A "Rich-vs.-King" Approach to Term Sheet Negotiations SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of A "Rich-vs.-King" Approach to Term Sheet Negotiations
This note offers a new approach to Venture Capital term-sheet negotiations, with actionable steps based on insights from Prof. Wasserman's "Rich-vs.-King" approach to founder decisions. A core thesis of this note is that trying to negotiate all terms in a term sheet will be less effective than focusing on the terms that are most important to the specific entrepreneur in question, taking into account the entrepreneur's goals and motivations in founding the venture. In particular, terms that are higher-priority to a control-motivated "King" founder are often lower-priority to a wealth-motivated "Rich" founder, and vice versa. Thus, this note identifies the most common terms that differ in their importance to different types of founders, and provides a framework for weighing the relative importance of each potential term sheet outcome for their specific type.
Authors :: Noam Wasserman, Furqan Nazeeri, Kyle Anderson
Swot Analysis of "A "Rich-vs.-King" Approach to Term Sheet Negotiations" written by Noam Wasserman, Furqan Nazeeri, Kyle Anderson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sheet King facing as an external strategic factors. Some of the topics covered in A "Rich-vs.-King" Approach to Term Sheet Negotiations case study are - Strategic Management Strategies, Motivating people, Negotiations, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the A "Rich-vs.-King" Approach to Term Sheet Negotiations casestudy better are - – digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, there is backlash against globalization, increasing transportation and logistics costs, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies,
geopolitical disruptions, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of A "Rich-vs.-King" Approach to Term Sheet Negotiations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A "Rich-vs.-King" Approach to Term Sheet Negotiations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sheet King, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sheet King 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations can be done for the following purposes –
1. Strategic planning using facts provided in A "Rich-vs.-King" Approach to Term Sheet Negotiations case study
2. Improving business portfolio management of Sheet King
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 Sheet King
Strengths A "Rich-vs.-King" Approach to Term Sheet Negotiations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sheet King in A "Rich-vs.-King" Approach to Term Sheet Negotiations Harvard Business Review case study are -
High switching costs
– The high switching costs that Sheet King 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.
Effective Research and Development (R&D)
– Sheet King 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Sheet King digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sheet King 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.
Successful track record of launching new products
– Sheet King has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sheet King 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.
Low bargaining power of suppliers
– Suppliers of Sheet King in the sector have low bargaining power. A "Rich-vs.-King" Approach to Term Sheet Negotiations has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sheet King to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Innovation & Entrepreneurship field
– Sheet King 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 Sheet King in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Sheet King is present in almost all the verticals within the industry. This has provided firm in A "Rich-vs.-King" Approach to Term Sheet Negotiations 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.
Superior customer experience
– The customer experience strategy of Sheet King in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Sheet King is one of the most innovative firm in sector. Manager in A "Rich-vs.-King" Approach to Term Sheet Negotiations Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Sheet King is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Sheet King has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sheet King to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Sheet King 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.
Weaknesses A "Rich-vs.-King" Approach to Term Sheet Negotiations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A "Rich-vs.-King" Approach to Term Sheet Negotiations are -
High cash cycle compare to competitors
Sheet King 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.
Need for greater diversity
– Sheet King 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 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 Sheet King supply chain. Even after few cautionary changes mentioned in the HBR case study - A "Rich-vs.-King" Approach to Term Sheet Negotiations, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sheet King vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 Sheet King has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Sheet King 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 bargaining power of channel partners
– Because of the regulatory requirements, Noam Wasserman, Furqan Nazeeri, Kyle Anderson suggests that, Sheet King is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study A "Rich-vs.-King" Approach to Term Sheet Negotiations, in the dynamic environment Sheet King has struggled to respond to the nimble upstart competition. Sheet King has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sheet King is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A "Rich-vs.-King" Approach to Term Sheet Negotiations can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Sheet King, firm in the HBR case study A "Rich-vs.-King" Approach to Term Sheet Negotiations needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations can leverage the sales team experience to cultivate customer relationships as Sheet King is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study A "Rich-vs.-King" Approach to Term Sheet Negotiations, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities A "Rich-vs.-King" Approach to Term Sheet Negotiations | 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations are -
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. Sheet King can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Sheet King to increase its market reach. Sheet King 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sheet King 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 Sheet King to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Sheet King 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sheet King 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, A "Rich-vs.-King" Approach to Term Sheet Negotiations, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Sheet King 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.
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 Sheet King in the consumer business. Now Sheet King can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sheet King 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sheet King can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sheet King 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. Sheet King can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Sheet King 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.
Buying journey improvements
– Sheet King can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. A "Rich-vs.-King" Approach to Term Sheet Negotiations 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.
Threats A "Rich-vs.-King" Approach to Term Sheet Negotiations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study A "Rich-vs.-King" Approach to Term Sheet Negotiations are -
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. Sheet King 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.
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 Sheet King in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing wage structure of Sheet King
– 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 Sheet King.
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 Sheet King business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Sheet King 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sheet King with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Sheet King needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Sheet King 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 Sheet King 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, Sheet King 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations .
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. Sheet King can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sheet King 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.
Shortening product life cycle
– it is one of the major threat that Sheet King 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 A "Rich-vs.-King" Approach to Term Sheet Negotiations 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 Sheet King needs to make to build a sustainable competitive advantage.
