Dr. Glenn Lopez, the founder and general director of GuateSalud, faces cash flow problems and some crucial choices about how to expand his innovative health maintenance organization for agricultural workers in rural Guatemala. The case describes Lopez's six-year struggle to establish GuateSalud and the organization's effort to combine business principles with a social mission. Also provides background on the tense political environment surrounding the delivery of health care, coffee growing, and the banana industry in Guatemala--factors Dr. Lopez must take into consideration as he weighs his options.
Authors :: J. Gregory Dees, Marc Boatwright, Jaan Elias
Swot Analysis of "GuateSalud" written by J. Gregory Dees, Marc Boatwright, Jaan Elias includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Guatesalud Guatemala facing as an external strategic factors. Some of the topics covered in GuateSalud case study are - Strategic Management Strategies, Emerging markets, Government, Social enterprise and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the GuateSalud casestudy better are - – geopolitical disruptions, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, wage bills are increasing,
technology disruption, challanges to central banks by blockchain based private currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GuateSalud case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Guatesalud Guatemala, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Guatesalud Guatemala 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 GuateSalud can be done for the following purposes –
1. Strategic planning using facts provided in GuateSalud case study
2. Improving business portfolio management of Guatesalud Guatemala
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 Guatesalud Guatemala
Strengths GuateSalud | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Guatesalud Guatemala in GuateSalud Harvard Business Review case study are -
High brand equity
– Guatesalud Guatemala has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Guatesalud Guatemala to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Guatesalud Guatemala is one of the most innovative firm in sector. Manager in GuateSalud 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 Guatesalud Guatemala digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Guatesalud Guatemala 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.
Diverse revenue streams
– Guatesalud Guatemala is present in almost all the verticals within the industry. This has provided firm in GuateSalud 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.
Organizational Resilience of Guatesalud Guatemala
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Guatesalud Guatemala does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Guatesalud Guatemala is one of the leading recruiters in the industry. Managers in the GuateSalud are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Guatesalud Guatemala 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 J. Gregory Dees, Marc Boatwright, Jaan Elias 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.
Training and development
– Guatesalud Guatemala has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in GuateSalud 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.
Cross disciplinary teams
– Horizontal connected teams at the Guatesalud Guatemala 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.
Strong track record of project management
– Guatesalud Guatemala is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Guatesalud Guatemala in the sector have low bargaining power. GuateSalud has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Guatesalud Guatemala to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the GuateSalud 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.
Weaknesses GuateSalud | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GuateSalud are -
High bargaining power of channel partners
– Because of the regulatory requirements, J. Gregory Dees, Marc Boatwright, Jaan Elias suggests that, Guatesalud Guatemala 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study GuateSalud, in the dynamic environment Guatesalud Guatemala has struggled to respond to the nimble upstart competition. Guatesalud Guatemala has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Guatesalud Guatemala 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study GuateSalud, it seems that the employees of Guatesalud Guatemala 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
Guatesalud Guatemala 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.
Lack of clear differentiation of Guatesalud Guatemala products
– To increase the profitability and margins on the products, Guatesalud Guatemala needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study GuateSalud, is just above the industry average. Guatesalud Guatemala 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 strategic competitive environment developments
– As GuateSalud HBR case study mentions - Guatesalud Guatemala 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.
High operating costs
– Compare to the competitors, firm in the HBR case study GuateSalud 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 Guatesalud Guatemala 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Guatesalud Guatemala 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.
Increasing silos among functional specialists
– The organizational structure of Guatesalud Guatemala is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Guatesalud Guatemala needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Guatesalud Guatemala to focus more on services rather than just following the product oriented approach.
Opportunities GuateSalud | 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 GuateSalud are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Guatesalud Guatemala 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 Guatesalud Guatemala to hire the very best people irrespective of their geographical location.
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. Guatesalud Guatemala can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Guatesalud Guatemala has opened avenues for new revenue streams for the organization in the industry. This can help Guatesalud Guatemala to build a more holistic ecosystem as suggested in the GuateSalud case study. Guatesalud Guatemala can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Guatesalud Guatemala in the consumer business. Now Guatesalud Guatemala can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Guatesalud Guatemala can use these opportunities to build new business models that can help the communities that Guatesalud Guatemala operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Guatesalud Guatemala 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.
Buying journey improvements
– Guatesalud Guatemala can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. GuateSalud 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.
Leveraging digital technologies
– Guatesalud Guatemala 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.
Developing new processes and practices
– Guatesalud Guatemala 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.
Better consumer reach
– The expansion of the 5G network will help Guatesalud Guatemala to increase its market reach. Guatesalud Guatemala 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.
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 Guatesalud Guatemala 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.
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. Guatesalud Guatemala 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. Guatesalud Guatemala 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.
Building a culture of innovation
– managers at Guatesalud Guatemala 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.
Threats GuateSalud External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GuateSalud are -
Technology acceleration in Forth Industrial Revolution
– Guatesalud Guatemala has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Guatesalud Guatemala 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.
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. Guatesalud Guatemala 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Guatesalud Guatemala with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Guatesalud Guatemala 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. Guatesalud Guatemala can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
High dependence on third party suppliers
– Guatesalud Guatemala 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.
Consumer confidence and its impact on Guatesalud Guatemala 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study GuateSalud, Guatesalud Guatemala 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, Guatesalud Guatemala 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 GuateSalud .
Shortening product life cycle
– it is one of the major threat that Guatesalud Guatemala 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
– Guatesalud Guatemala 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 Guatesalud Guatemala
– 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 Guatesalud Guatemala.
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 Guatesalud Guatemala.
Regulatory challenges
– Guatesalud Guatemala 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.
Weighted SWOT Analysis of GuateSalud 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 GuateSalud 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 GuateSalud 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 GuateSalud 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 GuateSalud 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 Guatesalud Guatemala needs to make to build a sustainable competitive advantage.
