Stephanie Collett sighed as she tried to focus on her laptop. It was late at night shortly before Christmas 2012, and she had spent hours trying to make the math work on a struggling apartment complex. Although she had no training or background in real estate, as a Stanford MBA student (2013), she was the best resource her family had to solve a complex financial dilemma. Her husband's grandmother had just passed away, leaving the family a portfolio of low-end rental properties scattered throughout the Los Angeles (L.A.), California, metropolitan area. One property in particular, an apartment complex located at West 92nd/94th Street, was behind on its maintenance schedule, as well as behind in payments on taxes and the mortgage. Collett's brother-in-law, Aaron Collett, had been working hard to bring the property back to profitability, but the bank was threatening to foreclose, and the Colletts had to make a decision. Should they pay off the loan and continue renting the property, which would require taking out a mortgage on the family home? Should they sell the property and use the proceeds to pay off the loan? Or should they just hand over the keys? Stephanie Collett was not at all sure how to go about valuing the property, but she knew two things: the West 92nd/94th Street complex was hemorrhaging cash, and the bank was preparing the foreclosure paperwork. Whatever they were to decide, they would need to decide fast.
Authors :: Nicholas Crews, Joseph Malchow, Piro D'Anna, Senapati Devesh
Swot Analysis of "L.A. Heir" written by Nicholas Crews, Joseph Malchow, Piro D'Anna, Senapati Devesh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Collett Property facing as an external strategic factors. Some of the topics covered in L.A. Heir case study are - Strategic Management Strategies, Financial management, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the L.A. Heir casestudy better are - – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, increasing commodity prices, geopolitical disruptions,
talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L.A. Heir case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Collett Property, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Collett Property 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 L.A. Heir can be done for the following purposes –
1. Strategic planning using facts provided in L.A. Heir case study
2. Improving business portfolio management of Collett Property
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 Collett Property
Strengths L.A. Heir | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Collett Property in L.A. Heir Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Collett Property 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.
Learning organization
- Collett Property 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 Collett Property is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in L.A. Heir Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Collett Property 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– L.A. Heir firm has clearly differentiated products in the market place. This has enabled Collett Property to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Collett Property to invest into research and development (R&D) and innovation.
Ability to lead change in Leadership & Managing People field
– Collett Property 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 Collett Property in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Collett Property 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 Nicholas Crews, Joseph Malchow, Piro D'Anna, Senapati Devesh 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
– Collett Property has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in L.A. Heir 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.
Effective Research and Development (R&D)
– Collett Property 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 L.A. Heir - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Collett Property in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the L.A. Heir Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Collett Property is one of the most innovative firm in sector. Manager in L.A. Heir Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Collett Property 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 L.A. Heir HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses L.A. Heir | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L.A. Heir are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study L.A. Heir, is just above the industry average. Collett Property 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.
Need for greater diversity
– Collett Property 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Nicholas Crews, Joseph Malchow, Piro D'Anna, Senapati Devesh suggests that, Collett Property 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.
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 Collett Property supply chain. Even after few cautionary changes mentioned in the HBR case study - L.A. Heir, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Collett Property vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Collett Property is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Collett Property needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Collett Property to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Collett Property 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 - L.A. Heir should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study L.A. Heir, in the dynamic environment Collett Property has struggled to respond to the nimble upstart competition. Collett Property has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the L.A. Heir 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 Collett Property has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study L.A. Heir 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 Collett Property 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Collett Property 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. Collett Property 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.
Low market penetration in new markets
– Outside its home market of Collett Property, firm in the HBR case study L.A. Heir needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities L.A. Heir | 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 L.A. Heir are -
Better consumer reach
– The expansion of the 5G network will help Collett Property to increase its market reach. Collett Property 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 Collett Property 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.
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 Collett Property in the consumer business. Now Collett Property can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Collett Property 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. Collett Property 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.
Creating value in data economy
– The success of analytics program of Collett Property has opened avenues for new revenue streams for the organization in the industry. This can help Collett Property to build a more holistic ecosystem as suggested in the L.A. Heir case study. Collett Property can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Collett Property 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, L.A. Heir, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Collett Property 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Collett Property 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.
Loyalty marketing
– Collett Property 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.
Building a culture of innovation
– managers at Collett Property 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 Leadership & Managing People segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Collett Property in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Collett Property 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 L.A. Heir - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Collett Property to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Collett Property can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L.A. Heir 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.
Threats L.A. Heir External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L.A. Heir are -
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Collett Property can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Collett Property 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 Collett Property
– 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 Collett Property.
High dependence on third party suppliers
– Collett Property 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.
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 Collett Property.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Collett Property with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Collett Property 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.
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. Collett Property needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Collett Property is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study L.A. Heir, Collett Property 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 .
Consumer confidence and its impact on Collett Property 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.
Environmental challenges
– Collett Property 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. Collett Property can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Stagnating economy with rate increase
– Collett Property 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.
Weighted SWOT Analysis of L.A. Heir 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 L.A. Heir 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 L.A. Heir 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 L.A. Heir 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 L.A. Heir 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 Collett Property needs to make to build a sustainable competitive advantage.
