Case Study Description of Tata Communications: Emerging Markets Growth Strategy
This case describes the second home market strategy of Tata Communications Limited (TCL) and its evaluation of Russia as a new market opportunity. Ahead of a July 2012 board meeting, TCL's Chief Strategy Officer had to decide whether to pursue an acquisition opportunity in Russia. The case traces TCL's transformation from an Indian public sector monopoly to a global challenger in the telecommunications market, its previous acquisition history and its foray into South Africa as a second home market. The latest opportunity - to create a third home market in Russia - was the possible acquisition of a Russian Internet Service Provider (ISP) which had a business-to-business (B2B) focus and product mix similar to TCL.
Swot Analysis of "Tata Communications: Emerging Markets Growth Strategy" written by Srinivasa Addepalli, Prashant Kale includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tcl's Tcl facing as an external strategic factors. Some of the topics covered in Tata Communications: Emerging Markets Growth Strategy case study are - Strategic Management Strategies, Growth strategy, Mergers & acquisitions and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Tata Communications: Emerging Markets Growth Strategy casestudy better are - – increasing commodity prices, central banks are concerned over increasing inflation, increasing transportation and logistics costs, geopolitical disruptions, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic ,
there is backlash against globalization, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Tata Communications: Emerging Markets Growth Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tata Communications: Emerging Markets Growth Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tcl's Tcl, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tcl's Tcl 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 Tata Communications: Emerging Markets Growth Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Tata Communications: Emerging Markets Growth Strategy case study
2. Improving business portfolio management of Tcl's Tcl
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 Tcl's Tcl
Strengths Tata Communications: Emerging Markets Growth Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tcl's Tcl in Tata Communications: Emerging Markets Growth Strategy Harvard Business Review case study are -
Ability to recruit top talent
– Tcl's Tcl is one of the leading recruiters in the industry. Managers in the Tata Communications: Emerging Markets Growth Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Tcl's Tcl digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tcl's Tcl 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.
Superior customer experience
– The customer experience strategy of Tcl's Tcl in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Tcl's Tcl 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 Tata Communications: Emerging Markets Growth Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Tcl's Tcl is one of the most innovative firm in sector. Manager in Tata Communications: Emerging Markets Growth Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Tcl's Tcl 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 Srinivasa Addepalli, Prashant Kale 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Tata Communications: Emerging Markets Growth Strategy firm has clearly differentiated products in the market place. This has enabled Tcl's Tcl to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Tcl's Tcl to invest into research and development (R&D) and innovation.
High brand equity
– Tcl's Tcl has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tcl's Tcl to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Tcl's Tcl has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tata Communications: Emerging Markets Growth Strategy 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.
Diverse revenue streams
– Tcl's Tcl is present in almost all the verticals within the industry. This has provided firm in Tata Communications: Emerging Markets Growth Strategy 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.
Successful track record of launching new products
– Tcl's Tcl has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tcl's Tcl 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 Tcl's Tcl
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tcl's Tcl does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Tata Communications: Emerging Markets Growth Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tata Communications: Emerging Markets Growth Strategy are -
Increasing silos among functional specialists
– The organizational structure of Tcl's Tcl is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Tcl's Tcl needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tcl's Tcl to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Tcl's Tcl 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. Tcl's Tcl 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.
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 Tcl's Tcl supply chain. Even after few cautionary changes mentioned in the HBR case study - Tata Communications: Emerging Markets Growth Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tcl's Tcl vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Tcl's Tcl 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 Tata Communications: Emerging Markets Growth Strategy 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 Tcl's Tcl has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tata Communications: Emerging Markets Growth Strategy, it seems that the employees of Tcl's Tcl 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 cash cycle compare to competitors
Tcl's Tcl 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 to strategic competitive environment developments
– As Tata Communications: Emerging Markets Growth Strategy HBR case study mentions - Tcl's Tcl 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tata Communications: Emerging Markets Growth Strategy, is just above the industry average. Tcl's Tcl 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.
Need for greater diversity
– Tcl's Tcl 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.
Low market penetration in new markets
– Outside its home market of Tcl's Tcl, firm in the HBR case study Tata Communications: Emerging Markets Growth Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Tata Communications: Emerging Markets Growth Strategy | 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 Tata Communications: Emerging Markets Growth Strategy are -
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. Tcl's Tcl can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Tcl's Tcl 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.
Better consumer reach
– The expansion of the 5G network will help Tcl's Tcl to increase its market reach. Tcl's Tcl 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, Tcl's Tcl can use these opportunities to build new business models that can help the communities that Tcl's Tcl operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tcl's Tcl is facing challenges because of the dominance of functional experts in the organization. Tata Communications: Emerging Markets Growth Strategy 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.
Manufacturing automation
– Tcl's Tcl 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.
Building a culture of innovation
– managers at Tcl's Tcl 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.
Learning at scale
– Online learning technologies has now opened space for Tcl's Tcl 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 Tcl's Tcl can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Tcl's Tcl 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.
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. Tcl's Tcl can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Tcl's Tcl has opened avenues for new revenue streams for the organization in the industry. This can help Tcl's Tcl to build a more holistic ecosystem as suggested in the Tata Communications: Emerging Markets Growth Strategy case study. Tcl's Tcl can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tcl's Tcl 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 Tcl's Tcl to hire the very best people irrespective of their geographical location.
Threats Tata Communications: Emerging Markets Growth Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tata Communications: Emerging Markets Growth Strategy 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.
Regulatory challenges
– Tcl's Tcl 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.
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 Tcl's Tcl in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tata Communications: Emerging Markets Growth Strategy, Tcl's Tcl 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 .
Environmental challenges
– Tcl's Tcl needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tcl's Tcl can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Technology acceleration in Forth Industrial Revolution
– Tcl's Tcl has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Tcl's Tcl 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.
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. Tcl's Tcl can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Tcl's Tcl.
Consumer confidence and its impact on Tcl's Tcl 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.
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. Tcl's Tcl needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tcl's Tcl 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 Tata Communications: Emerging Markets Growth Strategy .
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 Tcl's Tcl business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Tcl's Tcl is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Tata Communications: Emerging Markets Growth Strategy 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 Tata Communications: Emerging Markets Growth Strategy 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 Tata Communications: Emerging Markets Growth Strategy 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 Tata Communications: Emerging Markets Growth Strategy 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 Tata Communications: Emerging Markets Growth Strategy 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 Tcl's Tcl needs to make to build a sustainable competitive advantage.