Midnight Networks, Inc., is a small computer network validation company. This case describes how the five founders built their business from operations earnings and how they established "best practices" operational processes to run their firm successfully. Operational processes include developing a company procedures manual and assigning topics to specific people to maintain procedures; cross-training every employee in support and sales functions; employees entering weekly tasks and accomplishments on an online whiteboard that the whole company can view; group reviews of computer code for quality; performance reviews done by a committee of supervisor and peers. The company grows quickly, and a larger firm offers to buy it. Midnight Networks also has been considering going public. The founder must decide whether to go public or sell the firm to continue its growth.
Swot Analysis of "Midnight Networks, Inc." written by H. Kent Bowen, Marilyn E. Matis includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Midnight Networks facing as an external strategic factors. Some of the topics covered in Midnight Networks, Inc. case study are - Strategic Management Strategies, IT, Operations management, Organizational culture and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Midnight Networks, Inc. casestudy better are - – technology disruption, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Midnight Networks, Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Midnight Networks, Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Midnight Networks, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Midnight Networks 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 Midnight Networks, Inc. can be done for the following purposes –
1. Strategic planning using facts provided in Midnight Networks, Inc. case study
2. Improving business portfolio management of Midnight Networks
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 Midnight Networks
Strengths Midnight Networks, Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Midnight Networks in Midnight Networks, Inc. Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Midnight Networks in the sector have low bargaining power. Midnight Networks, Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Midnight Networks to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Midnight Networks 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 Midnight Networks is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Midnight Networks, Inc. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Midnight Networks has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Midnight Networks 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.
High switching costs
– The high switching costs that Midnight Networks 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.
Superior customer experience
– The customer experience strategy of Midnight Networks in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Midnight Networks
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Midnight Networks does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Midnight Networks is one of the most innovative firm in sector. Manager in Midnight Networks, Inc. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Midnight Networks, Inc. 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.
Ability to recruit top talent
– Midnight Networks is one of the leading recruiters in the industry. Managers in the Midnight Networks, Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Midnight Networks 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 H. Kent Bowen, Marilyn E. Matis 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.
Training and development
– Midnight Networks has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Midnight Networks, Inc. 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.
High brand equity
– Midnight Networks has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Midnight Networks to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Midnight Networks, Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Midnight Networks, Inc. are -
High cash cycle compare to competitors
Midnight Networks has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, H. Kent Bowen, Marilyn E. Matis suggests that, Midnight Networks 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.
Products dominated business model
– Even though Midnight Networks 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 - Midnight Networks, Inc. should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Midnight Networks is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Midnight Networks needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Midnight Networks to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Midnight Networks, firm in the HBR case study Midnight Networks, Inc. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Midnight Networks 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Midnight Networks, Inc., it seems that the employees of Midnight Networks 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Midnight Networks, Inc. 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 Midnight Networks 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Midnight Networks 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.
No frontier risks strategy
– After analyzing the HBR case study Midnight Networks, Inc., 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.
Slow to strategic competitive environment developments
– As Midnight Networks, Inc. HBR case study mentions - Midnight Networks takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Midnight Networks, Inc. | 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 Midnight Networks, Inc. are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Midnight Networks 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Midnight Networks 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.
Using analytics as competitive advantage
– Midnight Networks 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 Midnight Networks, Inc. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Midnight Networks to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Midnight Networks to increase its market reach. Midnight Networks 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Midnight Networks is facing challenges because of the dominance of functional experts in the organization. Midnight Networks, Inc. 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Midnight Networks can use these opportunities to build new business models that can help the communities that Midnight Networks operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Building a culture of innovation
– managers at Midnight Networks 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Midnight Networks can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Midnight Networks can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Midnight Networks 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Midnight Networks 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, Midnight Networks, Inc., 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
– Midnight Networks 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.
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 Midnight Networks 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.
Threats Midnight Networks, Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Midnight Networks, Inc. are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Midnight Networks 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 Midnight Networks, Inc. .
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 wage structure of Midnight Networks
– 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 Midnight Networks.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Midnight Networks with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Midnight Networks 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.
High dependence on third party suppliers
– Midnight Networks 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.
Technology acceleration in Forth Industrial Revolution
– Midnight Networks has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Midnight Networks 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Midnight Networks, Inc., Midnight Networks 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 .
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 Midnight Networks.
Stagnating economy with rate increase
– Midnight Networks can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Midnight Networks 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Midnight Networks business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Midnight Networks, Inc. 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 Midnight Networks, Inc. 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 Midnight Networks, Inc. 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 Midnight Networks, Inc. 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 Midnight Networks, Inc. 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 Midnight Networks needs to make to build a sustainable competitive advantage.
