Case Study Description of Spectrum Equity Investors, L.P.
Brion Applegate and Bill Collatos had already started a fund-raising campaign for their new venture-capital fund when the principals of a prestigious Wall Street investment bank asked them to become the two senior partners of an in-house $150 million fund. The case analyzes: (1) the venture capital investing process, (2) the experience, networks, and timing of starting a specialized fund, (3) the written prospectus of the new fund, and (4) the decisions and issues confronting Applegate and Collatos.
Authors :: Jeffry A. Timmons, Rebecca Voorheis, Elise Martin
Swot Analysis of "Spectrum Equity Investors, L.P." written by Jeffry A. Timmons, Rebecca Voorheis, Elise Martin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Collatos Applegate facing as an external strategic factors. Some of the topics covered in Spectrum Equity Investors, L.P. case study are - Strategic Management Strategies, Developing employees, Venture capital and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Spectrum Equity Investors, L.P. casestudy better are - – increasing energy prices, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, wage bills are increasing, supply chains are disrupted by pandemic ,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Spectrum Equity Investors, L.P.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Spectrum Equity Investors, L.P. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Collatos Applegate, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Collatos Applegate 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 Spectrum Equity Investors, L.P. can be done for the following purposes –
1. Strategic planning using facts provided in Spectrum Equity Investors, L.P. case study
2. Improving business portfolio management of Collatos Applegate
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 Collatos Applegate
Strengths Spectrum Equity Investors, L.P. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Collatos Applegate in Spectrum Equity Investors, L.P. Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Collatos Applegate in the sector have low bargaining power. Spectrum Equity Investors, L.P. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Collatos Applegate to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Spectrum Equity Investors, L.P. Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– Collatos Applegate has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Collatos Applegate 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Collatos Applegate digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Collatos Applegate 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.
Highly skilled collaborators
– Collatos Applegate 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 Spectrum Equity Investors, L.P. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Collatos Applegate has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Collatos Applegate to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Collatos Applegate
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Collatos Applegate does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Collatos Applegate 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 lead change in Finance & Accounting field
– Collatos Applegate 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 Collatos Applegate in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Collatos Applegate is present in almost all the verticals within the industry. This has provided firm in Spectrum Equity Investors, L.P. 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.
Analytics focus
– Collatos Applegate 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 Jeffry A. Timmons, Rebecca Voorheis, Elise Martin 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.
High switching costs
– The high switching costs that Collatos Applegate 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.
Weaknesses Spectrum Equity Investors, L.P. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Spectrum Equity Investors, L.P. are -
Products dominated business model
– Even though Collatos Applegate 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 - Spectrum Equity Investors, L.P. should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Spectrum Equity Investors, L.P. HBR case study mentions - Collatos Applegate 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Collatos Applegate is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Spectrum Equity Investors, L.P. 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 operating costs
– Compare to the competitors, firm in the HBR case study Spectrum Equity Investors, L.P. 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 Collatos Applegate 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Collatos Applegate, firm in the HBR case study Spectrum Equity Investors, L.P. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Spectrum Equity Investors, L.P. 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 Collatos Applegate has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Collatos Applegate is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Collatos Applegate needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Collatos Applegate to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Spectrum Equity Investors, L.P., it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Collatos Applegate 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 bargaining power of channel partners
– Because of the regulatory requirements, Jeffry A. Timmons, Rebecca Voorheis, Elise Martin suggests that, Collatos Applegate 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Spectrum Equity Investors, L.P., is just above the industry average. Collatos Applegate 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.
Opportunities Spectrum Equity Investors, L.P. | 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 Spectrum Equity Investors, L.P. are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Collatos Applegate 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, Spectrum Equity Investors, L.P., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Collatos Applegate has opened avenues for new revenue streams for the organization in the industry. This can help Collatos Applegate to build a more holistic ecosystem as suggested in the Spectrum Equity Investors, L.P. case study. Collatos Applegate can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Collatos Applegate can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Leveraging digital technologies
– Collatos Applegate 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 Collatos Applegate 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 Collatos Applegate to hire the very best people irrespective of their geographical location.
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 Collatos Applegate in the consumer business. Now Collatos Applegate can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Collatos Applegate is facing challenges because of the dominance of functional experts in the organization. Spectrum Equity Investors, L.P. 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Collatos Applegate to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Collatos Applegate to increase its market reach. Collatos Applegate 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.
Loyalty marketing
– Collatos Applegate 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.
Buying journey improvements
– Collatos Applegate can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Spectrum Equity Investors, L.P. 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Collatos Applegate can use these opportunities to build new business models that can help the communities that Collatos Applegate operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Collatos Applegate 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.
Threats Spectrum Equity Investors, L.P. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Spectrum Equity Investors, L.P. are -
Increasing wage structure of Collatos Applegate
– 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 Collatos Applegate.
Shortening product life cycle
– it is one of the major threat that Collatos Applegate is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Collatos Applegate with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
Stagnating economy with rate increase
– Collatos Applegate 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, Collatos Applegate 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 Spectrum Equity Investors, L.P. .
High dependence on third party suppliers
– Collatos Applegate 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.
Consumer confidence and its impact on Collatos Applegate 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.
Regulatory challenges
– Collatos Applegate needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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 Collatos Applegate in the Finance & Accounting sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Collatos Applegate has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Collatos Applegate 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.
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. Collatos Applegate needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Spectrum Equity Investors, L.P. 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 Spectrum Equity Investors, L.P. 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 Spectrum Equity Investors, L.P. 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 Spectrum Equity Investors, L.P. 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 Spectrum Equity Investors, L.P. 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 Collatos Applegate needs to make to build a sustainable competitive advantage.
