K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants
Focuses on entrepreneurship--both in setting up a new business and in keeping the entrepreneurial spirit alive in large, established organizations--and on internationalization. Describes how toy manufacturer Hasbro and other large toy manufacturers turned down an American entrepreneur's idea and how he started to market the toy (K'NEX) himself. Despite the fact that LEGO (the powerful construction toy maker) dominated the market, K'NEX became a success in the United States. How can the American entrepreneur take his product international? Looks at the timing and different strategies for going international.
Swot Analysis of "K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants" written by Jacques Horovitz, Els Van Weering includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that K'nex Toy facing as an external strategic factors. Some of the topics covered in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants case study are - Strategic Management Strategies, Product development and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants casestudy better are - – increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the K'nex Toy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which K'nex Toy 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants can be done for the following purposes –
1. Strategic planning using facts provided in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants case study
2. Improving business portfolio management of K'nex Toy
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 K'nex Toy
Strengths K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of K'nex Toy in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants Harvard Business Review case study are -
Highly skilled collaborators
– K'nex Toy 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For K'nex Toy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. K'nex Toy 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 K'nex Toy in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Innovation & Entrepreneurship field
– K'nex Toy 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 K'nex Toy in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– K'nex Toy is present in almost all the verticals within the industry. This has provided firm in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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.
Training and development
– K'nex Toy has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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.
Strong track record of project management
– K'nex Toy 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 switching costs
– The high switching costs that K'nex Toy 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.
Cross disciplinary teams
– Horizontal connected teams at the K'nex Toy 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.
Successful track record of launching new products
– K'nex Toy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. K'nex Toy 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.
Innovation driven organization
– K'nex Toy is one of the most innovative firm in sector. Manager in K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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)
– K'nex Toy 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants are -
High cash cycle compare to competitors
K'nex Toy 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants, in the dynamic environment K'nex Toy has struggled to respond to the nimble upstart competition. K'nex Toy has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though K'nex Toy 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 - K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, K'nex Toy needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants, 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.
Slow decision making process
– As mentioned earlier in the report, K'nex Toy 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. K'nex Toy 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 K'nex Toy supply chain. Even after few cautionary changes mentioned in the HBR case study - K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left K'nex Toy 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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 K'nex Toy has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, K'nex Toy 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.
Lack of clear differentiation of K'nex Toy products
– To increase the profitability and margins on the products, K'nex Toy needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract K'nex Toy 's lucrative customers.
Opportunities K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants | 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants are -
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 K'nex Toy in the consumer business. Now K'nex Toy can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– K'nex Toy 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, K'nex Toy 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, K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, K'nex Toy can use these opportunities to build new business models that can help the communities that K'nex Toy operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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. K'nex Toy 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. K'nex Toy 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.
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 K'nex Toy 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, K'nex Toy 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.
Using analytics as competitive advantage
– K'nex Toy 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants - to build a competitive advantage using analytics. The analytics driven competitive advantage can help K'nex Toy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for K'nex Toy 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.
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. K'nex Toy can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– K'nex Toy 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 K'nex Toy 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.
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. K'nex Toy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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. K'nex Toy 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, K'nex Toy 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants .
Shortening product life cycle
– it is one of the major threat that K'nex Toy is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– K'nex Toy 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.
Increasing wage structure of K'nex Toy
– 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 K'nex Toy.
Environmental challenges
– K'nex Toy 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. K'nex Toy can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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.
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 K'nex Toy business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– K'nex Toy 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.
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. K'nex Toy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. K'nex Toy needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Consumer confidence and its impact on K'nex Toy 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for K'nex Toy 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.
Weighted SWOT Analysis of K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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 K'NEX (B): 1991-1994 USA, Entering a Market Dominated by Giants 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 K'nex Toy needs to make to build a sustainable competitive advantage.