Vehbi Koc and the Making of Turkey's Largest Business Group SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Vehbi Koc and the Making of Turkey's Largest Business Group
The case describes the creation of Turkey's largest business group by Vehbi Koc. The foundation of this group in the interwar years, and its subsequent diversification into many industries, including automobiles, household goods, and services, are analysed. The case serves as a vehicle to explain why diversified business groups are so important in emerging markets such as Turkey. It explores the role of market imperfections, government policies, and entrepreneurial ambition in their creation, as well as the organizational challenges posed by managing such diversified firms owned by a family. Much of the firm's growth came from licensing and joint venture agreements with multinational firms that were unable, or unwilling, to invest directly in Turkey because of political risk and government restrictions. The case ends in 1988, when the founder has received a report from the management consultancy Bain calling for the firm to reduce the range of activities it undertakes because of the competitive challenges resulting from the liberalization of the Turkish economy.
Swot Analysis of "Vehbi Koc and the Making of Turkey's Largest Business Group" written by Asli M. Colpan, Geoffrey G. Jones includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Koc Vehbi facing as an external strategic factors. Some of the topics covered in Vehbi Koc and the Making of Turkey's Largest Business Group case study are - Strategic Management Strategies, Emerging markets, Entrepreneurship, Globalization, Marketing, Organizational structure, Risk management and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Vehbi Koc and the Making of Turkey's Largest Business Group casestudy better are - – cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, geopolitical disruptions, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, technology disruption, competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Vehbi Koc and the Making of Turkey's Largest Business Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Vehbi Koc and the Making of Turkey's Largest Business Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Koc Vehbi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Koc Vehbi 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 Vehbi Koc and the Making of Turkey's Largest Business Group can be done for the following purposes –
1. Strategic planning using facts provided in Vehbi Koc and the Making of Turkey's Largest Business Group case study
2. Improving business portfolio management of Koc Vehbi
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 Koc Vehbi
Strengths Vehbi Koc and the Making of Turkey's Largest Business Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Koc Vehbi in Vehbi Koc and the Making of Turkey's Largest Business Group Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Vehbi Koc and the Making of Turkey's Largest Business Group 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 Koc Vehbi in the sector have low bargaining power. Vehbi Koc and the Making of Turkey's Largest Business Group has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Koc Vehbi to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Koc Vehbi is present in almost all the verticals within the industry. This has provided firm in Vehbi Koc and the Making of Turkey's Largest Business Group 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.
Analytics focus
– Koc Vehbi 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 Asli M. Colpan, Geoffrey G. Jones 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.
Ability to lead change in Innovation & Entrepreneurship field
– Koc Vehbi 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 Koc Vehbi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Koc Vehbi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Koc Vehbi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Koc Vehbi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Koc Vehbi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Koc Vehbi is one of the most innovative firm in sector. Manager in Vehbi Koc and the Making of Turkey's Largest Business Group Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Koc Vehbi 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)
– Koc Vehbi 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 Vehbi Koc and the Making of Turkey's Largest Business Group - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Koc Vehbi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Koc Vehbi is one of the leading recruiters in the industry. Managers in the Vehbi Koc and the Making of Turkey's Largest Business Group are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Vehbi Koc and the Making of Turkey's Largest Business Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Vehbi Koc and the Making of Turkey's Largest Business Group are -
Interest costs
– Compare to the competition, Koc Vehbi 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Vehbi Koc and the Making of Turkey's Largest Business Group, in the dynamic environment Koc Vehbi has struggled to respond to the nimble upstart competition. Koc Vehbi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Vehbi Koc and the Making of Turkey's Largest Business Group 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 Koc Vehbi has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Asli M. Colpan, Geoffrey G. Jones suggests that, Koc Vehbi 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.
Capital Spending Reduction
– Even during the low interest decade, Koc Vehbi 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 operating costs
– Compare to the competitors, firm in the HBR case study Vehbi Koc and the Making of Turkey's Largest Business Group 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 Koc Vehbi 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Koc Vehbi 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.
Increasing silos among functional specialists
– The organizational structure of Koc Vehbi is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Koc Vehbi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Koc Vehbi to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Vehbi Koc and the Making of Turkey's Largest Business Group, 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Koc Vehbi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Vehbi Koc and the Making of Turkey's Largest Business Group can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Vehbi Koc and the Making of Turkey's Largest Business Group 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 Vehbi Koc and the Making of Turkey's Largest Business Group can leverage the sales team experience to cultivate customer relationships as Koc Vehbi is planning to shift buying processes online.
Opportunities Vehbi Koc and the Making of Turkey's Largest Business Group | 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 Vehbi Koc and the Making of Turkey's Largest Business Group are -
Developing new processes and practices
– Koc Vehbi 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Koc Vehbi is facing challenges because of the dominance of functional experts in the organization. Vehbi Koc and the Making of Turkey's Largest Business Group case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 Koc Vehbi 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Koc Vehbi 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, Vehbi Koc and the Making of Turkey's Largest Business Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Koc Vehbi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Vehbi Koc and the Making of Turkey's Largest Business Group 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Koc Vehbi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Koc Vehbi has opened avenues for new revenue streams for the organization in the industry. This can help Koc Vehbi to build a more holistic ecosystem as suggested in the Vehbi Koc and the Making of Turkey's Largest Business Group case study. Koc Vehbi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Koc Vehbi 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
– Koc Vehbi 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 Vehbi Koc and the Making of Turkey's Largest Business Group - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Koc Vehbi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Koc Vehbi 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.
Better consumer reach
– The expansion of the 5G network will help Koc Vehbi to increase its market reach. Koc Vehbi will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Koc Vehbi can use these opportunities to build new business models that can help the communities that Koc Vehbi operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Koc Vehbi 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 Koc Vehbi to hire the very best people irrespective of their geographical location.
Threats Vehbi Koc and the Making of Turkey's Largest Business Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Vehbi Koc and the Making of Turkey's Largest Business Group are -
Regulatory challenges
– Koc Vehbi 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. Koc Vehbi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Koc Vehbi 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. Koc Vehbi can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Koc Vehbi needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Vehbi Koc and the Making of Turkey's Largest Business Group, Koc Vehbi 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 .
Technology acceleration in Forth Industrial Revolution
– Koc Vehbi has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Koc Vehbi 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.
Stagnating economy with rate increase
– Koc Vehbi 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.
Increasing wage structure of Koc Vehbi
– 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 Koc Vehbi.
Consumer confidence and its impact on Koc Vehbi 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.
Shortening product life cycle
– it is one of the major threat that Koc Vehbi is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Koc Vehbi 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 Vehbi Koc and the Making of Turkey's Largest Business Group .
High dependence on third party suppliers
– Koc Vehbi 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.
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 Koc Vehbi in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Vehbi Koc and the Making of Turkey's Largest Business Group 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 Vehbi Koc and the Making of Turkey's Largest Business Group 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 Vehbi Koc and the Making of Turkey's Largest Business Group 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 Vehbi Koc and the Making of Turkey's Largest Business Group 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 Vehbi Koc and the Making of Turkey's Largest Business Group 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 Koc Vehbi needs to make to build a sustainable competitive advantage.