Case Study Description of Classtivity: Payal's Pirouette
A few months after launching a new fitness technology product, the small staff of New York startup Classtivity gathers on a Saturday in April 2013 to take stock. With one successful pivot under their belt, Classtivity is finally generating revenue and enthusiasm among customers. But cofounder and CEO Payal Kadakia has some doubts. There are signs that customers love the offering, but studios are less enthusiastic. Efforts to get customers to return to the studios after their monthly packs expire have largely failed. Kadakia must decide, preserve the product or pivot to a new business model?
Swot Analysis of "Classtivity: Payal's Pirouette" written by Jeffrey J. Bussgang, Olivia Hull includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Classtivity Kadakia facing as an external strategic factors. Some of the topics covered in Classtivity: Payal's Pirouette case study are - Strategic Management Strategies, Customers, Financial management, Health, Innovation, Sales, Strategy, Supply chain, Technology, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Classtivity: Payal's Pirouette casestudy better are - – geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, technology disruption, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of Classtivity: Payal's Pirouette
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Classtivity: Payal's Pirouette case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Classtivity Kadakia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Classtivity Kadakia 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 Classtivity: Payal's Pirouette can be done for the following purposes –
1. Strategic planning using facts provided in Classtivity: Payal's Pirouette case study
2. Improving business portfolio management of Classtivity Kadakia
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 Classtivity Kadakia
Strengths Classtivity: Payal's Pirouette | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Classtivity Kadakia in Classtivity: Payal's Pirouette Harvard Business Review case study are -
Diverse revenue streams
– Classtivity Kadakia is present in almost all the verticals within the industry. This has provided firm in Classtivity: Payal's Pirouette 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.
Operational resilience
– The operational resilience strategy in the Classtivity: Payal's Pirouette 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.
Low bargaining power of suppliers
– Suppliers of Classtivity Kadakia in the sector have low bargaining power. Classtivity: Payal's Pirouette has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Classtivity Kadakia to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Classtivity Kadakia 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 Classtivity: Payal's Pirouette HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Classtivity Kadakia has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Classtivity Kadakia 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 Jeffrey J. Bussgang, Olivia Hull 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
– Classtivity: Payal's Pirouette firm has clearly differentiated products in the market place. This has enabled Classtivity Kadakia to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Classtivity Kadakia to invest into research and development (R&D) and innovation.
Innovation driven organization
– Classtivity Kadakia is one of the most innovative firm in sector. Manager in Classtivity: Payal's Pirouette Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Classtivity Kadakia 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 Classtivity: Payal's Pirouette - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Classtivity Kadakia 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.
Learning organization
- Classtivity Kadakia 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 Classtivity Kadakia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Classtivity: Payal's Pirouette Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Classtivity Kadakia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Classtivity Kadakia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Classtivity: Payal's Pirouette | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Classtivity: Payal's Pirouette are -
Slow to strategic competitive environment developments
– As Classtivity: Payal's Pirouette HBR case study mentions - Classtivity Kadakia 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.
Slow decision making process
– As mentioned earlier in the report, Classtivity Kadakia 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. Classtivity Kadakia 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.
Products dominated business model
– Even though Classtivity Kadakia 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 - Classtivity: Payal's Pirouette should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Classtivity: Payal's Pirouette, is just above the industry average. Classtivity Kadakia 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.
Skills based hiring
– The stress on hiring functional specialists at Classtivity Kadakia 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.
Lack of clear differentiation of Classtivity Kadakia products
– To increase the profitability and margins on the products, Classtivity Kadakia needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Classtivity Kadakia 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.
High cash cycle compare to competitors
Classtivity Kadakia 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Classtivity: Payal's Pirouette, it seems that the employees of Classtivity Kadakia 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.
Capital Spending Reduction
– Even during the low interest decade, Classtivity Kadakia 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.
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 Classtivity Kadakia supply chain. Even after few cautionary changes mentioned in the HBR case study - Classtivity: Payal's Pirouette, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Classtivity Kadakia vulnerable to further global disruptions in South East Asia.
Opportunities Classtivity: Payal's Pirouette | 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 Classtivity: Payal's Pirouette are -
Using analytics as competitive advantage
– Classtivity Kadakia 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 Classtivity: Payal's Pirouette - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Classtivity Kadakia to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Classtivity Kadakia 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 Classtivity Kadakia to hire the very best people irrespective of their geographical location.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Classtivity Kadakia 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.
Loyalty marketing
– Classtivity Kadakia 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.
Manufacturing automation
– Classtivity Kadakia 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.
Developing new processes and practices
– Classtivity Kadakia 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.
Building a culture of innovation
– managers at Classtivity Kadakia 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.
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. Classtivity Kadakia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Classtivity Kadakia has opened avenues for new revenue streams for the organization in the industry. This can help Classtivity Kadakia to build a more holistic ecosystem as suggested in the Classtivity: Payal's Pirouette case study. Classtivity Kadakia can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Classtivity Kadakia 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Classtivity Kadakia can use these opportunities to build new business models that can help the communities that Classtivity Kadakia operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Learning at scale
– Online learning technologies has now opened space for Classtivity Kadakia 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.
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. Classtivity Kadakia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Classtivity: Payal's Pirouette External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Classtivity: Payal's Pirouette are -
Increasing wage structure of Classtivity Kadakia
– 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 Classtivity Kadakia.
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 Classtivity Kadakia.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Classtivity: Payal's Pirouette, Classtivity Kadakia 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 .
High dependence on third party suppliers
– Classtivity Kadakia 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Classtivity Kadakia 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.
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. Classtivity Kadakia needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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 Classtivity Kadakia business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Classtivity Kadakia 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.
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. Classtivity Kadakia 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.
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. Classtivity Kadakia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Classtivity Kadakia demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Classtivity Kadakia 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 Classtivity: Payal's Pirouette .
Weighted SWOT Analysis of Classtivity: Payal's Pirouette 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 Classtivity: Payal's Pirouette 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 Classtivity: Payal's Pirouette 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 Classtivity: Payal's Pirouette 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 Classtivity: Payal's Pirouette 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 Classtivity Kadakia needs to make to build a sustainable competitive advantage.
