ALLVP: Pioneering Seed Capital in Mexico SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of ALLVP: Pioneering Seed Capital in Mexico
At the end of 2011, Fernando Lelo de Larrea (MBA 2004) and Federico Antoni (MBA 2004) decided to resign from their CEO positions in their respective mid-sized companies and start fundraising for their first early stage investment fund: Seed Innovation Trust 1. Given their lack of track record in venture capital, they decided to create a micro fund, the smallest, yet most institutional, venture capital fund possible consistent with their investment thesis. Founded in 2012, ALLVP raised the first institutional seed capital fund in Mexico to invest in innovative service-oriented, new companies. The investment thesis focused on service industries such as healthcare, financial services, and consumer internet that were experiencing high growth due to demographic and macro-economic trends, favorable non-market forces, the growing middle class and the availability of new technologies. Given the underdeveloped entrepreneurial ecosystem in Mexico, the founders established, along with the fund management vehicles, a Seed Accelerator Program, called Venture Institute that would feed the fund with high quality startups. This dual model proved key to creating a high value first portfolio and positioning ALLVP in the Mexican entrepreneurial ecosystem. Two years and twelve portfolio companies later, ALLVP raised a second, $40 million dollar (USD) fund focused on Series A and B rounds in Latin America. Given ALLVP's success, a new proactive public policy from Mexico's new government was launched and helped the seed capital industry grow from ALLVP as the first and only institutional fund in 2012 to more than a dozen funds in 2014.
Authors :: Frederico Antoni, Steve Ciesinski, Howard Rosen, Fernando Lelo de Larrea
Swot Analysis of "ALLVP: Pioneering Seed Capital in Mexico" written by Frederico Antoni, Steve Ciesinski, Howard Rosen, Fernando Lelo de Larrea includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Allvp Fund facing as an external strategic factors. Some of the topics covered in ALLVP: Pioneering Seed Capital in Mexico case study are - Strategic Management Strategies, Joint ventures, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the ALLVP: Pioneering Seed Capital in Mexico casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, supply chains are disrupted by pandemic ,
central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of ALLVP: Pioneering Seed Capital in Mexico
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ALLVP: Pioneering Seed Capital in Mexico case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Allvp Fund, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Allvp Fund 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 ALLVP: Pioneering Seed Capital in Mexico can be done for the following purposes –
1. Strategic planning using facts provided in ALLVP: Pioneering Seed Capital in Mexico case study
2. Improving business portfolio management of Allvp Fund
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Allvp Fund
Strengths ALLVP: Pioneering Seed Capital in Mexico | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Allvp Fund in ALLVP: Pioneering Seed Capital in Mexico Harvard Business Review case study are -
Strong track record of project management
– Allvp Fund is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Allvp Fund 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.
High switching costs
– The high switching costs that Allvp Fund 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.
Organizational Resilience of Allvp Fund
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Allvp Fund does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Allvp Fund 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 ALLVP: Pioneering Seed Capital in Mexico - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Allvp Fund is one of the most innovative firm in sector. Manager in ALLVP: Pioneering Seed Capital in Mexico Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the ALLVP: Pioneering Seed Capital in Mexico 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 Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Allvp Fund digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Allvp Fund 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.
Learning organization
- Allvp Fund 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 Allvp Fund is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ALLVP: Pioneering Seed Capital in Mexico Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Allvp Fund 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 ALLVP: Pioneering Seed Capital in Mexico HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Allvp Fund has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Allvp Fund 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.
Diverse revenue streams
– Allvp Fund is present in almost all the verticals within the industry. This has provided firm in ALLVP: Pioneering Seed Capital in Mexico 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.
Weaknesses ALLVP: Pioneering Seed Capital in Mexico | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ALLVP: Pioneering Seed Capital in Mexico are -
High bargaining power of channel partners
– Because of the regulatory requirements, Frederico Antoni, Steve Ciesinski, Howard Rosen, Fernando Lelo de Larrea suggests that, Allvp Fund 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.
Aligning sales with marketing
– It come across in the case study ALLVP: Pioneering Seed Capital in Mexico 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 ALLVP: Pioneering Seed Capital in Mexico can leverage the sales team experience to cultivate customer relationships as Allvp Fund is planning to shift buying processes online.
Products dominated business model
– Even though Allvp Fund 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 - ALLVP: Pioneering Seed Capital in Mexico should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ALLVP: Pioneering Seed Capital in Mexico, is just above the industry average. Allvp Fund 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 ALLVP: Pioneering Seed Capital in Mexico 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 Allvp Fund has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ALLVP: Pioneering Seed Capital in Mexico, it seems that the employees of Allvp Fund 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.
Skills based hiring
– The stress on hiring functional specialists at Allvp Fund 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Allvp Fund 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.
Low market penetration in new markets
– Outside its home market of Allvp Fund, firm in the HBR case study ALLVP: Pioneering Seed Capital in Mexico needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Allvp Fund is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Allvp Fund needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Allvp Fund to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study ALLVP: Pioneering Seed Capital in Mexico, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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.
Opportunities ALLVP: Pioneering Seed Capital in Mexico | 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 ALLVP: Pioneering Seed Capital in Mexico are -
Manufacturing automation
– Allvp Fund can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Allvp Fund in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Allvp Fund 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
– Allvp Fund 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.
Building a culture of innovation
– managers at Allvp Fund 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 Innovation & Entrepreneurship segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Allvp Fund can use these opportunities to build new business models that can help the communities that Allvp Fund operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Developing new processes and practices
– Allvp Fund can develop new processes and procedures in Innovation & Entrepreneurship 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Allvp Fund can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Allvp Fund in the consumer business. Now Allvp Fund can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Allvp Fund 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, Allvp Fund is facing challenges because of the dominance of functional experts in the organization. ALLVP: Pioneering Seed Capital in Mexico 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.
Loyalty marketing
– Allvp Fund has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Allvp Fund 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 Allvp Fund to hire the very best people irrespective of their geographical location.
Threats ALLVP: Pioneering Seed Capital in Mexico External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ALLVP: Pioneering Seed Capital in Mexico are -
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 Allvp Fund in the Innovation & Entrepreneurship 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Allvp Fund 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 ALLVP: Pioneering Seed Capital in Mexico .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ALLVP: Pioneering Seed Capital in Mexico, Allvp Fund may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
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 Allvp Fund business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Allvp Fund 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 Innovation & Entrepreneurship industry regulations.
Environmental challenges
– Allvp Fund 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. Allvp Fund can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Allvp Fund in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Consumer confidence and its impact on Allvp Fund demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Allvp Fund is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Allvp Fund
– 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 Allvp Fund.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Allvp Fund with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Allvp Fund can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of ALLVP: Pioneering Seed Capital in Mexico 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 ALLVP: Pioneering Seed Capital in Mexico 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 ALLVP: Pioneering Seed Capital in Mexico 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 ALLVP: Pioneering Seed Capital in Mexico 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 ALLVP: Pioneering Seed Capital in Mexico 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 Allvp Fund needs to make to build a sustainable competitive advantage.