Paddle8: Painting a New Picture of the Art Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Paddle8: Painting a New Picture of the Art Market
The Paddle8 case is a short case that presents the idea for a new business in the global art market and asks students to evaluate whether it will work, given the structure and unique workings of the art market. Paddle8 is a New York-based startup that partners with well-known galleries to offer art works from their collections for sale on the Paddle8 website to carefully selected, globally-dispersed members. The firm aims to help galleries overcome their geographic limitations and to make art more accessible to a wide range of new collectors with the help of its technology platform. The question is: will this succeed in the context of the art market where exclusive access is a prime driver of value?
Swot Analysis of "Paddle8: Painting a New Picture of the Art Market" written by Mukti Khaire includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Paddle8 Art facing as an external strategic factors. Some of the topics covered in Paddle8: Painting a New Picture of the Art Market case study are - Strategic Management Strategies, Internet, Strategic planning and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Paddle8: Painting a New Picture of the Art Market casestudy better are - – there is backlash against globalization, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, technology disruption, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%,
supply chains are disrupted by pandemic , increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Paddle8: Painting a New Picture of the Art Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Paddle8: Painting a New Picture of the Art Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Paddle8 Art, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Paddle8 Art 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 Paddle8: Painting a New Picture of the Art Market can be done for the following purposes –
1. Strategic planning using facts provided in Paddle8: Painting a New Picture of the Art Market case study
2. Improving business portfolio management of Paddle8 Art
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 Paddle8 Art
Strengths Paddle8: Painting a New Picture of the Art Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Paddle8 Art in Paddle8: Painting a New Picture of the Art Market Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Paddle8: Painting a New Picture of the Art Market 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.
High brand equity
– Paddle8 Art has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Paddle8 Art to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Paddle8 Art 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
– Paddle8 Art has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Paddle8 Art 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.
Superior customer experience
– The customer experience strategy of Paddle8 Art in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Paddle8 Art
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Paddle8 Art does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Paddle8 Art 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 Mukti Khaire 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.
Highly skilled collaborators
– Paddle8 Art 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 Paddle8: Painting a New Picture of the Art Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Paddle8: Painting a New Picture of the Art Market firm has clearly differentiated products in the market place. This has enabled Paddle8 Art to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Paddle8 Art to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Paddle8 Art 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 Paddle8: Painting a New Picture of the Art Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Innovation & Entrepreneurship field
– Paddle8 Art 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 Paddle8 Art in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Paddle8 Art has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Paddle8: Painting a New Picture of the Art Market 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.
Weaknesses Paddle8: Painting a New Picture of the Art Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Paddle8: Painting a New Picture of the Art Market are -
Products dominated business model
– Even though Paddle8 Art 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 - Paddle8: Painting a New Picture of the Art Market should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Paddle8: Painting a New Picture of the Art Market, it seems that the employees of Paddle8 Art 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 cash cycle compare to competitors
Paddle8 Art 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.
No frontier risks strategy
– After analyzing the HBR case study Paddle8: Painting a New Picture of the Art Market, 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.
Skills based hiring
– The stress on hiring functional specialists at Paddle8 Art 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.
Interest costs
– Compare to the competition, Paddle8 Art 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.
Need for greater diversity
– Paddle8 Art 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Paddle8 Art is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Paddle8: Painting a New Picture of the Art Market 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 Paddle8 Art supply chain. Even after few cautionary changes mentioned in the HBR case study - Paddle8: Painting a New Picture of the Art Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Paddle8 Art 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 Paddle8: Painting a New Picture of the Art Market 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 Paddle8 Art has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Paddle8 Art is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Paddle8 Art needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Paddle8 Art to focus more on services rather than just following the product oriented approach.
Opportunities Paddle8: Painting a New Picture of the Art Market | 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 Paddle8: Painting a New Picture of the Art Market 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 Paddle8 Art in the consumer business. Now Paddle8 Art can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Paddle8 Art is facing challenges because of the dominance of functional experts in the organization. Paddle8: Painting a New Picture of the Art Market 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 Paddle8 Art 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.
Manufacturing automation
– Paddle8 Art 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.
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. Paddle8 Art 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. Paddle8 Art 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.
Buying journey improvements
– Paddle8 Art can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Paddle8: Painting a New Picture of the Art Market 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.
Using analytics as competitive advantage
– Paddle8 Art 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 Paddle8: Painting a New Picture of the Art Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Paddle8 Art to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Paddle8 Art 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.
Leveraging digital technologies
– Paddle8 Art 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Paddle8 Art can use these opportunities to build new business models that can help the communities that Paddle8 Art operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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. Paddle8 Art can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Paddle8 Art to increase its market reach. Paddle8 Art 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Paddle8 Art 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.
Threats Paddle8: Painting a New Picture of the Art Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Paddle8: Painting a New Picture of the Art Market are -
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. Paddle8 Art can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Paddle8 Art
– 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 Paddle8 Art.
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. Paddle8 Art 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, Paddle8 Art 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 Paddle8: Painting a New Picture of the Art Market .
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 Paddle8 Art in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Regulatory challenges
– Paddle8 Art 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.
Consumer confidence and its impact on Paddle8 Art 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Paddle8 Art 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.
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. Paddle8 Art needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Paddle8 Art 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.
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.
Environmental challenges
– Paddle8 Art 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. Paddle8 Art can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Weighted SWOT Analysis of Paddle8: Painting a New Picture of the Art Market 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 Paddle8: Painting a New Picture of the Art Market 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 Paddle8: Painting a New Picture of the Art Market 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 Paddle8: Painting a New Picture of the Art Market 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 Paddle8: Painting a New Picture of the Art Market 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 Paddle8 Art needs to make to build a sustainable competitive advantage.