Elasto Therm: The Next Step SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Elasto Therm: The Next Step
Julia and Nate Burstein were living their dream running their own business and balancing the demands between their work and family obligations while creating a company that was responsive to their employees' and their customers' needs. The Bursteins had joined a large multinational manufacturing company after receiving their MBAs from HBS, but soon left to join Julia's family plastics business. After the business was sold, they struck out on their own to search for a similar business. They purchased Elasto Therm, with $8 million in revenue from manufactured rubber and urethane components, with their own cash, bank financing, and the seller, partly in the form of an employee stock ownership plan (ESOP). Initially, Nate ran the business and after a few years changed roles with Julia to stay at home with their young children for three years. The two were in charge as co-CEOs before Julia relinquished her responsibilities to be at home again. The couple significantly strengthened the organization's talent, focused on innovation, growth, and provided a learning environment for their employees. Through cost efficiencies and pricing strategies, Elasto Therm was able to achieve higher margins than their competitors and focused on low-volume, short-run orders as they continued to expand the business. The 2008 recession forced them to reexamine all aspects of the business, and it retained profitability after painful cutbacks in the organization. To continue their growth into the next decade, they are faced with the choice of acquiring other businesses or growing more organically by adding to their sales organization to achieve geographic expansion.
Swot Analysis of "Elasto Therm: The Next Step" written by Jim Sharpe, James Weber includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Elasto Therm facing as an external strategic factors. Some of the topics covered in Elasto Therm: The Next Step case study are - Strategic Management Strategies, Entrepreneurial management, Growth strategy, Manufacturing, Mergers & acquisitions, Pricing, Strategy execution, Work-life balance and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Elasto Therm: The Next Step casestudy better are - – there is increasing trade war between United States & China, geopolitical disruptions, there is backlash against globalization, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, increasing energy prices, etc
Introduction to SWOT Analysis of Elasto Therm: The Next Step
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Elasto Therm: The Next Step case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Elasto Therm, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Elasto Therm 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 Elasto Therm: The Next Step can be done for the following purposes –
1. Strategic planning using facts provided in Elasto Therm: The Next Step case study
2. Improving business portfolio management of Elasto Therm
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 Elasto Therm
Strengths Elasto Therm: The Next Step | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Elasto Therm in Elasto Therm: The Next Step Harvard Business Review case study are -
Ability to recruit top talent
– Elasto Therm is one of the leading recruiters in the industry. Managers in the Elasto Therm: The Next Step are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Elasto Therm 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.
Analytics focus
– Elasto Therm 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 Jim Sharpe, James Weber 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.
Diverse revenue streams
– Elasto Therm is present in almost all the verticals within the industry. This has provided firm in Elasto Therm: The Next Step 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.
Learning organization
- Elasto Therm 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 Elasto Therm is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Elasto Therm: The Next Step Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Elasto Therm 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.
Organizational Resilience of Elasto Therm
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Elasto Therm does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Elasto Therm: The Next Step 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.
Effective Research and Development (R&D)
– Elasto Therm 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 Elasto Therm: The Next Step - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Elasto Therm has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Elasto Therm 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.
Training and development
– Elasto Therm has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Elasto Therm: The Next Step 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.
Highly skilled collaborators
– Elasto Therm 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 Elasto Therm: The Next Step HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Elasto Therm: The Next Step | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Elasto Therm: The Next Step are -
Increasing silos among functional specialists
– The organizational structure of Elasto Therm is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Elasto Therm needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Elasto Therm to focus more on services rather than just following the product oriented approach.
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 Elasto Therm supply chain. Even after few cautionary changes mentioned in the HBR case study - Elasto Therm: The Next Step, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Elasto Therm vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Elasto Therm 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.
Need for greater diversity
– Elasto Therm 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.
Slow to strategic competitive environment developments
– As Elasto Therm: The Next Step HBR case study mentions - Elasto Therm 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.
Products dominated business model
– Even though Elasto Therm 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 - Elasto Therm: The Next Step should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Jim Sharpe, James Weber suggests that, Elasto Therm 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.
Lack of clear differentiation of Elasto Therm products
– To increase the profitability and margins on the products, Elasto Therm needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Elasto Therm 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Elasto Therm: The Next Step, in the dynamic environment Elasto Therm has struggled to respond to the nimble upstart competition. Elasto Therm has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Elasto Therm 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. Elasto Therm 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.
Opportunities Elasto Therm: The Next Step | 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 Elasto Therm: The Next Step are -
Learning at scale
– Online learning technologies has now opened space for Elasto Therm 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.
Buying journey improvements
– Elasto Therm can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Elasto Therm: The Next Step 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.
Leveraging digital technologies
– Elasto Therm 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.
Better consumer reach
– The expansion of the 5G network will help Elasto Therm to increase its market reach. Elasto Therm 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.
Manufacturing automation
– Elasto Therm 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Elasto Therm 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.
Creating value in data economy
– The success of analytics program of Elasto Therm has opened avenues for new revenue streams for the organization in the industry. This can help Elasto Therm to build a more holistic ecosystem as suggested in the Elasto Therm: The Next Step case study. Elasto Therm 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 Elasto Therm 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Elasto Therm 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, Elasto Therm: The Next Step, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Elasto Therm 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 Elasto Therm: The Next Step - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Elasto Therm to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Elasto Therm can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Elasto Therm can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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 Elasto Therm in the consumer business. Now Elasto Therm can target international markets with far fewer capital restrictions requirements than the existing system.
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. Elasto Therm can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Elasto Therm: The Next Step External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Elasto Therm: The Next Step are -
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 Elasto Therm.
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.
Consumer confidence and its impact on Elasto Therm 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Elasto Therm: The Next Step, Elasto Therm 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 .
Increasing wage structure of Elasto Therm
– 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 Elasto Therm.
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.
Shortening product life cycle
– it is one of the major threat that Elasto Therm is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Elasto Therm 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Elasto Therm with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Elasto Therm 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.
Technology acceleration in Forth Industrial Revolution
– Elasto Therm has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Elasto Therm 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.
Environmental challenges
– Elasto Therm 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. Elasto Therm can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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 Elasto Therm business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Elasto Therm: The Next Step 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 Elasto Therm: The Next Step 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 Elasto Therm: The Next Step 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 Elasto Therm: The Next Step 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 Elasto Therm: The Next Step 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 Elasto Therm needs to make to build a sustainable competitive advantage.