Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups
To understand better the effects of venture capital investment on selected firm governance and financing structures, we examined the post-IPO experiences of 190 biotechnology and health care firms. In virtually all cases, the involvement of venture capitalists reduced the role of the founder-entrepreneur in strategic decision making. This was illustrated by the larger proportion of outside directors when venture capitalists invested and the smaller proportion of entrepreneurs who remained officers or in board positions after the IPO. We also found that venture capitalists rarely invested alone, preferring to structure deals in which venture capital partners share both risks and rewards.
Authors :: David R. Williams, W. Jack Duncan, Peter M. Ginter
Swot Analysis of "Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups" written by David R. Williams, W. Jack Duncan, Peter M. Ginter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Capitalists Venture facing as an external strategic factors. Some of the topics covered in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups case study are - Strategic Management Strategies, IPO, Organizational structure, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups casestudy better are - – digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, geopolitical disruptions, increasing commodity prices, increasing household debt because of falling income levels, there is backlash against globalization,
cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Capitalists Venture, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Capitalists Venture 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups can be done for the following purposes –
1. Strategic planning using facts provided in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups case study
2. Improving business portfolio management of Capitalists Venture
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 Capitalists Venture
Strengths Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Capitalists Venture in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Capitalists Venture 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 Capitalists Venture 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.
Learning organization
- Capitalists Venture 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 Capitalists Venture is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Innovation & Entrepreneurship field
– Capitalists Venture 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 Capitalists Venture in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Capitalists Venture is one of the most innovative firm in sector. Manager in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Capitalists Venture is present in almost all the verticals within the industry. This has provided firm in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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.
Superior customer experience
– The customer experience strategy of Capitalists Venture in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Capitalists Venture digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Capitalists Venture 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups firm has clearly differentiated products in the market place. This has enabled Capitalists Venture to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Capitalists Venture to invest into research and development (R&D) and innovation.
Organizational Resilience of Capitalists Venture
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Capitalists Venture does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Capitalists Venture has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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
– Capitalists Venture is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups, in the dynamic environment Capitalists Venture has struggled to respond to the nimble upstart competition. Capitalists Venture has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups, it seems that the employees of Capitalists Venture 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.
Increasing silos among functional specialists
– The organizational structure of Capitalists Venture is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Capitalists Venture needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Capitalists Venture to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Capitalists Venture is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Capitalists Venture 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.
Lack of clear differentiation of Capitalists Venture products
– To increase the profitability and margins on the products, Capitalists Venture needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Capitalists Venture, firm in the HBR case study Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Capitalists Venture supply chain. Even after few cautionary changes mentioned in the HBR case study - Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Capitalists Venture vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Capitalists Venture has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Capitalists Venture even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups, is just above the industry average. Capitalists Venture 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.
Skills based hiring
– The stress on hiring functional specialists at Capitalists Venture 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.
Opportunities Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups | 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups are -
Leveraging digital technologies
– Capitalists Venture 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.
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 Capitalists Venture 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.
Developing new processes and practices
– Capitalists Venture 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.
Using analytics as competitive advantage
– Capitalists Venture 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Capitalists Venture to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Capitalists Venture 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.
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. Capitalists Venture can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Capitalists Venture can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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, Capitalists Venture can use these opportunities to build new business models that can help the communities that Capitalists Venture operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Capitalists Venture can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Capitalists Venture 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.
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. Capitalists Venture can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Capitalists Venture 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, Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Capitalists Venture 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups are -
Stagnating economy with rate increase
– Capitalists Venture 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 Capitalists Venture 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.
High dependence on third party suppliers
– Capitalists Venture 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Capitalists Venture.
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 Capitalists Venture in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing wage structure of Capitalists Venture
– 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 Capitalists Venture.
Environmental challenges
– Capitalists Venture 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. Capitalists Venture can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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.
Consumer confidence and its impact on Capitalists Venture 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Capitalists Venture with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Capitalists Venture 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
– Capitalists Venture has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Capitalists Venture needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Weighted SWOT Analysis of Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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 Structuring Deals and Governance After the IPO: Entrepreneurs and Venture Capitalists in High Tech Start-Ups 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 Capitalists Venture needs to make to build a sustainable competitive advantage.
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