Vestas Wind Systems A/S - Exploiting Global R&D Synergies SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Vestas Wind Systems A/S - Exploiting Global R&D Synergies
With a change in management in 2005 came a radical reorganization and the announcement of several new strategic initiatives. Among the initiatives was the establishment of the Vestas Technology research and development (R&D) business unit with an aim of achieving global leadership in all core technology areas and, consequently, strengthening the core competence for the company. By 2008, Vestas had succeeded in setting up a global R&D network with R&D centres in Denmark, the United Kingdom, Singapore and India, and, in early 2009, a centre was opened in the United States. This transformed Vestas into a high-tech company and put a greater emphasis on its technological innovations.
Authors :: Torben Pedersen, Marcus Moller Larsen
Topics :: Innovation & Entrepreneurship
Tags :: International business, Manufacturing, Research & development, Supply chain, Technology, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Vestas Wind Systems A/S - Exploiting Global R&D Synergies" written by Torben Pedersen, Marcus Moller Larsen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vestas Initiatives facing as an external strategic factors. Some of the topics covered in Vestas Wind Systems A/S - Exploiting Global R&D Synergies case study are - Strategic Management Strategies, International business, Manufacturing, Research & development, Supply chain, Technology and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Vestas Wind Systems A/S - Exploiting Global R&D Synergies casestudy better are - – central banks are concerned over increasing inflation, increasing energy prices, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, geopolitical disruptions,
increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, etc
Introduction to SWOT Analysis of Vestas Wind Systems A/S - Exploiting Global R&D Synergies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Vestas Wind Systems A/S - Exploiting Global R&D Synergies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vestas Initiatives, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vestas Initiatives 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies can be done for the following purposes –
1. Strategic planning using facts provided in Vestas Wind Systems A/S - Exploiting Global R&D Synergies case study
2. Improving business portfolio management of Vestas Initiatives
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 Vestas Initiatives
Strengths Vestas Wind Systems A/S - Exploiting Global R&D Synergies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vestas Initiatives in Vestas Wind Systems A/S - Exploiting Global R&D Synergies Harvard Business Review case study are -
Analytics focus
– Vestas Initiatives 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 Torben Pedersen, Marcus Moller Larsen 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.
Successful track record of launching new products
– Vestas Initiatives has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vestas Initiatives 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.
Strong track record of project management
– Vestas Initiatives is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Vestas Initiatives is one of the leading recruiters in the industry. Managers in the Vestas Wind Systems A/S - Exploiting Global R&D Synergies are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Vestas Wind Systems A/S - Exploiting Global R&D Synergies Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Vestas Initiatives 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
- Vestas Initiatives 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 Vestas Initiatives is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Vestas Wind Systems A/S - Exploiting Global R&D Synergies Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Vestas Initiatives has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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.
Low bargaining power of suppliers
– Suppliers of Vestas Initiatives in the sector have low bargaining power. Vestas Wind Systems A/S - Exploiting Global R&D Synergies has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vestas Initiatives to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Vestas Initiatives has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vestas Initiatives to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Vestas Initiatives 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Vestas Initiatives is present in almost all the verticals within the industry. This has provided firm in Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Vestas Wind Systems A/S - Exploiting Global R&D Synergies are -
Increasing silos among functional specialists
– The organizational structure of Vestas Initiatives is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Vestas Initiatives needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vestas Initiatives to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Vestas Initiatives products
– To increase the profitability and margins on the products, Vestas Initiatives needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Torben Pedersen, Marcus Moller Larsen suggests that, Vestas Initiatives 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies can leverage the sales team experience to cultivate customer relationships as Vestas Initiatives is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies, is just above the industry average. Vestas Initiatives 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies, in the dynamic environment Vestas Initiatives has struggled to respond to the nimble upstart competition. Vestas Initiatives has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Vestas Initiatives 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 - Vestas Wind Systems A/S - Exploiting Global R&D Synergies should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Vestas Initiatives has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, firm in the HBR case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Initiatives 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Vestas Initiatives, firm in the HBR case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Vestas Initiatives 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. Vestas Initiatives 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.
Opportunities Vestas Wind Systems A/S - Exploiting Global R&D Synergies | 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies are -
Leveraging digital technologies
– Vestas Initiatives 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vestas Initiatives 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Vestas Initiatives 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. Vestas Initiatives 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.
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 Vestas Initiatives in the consumer business. Now Vestas Initiatives can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Vestas Initiatives 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, Vestas Wind Systems A/S - Exploiting Global R&D Synergies, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Vestas Initiatives can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Vestas Initiatives 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.
Loyalty marketing
– Vestas Initiatives 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.
Better consumer reach
– The expansion of the 5G network will help Vestas Initiatives to increase its market reach. Vestas Initiatives 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vestas Initiatives 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.
Manufacturing automation
– Vestas Initiatives 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.
Learning at scale
– Online learning technologies has now opened space for Vestas Initiatives to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Vestas Initiatives has opened avenues for new revenue streams for the organization in the industry. This can help Vestas Initiatives to build a more holistic ecosystem as suggested in the Vestas Wind Systems A/S - Exploiting Global R&D Synergies case study. Vestas Initiatives can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Vestas Wind Systems A/S - Exploiting Global R&D Synergies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies are -
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 Vestas Initiatives.
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. Vestas Initiatives 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.
Shortening product life cycle
– it is one of the major threat that Vestas Initiatives is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Vestas Initiatives 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. Vestas Initiatives can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Vestas Initiatives needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Increasing wage structure of Vestas Initiatives
– 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 Vestas Initiatives.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Vestas Initiatives can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Vestas Initiatives in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Vestas Initiatives 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.
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.
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 Vestas Initiatives business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies, Vestas Initiatives 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 .
Weighted SWOT Analysis of Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Initiatives needs to make to build a sustainable competitive advantage.