Authors in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Global Business industry
– Thriving in an Increasingly Digital Ecosystem firm has clearly differentiated products in the market place. This has enabled Ecosystems Authors to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Ecosystems Authors to invest into research and development (R&D) and innovation.
Weaknesses Thriving in an Increasingly Digital Ecosystem | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Thriving in an Increasingly Digital Ecosystem are -
High operating costs
– Compare to the competitors, firm in the HBR case study Thriving in an Increasingly Digital Ecosystem 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 Ecosystems Authors 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Thriving in an Increasingly Digital Ecosystem, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Thriving in an Increasingly Digital Ecosystem, is just above the industry average. Ecosystems Authors 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.
Need for greater diversity
– Ecosystems Authors 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.
Capital Spending Reduction
– Even during the low interest decade, Ecosystems Authors 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Thriving in an Increasingly Digital Ecosystem, in the dynamic environment Ecosystems Authors has struggled to respond to the nimble upstart competition. Ecosystems Authors has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ecosystems Authors is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Thriving in an Increasingly Digital Ecosystem can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Thriving in an Increasingly Digital Ecosystem 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 Ecosystems Authors has relatively successful track record of launching new products.
Lack of clear differentiation of Ecosystems Authors products
– To increase the profitability and margins on the products, Ecosystems Authors needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Ecosystems Authors 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.
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 Ecosystems Authors supply chain. Even after few cautionary changes mentioned in the HBR case study - Thriving in an Increasingly Digital Ecosystem, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ecosystems Authors vulnerable to further global disruptions in South East Asia.
Opportunities Thriving in an Increasingly Digital Ecosystem | 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 Thriving in an Increasingly Digital Ecosystem are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ecosystems Authors can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Ecosystems Authors 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.
Building a culture of innovation
– managers at Ecosystems Authors 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.
Manufacturing automation
– Ecosystems Authors 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. Ecosystems Authors can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ecosystems Authors is facing challenges because of the dominance of functional experts in the organization. Thriving in an Increasingly Digital Ecosystem 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ecosystems Authors 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.
Leveraging digital technologies
– Ecosystems Authors 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ecosystems Authors 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 Ecosystems Authors to hire the very best people irrespective of their geographical location.
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. Ecosystems Authors 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. Ecosystems Authors 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.
Using analytics as competitive advantage
– Ecosystems Authors 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 Thriving in an Increasingly Digital Ecosystem - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ecosystems Authors 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 Ecosystems Authors in the consumer business. Now Ecosystems Authors 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 Ecosystems Authors can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Thriving in an Increasingly Digital Ecosystem External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Thriving in an Increasingly Digital Ecosystem are -
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. Ecosystems Authors can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Ecosystems Authors 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ecosystems Authors in the Global Business industry. The Global Business 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.
Increasing wage structure of Ecosystems Authors
– 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 Ecosystems Authors.
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. Ecosystems Authors 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.
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. Ecosystems Authors needs to understand the core reasons impacting the Global Business 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 Ecosystems Authors with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Ecosystems Authors in the Global Business sector and impact the bottomline of the organization.
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.
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.
Environmental challenges
– Ecosystems Authors 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. Ecosystems Authors can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Shortening product life cycle
– it is one of the major threat that Ecosystems Authors is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Ecosystems Authors 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 Thriving in an Increasingly Digital Ecosystem 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 Thriving in an Increasingly Digital Ecosystem 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 Thriving in an Increasingly Digital Ecosystem 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 Thriving in an Increasingly Digital Ecosystem 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 Thriving in an Increasingly Digital Ecosystem 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 Ecosystems Authors needs to make to build a sustainable competitive advantage.