Circles: Lifecycle of a New Venture SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Circles: Lifecycle of a New Venture
In the tenth year of their business, Circles' co-founders, Janet Kraus and Kathy Sherbrooke, had completed a successful exit for their company. They had worked closely for years, building their early venture into a leading provider of concierge services with over $40 million in annual revenues. In preparing the company for exit, the two not only had to package the business for sale, but also prepare themselves for the next phases of their careers. Sherbrooke would move on to a corporate role with the acquirer, Sodexho, as the CEO of Circles, and Kraus would take on leading an early stage company, Spire, a Circles spinoff. The transition would not be just one for the company, but also one for their relationship as co-founders and true business partners.
Authors :: Garth Saloner, Jim Ellis, Amanda Silverman
Swot Analysis of "Circles: Lifecycle of a New Venture" written by Garth Saloner, Jim Ellis, Amanda Silverman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Circles Kraus facing as an external strategic factors. Some of the topics covered in Circles: Lifecycle of a New Venture case study are - Strategic Management Strategies, Entrepreneurship, Mergers & acquisitions, Professional transitions, Succession planning and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Circles: Lifecycle of a New Venture casestudy better are - – there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, wage bills are increasing,
geopolitical disruptions, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Circles: Lifecycle of a New Venture
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Circles: Lifecycle of a New Venture case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Circles Kraus, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Circles Kraus 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 Circles: Lifecycle of a New Venture can be done for the following purposes –
1. Strategic planning using facts provided in Circles: Lifecycle of a New Venture case study
2. Improving business portfolio management of Circles Kraus
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 Circles Kraus
Strengths Circles: Lifecycle of a New Venture | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Circles Kraus in Circles: Lifecycle of a New Venture Harvard Business Review case study are -
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Circles Kraus digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Circles Kraus 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 lead change in Innovation & Entrepreneurship field
– Circles Kraus 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 Circles Kraus in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Circles Kraus in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Circles Kraus is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Circles: Lifecycle of a New Venture firm has clearly differentiated products in the market place. This has enabled Circles Kraus to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Circles Kraus to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Circles Kraus is present in almost all the verticals within the industry. This has provided firm in Circles: Lifecycle of a New Venture 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
– Circles Kraus 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 Garth Saloner, Jim Ellis, Amanda Silverman 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.
Successful track record of launching new products
– Circles Kraus has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Circles Kraus 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.
High switching costs
– The high switching costs that Circles Kraus 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.
High brand equity
– Circles Kraus has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Circles Kraus to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Circles Kraus has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Circles: Lifecycle of a New Venture 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.
Low bargaining power of suppliers
– Suppliers of Circles Kraus in the sector have low bargaining power. Circles: Lifecycle of a New Venture has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Circles Kraus to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Circles: Lifecycle of a New Venture | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Circles: Lifecycle of a New Venture are -
High operating costs
– Compare to the competitors, firm in the HBR case study Circles: Lifecycle of a New Venture 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 Circles Kraus 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Circles: Lifecycle of a New Venture, is just above the industry average. Circles Kraus 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Circles Kraus is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Circles: Lifecycle of a New Venture can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Circles Kraus 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 Circles: Lifecycle of a New Venture, in the dynamic environment Circles Kraus has struggled to respond to the nimble upstart competition. Circles Kraus has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Circles: Lifecycle of a New Venture, it seems that the employees of Circles Kraus 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.
Low market penetration in new markets
– Outside its home market of Circles Kraus, firm in the HBR case study Circles: Lifecycle of a New Venture needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Circles Kraus supply chain. Even after few cautionary changes mentioned in the HBR case study - Circles: Lifecycle of a New Venture, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Circles Kraus vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Garth Saloner, Jim Ellis, Amanda Silverman suggests that, Circles Kraus 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Circles Kraus 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.
Need for greater diversity
– Circles Kraus 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.
Opportunities Circles: Lifecycle of a New Venture | 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 Circles: Lifecycle of a New Venture are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Circles Kraus is facing challenges because of the dominance of functional experts in the organization. Circles: Lifecycle of a New Venture 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 Circles Kraus 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Circles Kraus 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Circles Kraus can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Circles Kraus can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Circles: Lifecycle of a New Venture 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.
Learning at scale
– Online learning technologies has now opened space for Circles Kraus 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.
Building a culture of innovation
– managers at Circles Kraus 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.
Loyalty marketing
– Circles Kraus has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Circles Kraus 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 Circles: Lifecycle of a New Venture - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Circles Kraus to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Circles Kraus 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.
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. Circles Kraus can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Circles Kraus 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.
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 Circles Kraus in the consumer business. Now Circles Kraus can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Circles: Lifecycle of a New Venture External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Circles: Lifecycle of a New Venture are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Circles Kraus 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 Circles: Lifecycle of a New Venture .
High dependence on third party suppliers
– Circles Kraus 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.
Environmental challenges
– Circles Kraus 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. Circles Kraus can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Shortening product life cycle
– it is one of the major threat that Circles Kraus is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Circles Kraus 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Circles: Lifecycle of a New Venture, Circles Kraus 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 .
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. Circles Kraus can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Circles Kraus has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Circles Kraus 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.
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 Circles Kraus.
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 Circles Kraus in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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. Circles Kraus 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.
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 Circles Kraus 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 Circles: Lifecycle of a New Venture 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 Circles: Lifecycle of a New Venture 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 Circles: Lifecycle of a New Venture 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 Circles: Lifecycle of a New Venture 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 Circles: Lifecycle of a New Venture 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 Circles Kraus needs to make to build a sustainable competitive advantage.