About to break bank covenants, Peter Jepsen has to deal with a contentious prior owner, improve profitability and staff appropriately all while maintaining credibility with his investors, in the furniture hardware company he has owned for less than a year.Peter Jepsen, a newly minted MBA, has bought a furniture hardware manufacturing business utilizing debt and investors equity that in a very short time is about to trigger bank covenants due to poor financial performance. The prior owner continues to be involved in the business, handling key customers and expecting a healthy earn-out and some favorable transaction closing adjustments and Jepsen considers the wisdom of having him involved. Further, he has discovered an illegal practice to avoid customs duties that has been going on for years and condoned by the owner. He has taken steps to bring on new hires and outsource to reduce costs, but the faltering economy is lowering his revenues. He has to decide how to manage his banking relationships, the caliber of staff he needs and react to the declining revenue while maintaining the confidence of his board.
Authors :: Howard H. Stevenson, Michael J. Roberts, James M. Sharpe
Swot Analysis of "Peter Jepsen" written by Howard H. Stevenson, Michael J. Roberts, James M. Sharpe includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jepsen Covenants facing as an external strategic factors. Some of the topics covered in Peter Jepsen case study are - Strategic Management Strategies, Costs, Crisis management, Entrepreneurial finance, Entrepreneurial management, Ethics, Manufacturing, Mergers & acquisitions, Negotiations, Recession and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Peter Jepsen casestudy better are - – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, wage bills are increasing, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, technology disruption,
there is backlash against globalization, supply chains are disrupted by pandemic , etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Peter Jepsen case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jepsen Covenants, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jepsen Covenants 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 Peter Jepsen can be done for the following purposes –
1. Strategic planning using facts provided in Peter Jepsen case study
2. Improving business portfolio management of Jepsen Covenants
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 Jepsen Covenants
Strengths Peter Jepsen | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jepsen Covenants in Peter Jepsen Harvard Business Review case study are -
Training and development
– Jepsen Covenants has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Peter Jepsen 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.
Effective Research and Development (R&D)
– Jepsen Covenants 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 Peter Jepsen - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Jepsen Covenants has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jepsen Covenants 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.
Operational resilience
– The operational resilience strategy in the Peter Jepsen 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Jepsen Covenants digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jepsen Covenants 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.
High switching costs
– The high switching costs that Jepsen Covenants 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
– Jepsen Covenants 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 Howard H. Stevenson, Michael J. Roberts, James M. Sharpe 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.
Innovation driven organization
– Jepsen Covenants is one of the most innovative firm in sector. Manager in Peter Jepsen Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Peter Jepsen firm has clearly differentiated products in the market place. This has enabled Jepsen Covenants to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Jepsen Covenants to invest into research and development (R&D) and innovation.
Organizational Resilience of Jepsen Covenants
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jepsen Covenants does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Jepsen Covenants 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 Jepsen Covenants is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Peter Jepsen Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Jepsen Covenants is one of the leading recruiters in the industry. Managers in the Peter Jepsen are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Peter Jepsen | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Peter Jepsen are -
Aligning sales with marketing
– It come across in the case study Peter Jepsen 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 Peter Jepsen can leverage the sales team experience to cultivate customer relationships as Jepsen Covenants is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Jepsen Covenants 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. Jepsen Covenants 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Jepsen Covenants needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Howard H. Stevenson, Michael J. Roberts, James M. Sharpe suggests that, Jepsen Covenants 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Jepsen Covenants is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Peter Jepsen can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Peter Jepsen 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 Jepsen Covenants has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Peter Jepsen, is just above the industry average. Jepsen Covenants 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 Peter Jepsen, in the dynamic environment Jepsen Covenants has struggled to respond to the nimble upstart competition. Jepsen Covenants has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Peter Jepsen, 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.
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 Jepsen Covenants supply chain. Even after few cautionary changes mentioned in the HBR case study - Peter Jepsen, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Jepsen Covenants vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Jepsen Covenants has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Peter Jepsen | 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 Peter Jepsen are -
Using analytics as competitive advantage
– Jepsen Covenants 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 Peter Jepsen - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jepsen Covenants to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jepsen Covenants 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 Jepsen Covenants to hire the very best people irrespective of their geographical location.
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 Jepsen Covenants 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.
Better consumer reach
– The expansion of the 5G network will help Jepsen Covenants to increase its market reach. Jepsen Covenants 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.
Creating value in data economy
– The success of analytics program of Jepsen Covenants has opened avenues for new revenue streams for the organization in the industry. This can help Jepsen Covenants to build a more holistic ecosystem as suggested in the Peter Jepsen case study. Jepsen Covenants can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Jepsen Covenants can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Peter Jepsen 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.
Building a culture of innovation
– managers at Jepsen Covenants 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Jepsen Covenants 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.
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. Jepsen Covenants 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. Jepsen Covenants 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.
Learning at scale
– Online learning technologies has now opened space for Jepsen Covenants 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jepsen Covenants can use these opportunities to build new business models that can help the communities that Jepsen Covenants operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Loyalty marketing
– Jepsen Covenants 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.
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 Jepsen Covenants in the consumer business. Now Jepsen Covenants can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Peter Jepsen External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Peter Jepsen are -
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.
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. Jepsen Covenants can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Jepsen Covenants 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.
Increasing wage structure of Jepsen Covenants
– 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 Jepsen Covenants.
High dependence on third party suppliers
– Jepsen Covenants 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.
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 Jepsen Covenants in the Innovation & Entrepreneurship sector and impact the bottomline 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 Jepsen Covenants business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Peter Jepsen, Jepsen Covenants 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jepsen Covenants 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 Peter Jepsen .
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.
Shortening product life cycle
– it is one of the major threat that Jepsen Covenants is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Jepsen Covenants 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 Jepsen Covenants with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Peter Jepsen 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 Peter Jepsen 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 Peter Jepsen 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 Peter Jepsen 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 Peter Jepsen 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 Jepsen Covenants needs to make to build a sustainable competitive advantage.
