Case Study Description of Vermeer Technologies (D): Making Transitions
Microsoft has acquired Vermeer, and Vermeer executives are both excited and concerned as they prepare to move to Redmond. Even though the acquisition has been financially rewarding, the Vermeer engineers worry how well they will adapt to their new home. Meanwhile, Chris Peters, their new boss, is trying to ensure a smooth integration of the Vermeer team into the Microsoft organization.
Swot Analysis of "Vermeer Technologies (D): Making Transitions" written by Ashish Nanda, Georgia Levenson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vermeer Microsoft facing as an external strategic factors. Some of the topics covered in Vermeer Technologies (D): Making Transitions case study are - Strategic Management Strategies, Hiring, Mergers & acquisitions, Organizational structure, Product development, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Vermeer Technologies (D): Making Transitions casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google,
cloud computing is disrupting traditional business models, increasing commodity prices, etc
Introduction to SWOT Analysis of Vermeer Technologies (D): Making Transitions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Vermeer Technologies (D): Making Transitions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vermeer Microsoft, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vermeer Microsoft 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 Vermeer Technologies (D): Making Transitions can be done for the following purposes –
1. Strategic planning using facts provided in Vermeer Technologies (D): Making Transitions case study
2. Improving business portfolio management of Vermeer Microsoft
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 Vermeer Microsoft
Strengths Vermeer Technologies (D): Making Transitions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vermeer Microsoft in Vermeer Technologies (D): Making Transitions Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Vermeer Technologies (D): Making Transitions 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.
High switching costs
– The high switching costs that Vermeer Microsoft 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.
Training and development
– Vermeer Microsoft has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Vermeer Technologies (D): Making Transitions 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.
Cross disciplinary teams
– Horizontal connected teams at the Vermeer Microsoft 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.
Effective Research and Development (R&D)
– Vermeer Microsoft 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 Vermeer Technologies (D): Making Transitions - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Vermeer Microsoft in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Vermeer Microsoft 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 Vermeer Microsoft is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Vermeer Technologies (D): Making Transitions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Vermeer Microsoft has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vermeer Microsoft 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.
Organizational Resilience of Vermeer Microsoft
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vermeer Microsoft 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 Vermeer Microsoft in the sector have low bargaining power. Vermeer Technologies (D): Making Transitions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vermeer Microsoft to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Vermeer Microsoft digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vermeer Microsoft 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.
Diverse revenue streams
– Vermeer Microsoft is present in almost all the verticals within the industry. This has provided firm in Vermeer Technologies (D): Making Transitions case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Vermeer Technologies (D): Making Transitions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Vermeer Technologies (D): Making Transitions are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Vermeer Technologies (D): Making Transitions 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 Vermeer Microsoft has relatively successful track record of launching new products.
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 Vermeer Microsoft supply chain. Even after few cautionary changes mentioned in the HBR case study - Vermeer Technologies (D): Making Transitions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vermeer Microsoft vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Vermeer Microsoft is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Vermeer Microsoft needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vermeer Microsoft to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Vermeer Microsoft 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, Vermeer Microsoft 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. Vermeer Microsoft 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Vermeer Technologies (D): Making Transitions, in the dynamic environment Vermeer Microsoft has struggled to respond to the nimble upstart competition. Vermeer Microsoft has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Vermeer Microsoft 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.
Interest costs
– Compare to the competition, Vermeer Microsoft 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vermeer Microsoft is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Vermeer Technologies (D): Making Transitions can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Vermeer Microsoft products
– To increase the profitability and margins on the products, Vermeer Microsoft needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Vermeer Technologies (D): Making Transitions 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 Vermeer Technologies (D): Making Transitions can leverage the sales team experience to cultivate customer relationships as Vermeer Microsoft is planning to shift buying processes online.
Opportunities Vermeer Technologies (D): Making Transitions | 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 Vermeer Technologies (D): Making Transitions are -
Buying journey improvements
– Vermeer Microsoft can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Vermeer Technologies (D): Making Transitions 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.
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. Vermeer Microsoft 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. Vermeer Microsoft 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.
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. Vermeer Microsoft can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vermeer Microsoft 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.
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 Vermeer Microsoft in the consumer business. Now Vermeer Microsoft can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Vermeer Microsoft 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.
Creating value in data economy
– The success of analytics program of Vermeer Microsoft has opened avenues for new revenue streams for the organization in the industry. This can help Vermeer Microsoft to build a more holistic ecosystem as suggested in the Vermeer Technologies (D): Making Transitions case study. Vermeer Microsoft can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Vermeer Microsoft can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Vermeer Microsoft 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 Vermeer Microsoft to increase its market reach. Vermeer Microsoft 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vermeer Microsoft can use these opportunities to build new business models that can help the communities that Vermeer Microsoft operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Developing new processes and practices
– Vermeer Microsoft 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.
Manufacturing automation
– Vermeer Microsoft 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.
Threats Vermeer Technologies (D): Making Transitions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Vermeer Technologies (D): Making Transitions 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. Vermeer Microsoft needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Vermeer Microsoft has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Vermeer Microsoft 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.
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 Vermeer Microsoft.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Vermeer Technologies (D): Making Transitions, Vermeer Microsoft 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 .
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 Vermeer Microsoft in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Vermeer Microsoft 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.
Consumer confidence and its impact on Vermeer Microsoft 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.
Stagnating economy with rate increase
– Vermeer Microsoft 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vermeer Microsoft 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 Vermeer Technologies (D): Making Transitions .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vermeer Microsoft 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. Vermeer Microsoft 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.
Increasing wage structure of Vermeer Microsoft
– 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 Vermeer Microsoft.
Weighted SWOT Analysis of Vermeer Technologies (D): Making Transitions 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 Vermeer Technologies (D): Making Transitions 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 Vermeer Technologies (D): Making Transitions 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 Vermeer Technologies (D): Making Transitions 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 Vermeer Technologies (D): Making Transitions 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 Vermeer Microsoft needs to make to build a sustainable competitive advantage.
