Case Study Description of SpiffyTerm, Inc.: January 2000
The fictional case of SpiffyTerm, Inc., is meant to teach students about the term sheets commonly used in venture capital deals. At the time of the case, the three company founders concentrate on understanding the term sheet just received from a Silicon Valley venture capital firm (included in the case) and, considering the current and anticipated future financing rounds, collaborate to determine what valuation and other terms they should bargain for. The case consists of six sections: 1) basic valuation, 2) valuation with alternative scenarios, 3) vesting and founder replacement, 4) preferred stock, 5) pricing of follow-up rounds and the right of first refusal, and 6) anti-dilution. The teaching note to this case is a spreadsheet that contains all the formulas used to solve the problems.
Swot Analysis of "SpiffyTerm, Inc.: January 2000" written by Thomas Hellmann includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Spiffyterm Valuation facing as an external strategic factors. Some of the topics covered in SpiffyTerm, Inc.: January 2000 case study are - Strategic Management Strategies, Financial analysis, Financial management, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the SpiffyTerm, Inc.: January 2000 casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, technology disruption, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , increasing transportation and logistics costs, geopolitical disruptions,
increasing commodity prices, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of SpiffyTerm, Inc.: January 2000
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SpiffyTerm, Inc.: January 2000 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Spiffyterm Valuation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Spiffyterm Valuation 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 SpiffyTerm, Inc.: January 2000 can be done for the following purposes –
1. Strategic planning using facts provided in SpiffyTerm, Inc.: January 2000 case study
2. Improving business portfolio management of Spiffyterm Valuation
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 Spiffyterm Valuation
Strengths SpiffyTerm, Inc.: January 2000 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Spiffyterm Valuation in SpiffyTerm, Inc.: January 2000 Harvard Business Review case study are -
Learning organization
- Spiffyterm Valuation 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 Spiffyterm Valuation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in SpiffyTerm, Inc.: January 2000 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Spiffyterm Valuation is one of the most innovative firm in sector. Manager in SpiffyTerm, Inc.: January 2000 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Spiffyterm Valuation
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Spiffyterm Valuation does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Spiffyterm Valuation 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 Thomas Hellmann 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Spiffyterm Valuation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Spiffyterm Valuation 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.
Cross disciplinary teams
– Horizontal connected teams at the Spiffyterm Valuation 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.
Highly skilled collaborators
– Spiffyterm Valuation 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 SpiffyTerm, Inc.: January 2000 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Spiffyterm Valuation in the sector have low bargaining power. SpiffyTerm, Inc.: January 2000 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Spiffyterm Valuation to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Spiffyterm Valuation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SpiffyTerm, Inc.: January 2000 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.
Ability to lead change in Innovation & Entrepreneurship field
– Spiffyterm Valuation is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Spiffyterm Valuation in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Spiffyterm Valuation is present in almost all the verticals within the industry. This has provided firm in SpiffyTerm, Inc.: January 2000 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.
Ability to recruit top talent
– Spiffyterm Valuation is one of the leading recruiters in the industry. Managers in the SpiffyTerm, Inc.: January 2000 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 SpiffyTerm, Inc.: January 2000 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SpiffyTerm, Inc.: January 2000 are -
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 Spiffyterm Valuation supply chain. Even after few cautionary changes mentioned in the HBR case study - SpiffyTerm, Inc.: January 2000, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Spiffyterm Valuation vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study SpiffyTerm, Inc.: January 2000, is just above the industry average. Spiffyterm Valuation 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.
Slow decision making process
– As mentioned earlier in the report, Spiffyterm Valuation 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. Spiffyterm Valuation 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 SpiffyTerm, Inc.: January 2000, in the dynamic environment Spiffyterm Valuation has struggled to respond to the nimble upstart competition. Spiffyterm Valuation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Spiffyterm Valuation has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the SpiffyTerm, Inc.: January 2000 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 Spiffyterm Valuation has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Spiffyterm Valuation 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Spiffyterm Valuation is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study SpiffyTerm, Inc.: January 2000 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study SpiffyTerm, Inc.: January 2000, it seems that the employees of Spiffyterm Valuation 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 Spiffyterm Valuation, firm in the HBR case study SpiffyTerm, Inc.: January 2000 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Spiffyterm Valuation has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities SpiffyTerm, Inc.: January 2000 | 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 SpiffyTerm, Inc.: January 2000 are -
Learning at scale
– Online learning technologies has now opened space for Spiffyterm Valuation 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Spiffyterm Valuation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Spiffyterm Valuation 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, SpiffyTerm, Inc.: January 2000, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Spiffyterm Valuation 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.
Manufacturing automation
– Spiffyterm Valuation 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Spiffyterm Valuation 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.
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. Spiffyterm Valuation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Spiffyterm Valuation 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.
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 Spiffyterm Valuation in the consumer business. Now Spiffyterm Valuation can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Spiffyterm Valuation can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. SpiffyTerm, Inc.: January 2000 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Spiffyterm Valuation has opened avenues for new revenue streams for the organization in the industry. This can help Spiffyterm Valuation to build a more holistic ecosystem as suggested in the SpiffyTerm, Inc.: January 2000 case study. Spiffyterm Valuation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Spiffyterm Valuation 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.
Developing new processes and practices
– Spiffyterm Valuation 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.
Threats SpiffyTerm, Inc.: January 2000 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SpiffyTerm, Inc.: January 2000 are -
Regulatory challenges
– Spiffyterm Valuation 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.
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.
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.
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. Spiffyterm Valuation 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.
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 Spiffyterm Valuation business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Spiffyterm Valuation in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Spiffyterm Valuation 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 SpiffyTerm, Inc.: January 2000 .
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. Spiffyterm Valuation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Spiffyterm Valuation in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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. Spiffyterm Valuation 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
– Spiffyterm Valuation has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Spiffyterm Valuation 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.
Shortening product life cycle
– it is one of the major threat that Spiffyterm Valuation is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Spiffyterm Valuation.
Weighted SWOT Analysis of SpiffyTerm, Inc.: January 2000 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 SpiffyTerm, Inc.: January 2000 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 SpiffyTerm, Inc.: January 2000 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 SpiffyTerm, Inc.: January 2000 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 SpiffyTerm, Inc.: January 2000 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 Spiffyterm Valuation needs to make to build a sustainable competitive advantage.