Axel Springer in 2014: Strategic Leadership of the Digital Transformation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Axel Springer in 2014: Strategic Leadership of the Digital Transformation
In 2013, Mathias Dopfner, CEO of the publishing house Axel Springer SE, a premier source of content in Germany, with its popular newspapers and magazines such as Bild and Die Welt, was evaluating the progress of his company's digital transformation. The advent of the digital revolution at the end of the twentieth century had caused an appreciable shift in the publishing industry. Traditional print media players were confronted with major technological advancements and changes in consumer tastes and how news was consumed. Thus, the challenge for Axel Springer was in finding fresh ways to disDopfner had directed Axel Springer to approach this task with a two-stage digital transformation strategy process. Beginning in 2006, the company focused on organic growth and late-stage digital acquisitions. This stage of the strategy process had centered around profitability and the infusion of digitization into the corporate culture. In 2013, the second stage of the strategy process was driven by Dopfner's formulation of the firm's corporate mission to become "The Leading Digital Publisher" and his defining the company's business as its branded content and not its distribution channels. With this new strategy, Axel Springer intended to espouse early-stage investments and entrepreneurship and grow revenue through three business models: paid content, marketing, and classified advertising. As of 2013, Dopfner's two-stage digital transformation strategy had been a stunning success. Axel Springer had more than 12,800 employees, total revenues of $3.9 billion, and EBITDA of $625 million. The company had exceeded the goals it had set for digital media contributions to revenue and EBITDA, achieved reach in 44 countries, and serviced 98 million unique digital visitors worldwide. Looking forward in April 2014, however, it was clear that the future still held many challenges. Dopfner knew that Axel Springer would need to continue to successfully balance digital and traditional media business strategies, further reestablish the firm's identity, and continue to pioneer the cultural transition within the organization. Most importantly, he realized the urgency of preparing his organization for the looming battle between digitally transforming old media content providers (like Axel Springer) and new giant digital technology experts (like Google) transforming themselves into media companies. He also pondered whether it would be possible, and if so how, to mobilize a sufficiently powerful coalition to help the digitally transforming old media content providers in that battle.
Authors :: Robert Burgelman, Robert Siegel, Jason Luther
Swot Analysis of "Axel Springer in 2014: Strategic Leadership of the Digital Transformation" written by Robert Burgelman, Robert Siegel, Jason Luther includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Axel Springer facing as an external strategic factors. Some of the topics covered in Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Axel Springer in 2014: Strategic Leadership of the Digital Transformation casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies,
increasing government debt because of Covid-19 spendings, there is backlash against globalization, etc
Introduction to SWOT Analysis of Axel Springer in 2014: Strategic Leadership of the Digital Transformation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Axel Springer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation can be done for the following purposes –
1. Strategic planning using facts provided in Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study
2. Improving business portfolio management of Axel Springer
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 Axel Springer
Strengths Axel Springer in 2014: Strategic Leadership of the Digital Transformation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Axel Springer in Axel Springer in 2014: Strategic Leadership of the Digital Transformation Harvard Business Review case study are -
Learning organization
- Axel Springer 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 Axel Springer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Axel Springer in 2014: Strategic Leadership of the Digital Transformation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Axel Springer is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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.
Analytics focus
– Axel Springer 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 Robert Burgelman, Robert Siegel, Jason Luther 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.
Organizational Resilience of Axel Springer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Axel Springer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Axel Springer is one of the leading recruiters in the industry. Managers in the Axel Springer in 2014: Strategic Leadership of the Digital Transformation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Axel Springer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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.
High brand equity
– Axel Springer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Axel Springer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Axel Springer in the sector have low bargaining power. Axel Springer in 2014: Strategic Leadership of the Digital Transformation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Axel Springer to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Leadership & Managing People industry
– Axel Springer in 2014: Strategic Leadership of the Digital Transformation firm has clearly differentiated products in the market place. This has enabled Axel Springer to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Axel Springer to invest into research and development (R&D) and innovation.
Weaknesses Axel Springer in 2014: Strategic Leadership of the Digital Transformation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Axel Springer in 2014: Strategic Leadership of the Digital Transformation are -
Low market penetration in new markets
– Outside its home market of Axel Springer, firm in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation, it seems that the employees of Axel Springer 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.
Slow decision making process
– As mentioned earlier in the report, Axel Springer 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. Axel Springer 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.
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 Axel Springer supply chain. Even after few cautionary changes mentioned in the HBR case study - Axel Springer in 2014: Strategic Leadership of the Digital Transformation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Axel Springer vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation, in the dynamic environment Axel Springer has struggled to respond to the nimble upstart competition. Axel Springer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Axel Springer 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.
Slow to strategic competitive environment developments
– As Axel Springer in 2014: Strategic Leadership of the Digital Transformation HBR case study mentions - Axel Springer 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Axel Springer is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Axel Springer 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 cash cycle compare to competitors
Axel Springer 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.
Opportunities Axel Springer in 2014: Strategic Leadership of the Digital Transformation | 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation are -
Learning at scale
– Online learning technologies has now opened space for Axel Springer 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Axel Springer is facing challenges because of the dominance of functional experts in the organization. Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Axel Springer 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 Axel Springer 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 Leadership & Managing People industry, but it has also influenced the consumer preferences. Axel Springer can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Axel Springer 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Axel Springer 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, Axel Springer 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, Axel Springer in 2014: Strategic Leadership of the Digital Transformation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Axel Springer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Axel Springer 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Axel Springer 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.
Better consumer reach
– The expansion of the 5G network will help Axel Springer to increase its market reach. Axel Springer 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.
Building a culture of innovation
– managers at Axel Springer 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.
Creating value in data economy
– The success of analytics program of Axel Springer has opened avenues for new revenue streams for the organization in the industry. This can help Axel Springer to build a more holistic ecosystem as suggested in the Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study. Axel Springer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Axel Springer in 2014: Strategic Leadership of the Digital Transformation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Axel Springer 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation .
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. Axel Springer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Axel Springer 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.
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 Axel Springer in the Leadership & Managing People sector and impact the bottomline of the organization.
Regulatory challenges
– Axel Springer 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.
Environmental challenges
– Axel Springer 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. Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation, Axel Springer 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 .
Increasing wage structure of Axel Springer
– 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 Axel Springer.
Technology acceleration in Forth Industrial Revolution
– Axel Springer has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Axel Springer needs to keep up with the evolution of technology in the Leadership & Managing People 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.
High dependence on third party suppliers
– Axel Springer 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Axel Springer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer needs to make to build a sustainable competitive advantage.