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 - – challanges to central banks by blockchain based private currencies, increasing commodity prices, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions,
talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, 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 -
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.
Superior customer experience
– The customer experience strategy of Vestas Initiatives in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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 Vestas Initiatives supply chain. Even after few cautionary changes mentioned in the HBR case study - Vestas Wind Systems A/S - Exploiting Global R&D Synergies, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vestas Initiatives vulnerable to further global disruptions in South East Asia.
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.
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 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.
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.
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 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.
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.
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.
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.
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 -
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 Vestas Initiatives 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.
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.
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.
Developing new processes and practices
– Vestas Initiatives 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.
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.
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.
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.
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Vestas Initiatives can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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 -
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vestas Initiatives 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. 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.
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 .
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.
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.
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.
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vestas Initiatives 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 Vestas Wind Systems A/S - Exploiting Global R&D Synergies .
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.
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.
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.
