A Strategic Framework for Spare Parts Logistics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of A Strategic Framework for Spare Parts Logistics
Strategically aligned and efficiently implemented spare parts logistics can differentiate a business from its competitors, lower costs, increase revenues, and thus help firms generate greater value for customers and ultimately increase profits. Based on multiple case studies with manufacturers in the machine and plant construction industry, this article examines the key components of a superior spare parts logistics strategy. The study suggests that an efficient spare parts logistics strategy can be developed with a three-step model that consists of nine components.
Authors :: Stephan M. Wagner, Ruben Jonke, Andreas B. Eisingerich
Swot Analysis of "A Strategic Framework for Spare Parts Logistics" written by Stephan M. Wagner, Ruben Jonke, Andreas B. Eisingerich includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Spare Logistics facing as an external strategic factors. Some of the topics covered in A Strategic Framework for Spare Parts Logistics case study are - Strategic Management Strategies, Supply chain and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the A Strategic Framework for Spare Parts Logistics casestudy better are - – cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, there is backlash against globalization, geopolitical disruptions, talent flight as more people leaving formal jobs,
competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, etc
Introduction to SWOT Analysis of A Strategic Framework for Spare Parts Logistics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A Strategic Framework for Spare Parts Logistics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Spare Logistics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Spare Logistics 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 Strategic Framework for Spare Parts Logistics can be done for the following purposes –
1. Strategic planning using facts provided in A Strategic Framework for Spare Parts Logistics case study
2. Improving business portfolio management of Spare Logistics
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 Spare Logistics
Strengths A Strategic Framework for Spare Parts Logistics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Spare Logistics in A Strategic Framework for Spare Parts Logistics Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Spare Logistics 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
– Spare Logistics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Spare Logistics 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– A Strategic Framework for Spare Parts Logistics firm has clearly differentiated products in the market place. This has enabled Spare Logistics to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Spare Logistics to invest into research and development (R&D) and innovation.
High brand equity
– Spare Logistics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Spare Logistics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Innovation & Entrepreneurship field
– Spare Logistics 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 Spare Logistics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Spare Logistics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Spare Logistics 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 A Strategic Framework for Spare Parts Logistics 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.
Innovation driven organization
– Spare Logistics is one of the most innovative firm in sector. Manager in A Strategic Framework for Spare Parts Logistics Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Spare Logistics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Spare Logistics 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.
Ability to recruit top talent
– Spare Logistics is one of the leading recruiters in the industry. Managers in the A Strategic Framework for Spare Parts Logistics are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Spare Logistics is present in almost all the verticals within the industry. This has provided firm in A Strategic Framework for Spare Parts Logistics 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
– Spare Logistics 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 Stephan M. Wagner, Ruben Jonke, Andreas B. Eisingerich 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.
Weaknesses A Strategic Framework for Spare Parts Logistics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A Strategic Framework for Spare Parts Logistics are -
Slow decision making process
– As mentioned earlier in the report, Spare Logistics 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. Spare Logistics 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Spare Logistics is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A Strategic Framework for Spare Parts Logistics can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Spare Logistics supply chain. Even after few cautionary changes mentioned in the HBR case study - A Strategic Framework for Spare Parts Logistics, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Spare Logistics vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Spare Logistics 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.
Slow to strategic competitive environment developments
– As A Strategic Framework for Spare Parts Logistics HBR case study mentions - Spare Logistics 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.
No frontier risks strategy
– After analyzing the HBR case study A Strategic Framework for Spare Parts Logistics, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study A Strategic Framework for Spare Parts Logistics, is just above the industry average. Spare Logistics needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study A Strategic Framework for Spare Parts Logistics, it seems that the employees of Spare Logistics don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study A Strategic Framework for Spare Parts Logistics 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 Spare Logistics 's lucrative customers.
Products dominated business model
– Even though Spare Logistics 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 - A Strategic Framework for Spare Parts Logistics should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Spare Logistics is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Spare Logistics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Spare Logistics to focus more on services rather than just following the product oriented approach.
Opportunities A Strategic Framework for Spare Parts Logistics | 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 Strategic Framework for Spare Parts Logistics are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Spare Logistics is facing challenges because of the dominance of functional experts in the organization. A Strategic Framework for Spare Parts Logistics 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.
Learning at scale
– Online learning technologies has now opened space for Spare Logistics 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, Spare Logistics 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 Strategic Framework for Spare Parts Logistics, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Spare Logistics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Spare Logistics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Spare Logistics in the consumer business. Now Spare Logistics can target international markets with far fewer capital restrictions requirements than the existing system.
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 Spare Logistics 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.
Better consumer reach
– The expansion of the 5G network will help Spare Logistics to increase its market reach. Spare Logistics 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 Spare Logistics 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 Spare Logistics to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Spare Logistics 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Spare Logistics can use these opportunities to build new business models that can help the communities that Spare Logistics operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Leveraging digital technologies
– Spare Logistics 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.
Using analytics as competitive advantage
– Spare Logistics 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 A Strategic Framework for Spare Parts Logistics - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Spare Logistics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats A Strategic Framework for Spare Parts Logistics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study A Strategic Framework for Spare Parts Logistics are -
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. Spare Logistics needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Spare Logistics has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Spare Logistics 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.
High dependence on third party suppliers
– Spare Logistics 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 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study A Strategic Framework for Spare Parts Logistics, Spare Logistics 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Spare Logistics 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 Strategic Framework for Spare Parts Logistics .
Shortening product life cycle
– it is one of the major threat that Spare Logistics is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Spare Logistics business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Spare Logistics
– 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 Spare Logistics.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Spare Logistics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Spare Logistics 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.
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 Spare Logistics.
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 Spare Logistics in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Weighted SWOT Analysis of A Strategic Framework for Spare Parts Logistics 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 Strategic Framework for Spare Parts Logistics 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 Strategic Framework for Spare Parts Logistics 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 Strategic Framework for Spare Parts Logistics 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 Strategic Framework for Spare Parts Logistics 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 Spare Logistics needs to make to build a sustainable competitive advantage.
