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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , geopolitical disruptions,
there is backlash against globalization, talent flight as more people leaving formal jobs, 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 -
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Vestas Initiatives 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.
Organizational Resilience of Vestas Initiatives
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vestas Initiatives does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Vestas Initiatives digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vestas Initiatives 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.
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.
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.
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.
Effective Research and Development (R&D)
– Vestas Initiatives 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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 -
No frontier risks strategy
– After analyzing the HBR case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies, 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.
Capital Spending Reduction
– Even during the low interest decade, Vestas Initiatives has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Vestas Initiatives 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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 Vestas Initiatives has relatively successful track record of launching new products.
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.
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vestas Initiatives is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Vestas Wind Systems A/S - Exploiting Global R&D Synergies can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Vestas Initiatives has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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 -
Buying journey improvements
– Vestas Initiatives can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vestas Initiatives is facing challenges because of the dominance of functional experts in the organization. Vestas Wind Systems A/S - Exploiting Global R&D Synergies 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
– 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vestas Initiatives can use these opportunities to build new business models that can help the communities that Vestas Initiatives operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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.
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.
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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vestas Initiatives 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 Vestas Initiatives to hire the very best people irrespective of their geographical location.
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.
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 -
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.
High dependence on third party suppliers
– Vestas Initiatives 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.
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vestas Initiatives 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.
Regulatory challenges
– Vestas Initiatives 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.
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.
Consumer confidence and its impact on Vestas Initiatives 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.
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.
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.
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.
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.
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.