Powerven: When It Is Imperative to Change SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Powerven: When It Is Imperative to Change
In 1998, Mikel Lizarralde, anticipating the political changes lying in store for Venezuela when ChA?vez took over Venezuela, realized he needed to change his company's business model if it were to survive in the new domestic scenario. He managed Powerven, his family's business, which marketed the multinational General Dynamics' (GD) products in Venezuela. At that time, the company faced severe labor issues, including an ongoing conflict-riddled atmosphere, low productivity, a drain of qualified technical personnel, and workers' lacking commitment. With the support of a consultant, Lizarralde developed a change program that hinged on laying off workers to build cooperatives that would later provide their services to Powerven on an outsourcing scheme. Lizarralde secured the approval of both GD and his father. He also managed to get the reluctant support of his siblings and to persuade Powerven's top executives in order to finally convince the workers. Taking a significant risk, Lizarralde chose Powerven's best-selling branch office to run a pilot test. This experiment proved successful, and Valencia's branch office quickly increased its sales while lowering its fixed costs. In addition, the members of the cooperative in charge also saw their income rise. The results had an immediate effect, and all of Powerven's 13 branch offices had adopted the new business scheme. However, by 2008, Lizarralde started to notice with concern a few clouds building up in Powerven's horizon. Cooperatives were not as cohesive as they should have. Additionally, some signs revealed that ChA?vez's administration no longer supported cooperatives as staunchly as in the past. In 2008, Lizarralde was tired and rather skeptical about his company's future. He knew he had to change gears once again, but he was unsure as to the best course to take. He wondered whether he should try to solve the problems plaguing cooperatives, revamp the company's business model or simply walk away. IESA's case collection
Swot Analysis of "Powerven: When It Is Imperative to Change" written by Maria H. Jaen, Jose Ramon Padilla includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lizarralde Powerven's facing as an external strategic factors. Some of the topics covered in Powerven: When It Is Imperative to Change case study are - Strategic Management Strategies, Leadership, Organizational culture and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Powerven: When It Is Imperative to Change casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, increasing energy prices, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, supply chains are disrupted by pandemic ,
cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Powerven: When It Is Imperative to Change
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Powerven: When It Is Imperative to Change case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lizarralde Powerven's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lizarralde Powerven's 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 Powerven: When It Is Imperative to Change can be done for the following purposes –
1. Strategic planning using facts provided in Powerven: When It Is Imperative to Change case study
2. Improving business portfolio management of Lizarralde Powerven's
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lizarralde Powerven's
Strengths Powerven: When It Is Imperative to Change | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lizarralde Powerven's in Powerven: When It Is Imperative to Change Harvard Business Review case study are -
High switching costs
– The high switching costs that Lizarralde Powerven's 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.
Operational resilience
– The operational resilience strategy in the Powerven: When It Is Imperative to Change 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.
Strong track record of project management
– Lizarralde Powerven's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Leadership & Managing People field
– Lizarralde Powerven's 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 Lizarralde Powerven's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Lizarralde Powerven's in the sector have low bargaining power. Powerven: When It Is Imperative to Change has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lizarralde Powerven's to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Lizarralde Powerven's is present in almost all the verticals within the industry. This has provided firm in Powerven: When It Is Imperative to Change 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.
Learning organization
- Lizarralde Powerven's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Lizarralde Powerven's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Powerven: When It Is Imperative to Change Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Lizarralde Powerven's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lizarralde Powerven's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Lizarralde Powerven's 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.
Highly skilled collaborators
– Lizarralde Powerven's 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 Powerven: When It Is Imperative to Change HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Lizarralde Powerven's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lizarralde Powerven's 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Powerven: When It Is Imperative to Change firm has clearly differentiated products in the market place. This has enabled Lizarralde Powerven's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Lizarralde Powerven's to invest into research and development (R&D) and innovation.
Weaknesses Powerven: When It Is Imperative to Change | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Powerven: When It Is Imperative to Change are -
Low market penetration in new markets
– Outside its home market of Lizarralde Powerven's, firm in the HBR case study Powerven: When It Is Imperative to Change needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Lizarralde Powerven's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Powerven: When It Is Imperative to Change, it seems that the employees of Lizarralde Powerven's 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.
Capital Spending Reduction
– Even during the low interest decade, Lizarralde Powerven's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Maria H. Jaen, Jose Ramon Padilla suggests that, Lizarralde Powerven's 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.
Aligning sales with marketing
– It come across in the case study Powerven: When It Is Imperative to Change that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Powerven: When It Is Imperative to Change can leverage the sales team experience to cultivate customer relationships as Lizarralde Powerven's is planning to shift buying processes online.
Interest costs
– Compare to the competition, Lizarralde Powerven's 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.
High cash cycle compare to competitors
Lizarralde Powerven's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Powerven: When It Is Imperative to Change, is just above the industry average. Lizarralde Powerven's 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.
Products dominated business model
– Even though Lizarralde Powerven's 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 - Powerven: When It Is Imperative to Change should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Lizarralde Powerven's 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. Lizarralde Powerven's 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.
Opportunities Powerven: When It Is Imperative to Change | 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 Powerven: When It Is Imperative to Change are -
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. Lizarralde Powerven's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lizarralde Powerven's is facing challenges because of the dominance of functional experts in the organization. Powerven: When It Is Imperative to Change 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 Lizarralde Powerven's 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.
Manufacturing automation
– Lizarralde Powerven's can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Lizarralde Powerven's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Lizarralde Powerven's 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.
Using analytics as competitive advantage
– Lizarralde Powerven's 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 Powerven: When It Is Imperative to Change - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lizarralde Powerven's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Lizarralde Powerven's has opened avenues for new revenue streams for the organization in the industry. This can help Lizarralde Powerven's to build a more holistic ecosystem as suggested in the Powerven: When It Is Imperative to Change case study. Lizarralde Powerven's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Lizarralde Powerven's to increase its market reach. Lizarralde Powerven's 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.
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 Lizarralde Powerven's in the consumer business. Now Lizarralde Powerven's can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lizarralde Powerven's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lizarralde Powerven's 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, Powerven: When It Is Imperative to Change, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Lizarralde Powerven's can develop new processes and procedures in Leadership & Managing People 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.
Threats Powerven: When It Is Imperative to Change External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Powerven: When It Is Imperative to Change are -
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.
Environmental challenges
– Lizarralde Powerven's 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. Lizarralde Powerven's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Powerven: When It Is Imperative to Change, Lizarralde Powerven's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lizarralde Powerven's in the Leadership & Managing People industry. The Leadership & Managing People 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.
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 Lizarralde Powerven's business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lizarralde Powerven's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Shortening product life cycle
– it is one of the major threat that Lizarralde Powerven's is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Lizarralde Powerven's 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.
Regulatory challenges
– Lizarralde Powerven's 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 Leadership & Managing People industry regulations.
Increasing wage structure of Lizarralde Powerven's
– 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 Lizarralde Powerven's.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lizarralde Powerven's 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 Powerven: When It Is Imperative to Change .
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. Lizarralde Powerven's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Powerven: When It Is Imperative to Change 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 Powerven: When It Is Imperative to Change 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 Powerven: When It Is Imperative to Change 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 Powerven: When It Is Imperative to Change 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 Powerven: When It Is Imperative to Change 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 Lizarralde Powerven's needs to make to build a sustainable competitive advantage.
