Describes the financing, strategy, and growth decisions facing fortu, a young German battery company. The company is contemplating a facility in East Germany, where state subsidies make the finances appealing. A sudden offer to license fortu technology for application in a very promising segment and the ensuing potential cash influx makes fortu examine alternative ways to build its first production plant.
Authors :: Michael J. Roberts, William A. Sahlman, Vincent Dessain, Monika Stachowiak
Swot Analysis of "fortu PowerCell GmbH" written by Michael J. Roberts, William A. Sahlman, Vincent Dessain, Monika Stachowiak includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fortu Powercell facing as an external strategic factors. Some of the topics covered in fortu PowerCell GmbH case study are - Strategic Management Strategies, Growth strategy, Intellectual property, Manufacturing, Motivating people, Policy, Research & development, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the fortu PowerCell GmbH casestudy better are - – wage bills are increasing, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, increasing commodity prices, increasing energy prices, increasing transportation and logistics costs, cloud computing is disrupting traditional business models,
digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of fortu PowerCell GmbH
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in fortu PowerCell GmbH case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fortu Powercell, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fortu Powercell 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 fortu PowerCell GmbH can be done for the following purposes –
1. Strategic planning using facts provided in fortu PowerCell GmbH case study
2. Improving business portfolio management of Fortu Powercell
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 Fortu Powercell
Strengths fortu PowerCell GmbH | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fortu Powercell in fortu PowerCell GmbH Harvard Business Review case study are -
Highly skilled collaborators
– Fortu Powercell 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 fortu PowerCell GmbH HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Fortu Powercell is one of the most innovative firm in sector. Manager in fortu PowerCell GmbH Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Fortu Powercell has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fortu Powercell to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Fortu Powercell 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 Fortu Powercell is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in fortu PowerCell GmbH Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Fortu Powercell 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 Michael J. Roberts, William A. Sahlman, Vincent Dessain, Monika Stachowiak 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.
Organizational Resilience of Fortu Powercell
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fortu Powercell does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Fortu Powercell in the sector have low bargaining power. fortu PowerCell GmbH has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fortu Powercell to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Fortu Powercell 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.
Operational resilience
– The operational resilience strategy in the fortu PowerCell GmbH 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.
Effective Research and Development (R&D)
– Fortu Powercell 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 fortu PowerCell GmbH - 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 Fortu Powercell 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– fortu PowerCell GmbH firm has clearly differentiated products in the market place. This has enabled Fortu Powercell to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Fortu Powercell to invest into research and development (R&D) and innovation.
Weaknesses fortu PowerCell GmbH | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of fortu PowerCell GmbH are -
High cash cycle compare to competitors
Fortu Powercell 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.
No frontier risks strategy
– After analyzing the HBR case study fortu PowerCell GmbH, 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.
Lack of clear differentiation of Fortu Powercell products
– To increase the profitability and margins on the products, Fortu Powercell needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study fortu PowerCell GmbH, in the dynamic environment Fortu Powercell has struggled to respond to the nimble upstart competition. Fortu Powercell has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study fortu PowerCell GmbH, is just above the industry average. Fortu Powercell 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study fortu PowerCell GmbH, it seems that the employees of Fortu Powercell 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.
Low market penetration in new markets
– Outside its home market of Fortu Powercell, firm in the HBR case study fortu PowerCell GmbH needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fortu Powercell is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study fortu PowerCell GmbH 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, Fortu Powercell 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.
Products dominated business model
– Even though Fortu Powercell 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 - fortu PowerCell GmbH should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Fortu Powercell 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. Fortu Powercell 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 fortu PowerCell GmbH | 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 fortu PowerCell GmbH are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fortu Powercell 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, fortu PowerCell GmbH, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Fortu Powercell 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.
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 Fortu Powercell in the consumer business. Now Fortu Powercell 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, Fortu Powercell is facing challenges because of the dominance of functional experts in the organization. fortu PowerCell GmbH 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.
Learning at scale
– Online learning technologies has now opened space for Fortu Powercell 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.
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. Fortu Powercell 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. Fortu Powercell 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.
Using analytics as competitive advantage
– Fortu Powercell 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 fortu PowerCell GmbH - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fortu Powercell to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fortu Powercell can use these opportunities to build new business models that can help the communities that Fortu Powercell operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Better consumer reach
– The expansion of the 5G network will help Fortu Powercell to increase its market reach. Fortu Powercell 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fortu Powercell 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.
Creating value in data economy
– The success of analytics program of Fortu Powercell has opened avenues for new revenue streams for the organization in the industry. This can help Fortu Powercell to build a more holistic ecosystem as suggested in the fortu PowerCell GmbH case study. Fortu Powercell can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fortu Powercell 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.
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. Fortu Powercell can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats fortu PowerCell GmbH External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study fortu PowerCell GmbH are -
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 Fortu Powercell in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Fortu Powercell 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.
Regulatory challenges
– Fortu Powercell 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study fortu PowerCell GmbH, Fortu Powercell 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 .
Shortening product life cycle
– it is one of the major threat that Fortu Powercell is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fortu Powercell with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Fortu Powercell
– 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 Fortu Powercell.
Technology acceleration in Forth Industrial Revolution
– Fortu Powercell has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Fortu Powercell 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.
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. Fortu Powercell 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.
Environmental challenges
– Fortu Powercell 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. Fortu Powercell can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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 Fortu Powercell.
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. Fortu Powercell can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Weighted SWOT Analysis of fortu PowerCell GmbH 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 fortu PowerCell GmbH 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 fortu PowerCell GmbH 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 fortu PowerCell GmbH 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 fortu PowerCell GmbH 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 Fortu Powercell needs to make to build a sustainable competitive advantage.