Bertelsmann - Corporate Structures for Value Creation (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bertelsmann - Corporate Structures for Value Creation (B)
Case B: This case picks up after the ousting of the former CEO of Bertelsmann, following his attempts to push the company forward in its exposure to the capital markets and the extent of corporate synergies. It shows how unforgiving the New Economy could be to dreams of internet driven synergies. It also shows how business unit profitability remains a key concern, and especially as economic conditions change, although ideas for greater cooperation are not lost but re-sized.
Authors :: D. Charles Galunic, Immanuel Hermreck, Steven Moran
Swot Analysis of "Bertelsmann - Corporate Structures for Value Creation (B)" written by D. Charles Galunic, Immanuel Hermreck, Steven Moran includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bertelsmann Synergies facing as an external strategic factors. Some of the topics covered in Bertelsmann - Corporate Structures for Value Creation (B) case study are - Strategic Management Strategies, Corporate governance, Internet, Leadership, Mergers & acquisitions, Organizational structure and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Bertelsmann - Corporate Structures for Value Creation (B) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, increasing household debt because of falling income levels,
competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, etc
Introduction to SWOT Analysis of Bertelsmann - Corporate Structures for Value Creation (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bertelsmann - Corporate Structures for Value Creation (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bertelsmann Synergies, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bertelsmann Synergies 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 Bertelsmann - Corporate Structures for Value Creation (B) can be done for the following purposes –
1. Strategic planning using facts provided in Bertelsmann - Corporate Structures for Value Creation (B) case study
2. Improving business portfolio management of Bertelsmann Synergies
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 Bertelsmann Synergies
Strengths Bertelsmann - Corporate Structures for Value Creation (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bertelsmann Synergies in Bertelsmann - Corporate Structures for Value Creation (B) Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Bertelsmann Synergies 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.
Organizational Resilience of Bertelsmann Synergies
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bertelsmann Synergies does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Leadership & Managing People industry
– Bertelsmann - Corporate Structures for Value Creation (B) firm has clearly differentiated products in the market place. This has enabled Bertelsmann Synergies to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Bertelsmann Synergies to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Bertelsmann Synergies 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 Bertelsmann - Corporate Structures for Value Creation (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Bertelsmann Synergies in the sector have low bargaining power. Bertelsmann - Corporate Structures for Value Creation (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bertelsmann Synergies to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Bertelsmann Synergies 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 Bertelsmann - Corporate Structures for Value Creation (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Bertelsmann Synergies 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 Bertelsmann Synergies is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bertelsmann - Corporate Structures for Value Creation (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Bertelsmann Synergies is present in almost all the verticals within the industry. This has provided firm in Bertelsmann - Corporate Structures for Value Creation (B) 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.
High switching costs
– The high switching costs that Bertelsmann Synergies 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Bertelsmann Synergies digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bertelsmann Synergies 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.
High brand equity
– Bertelsmann Synergies has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bertelsmann Synergies to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Bertelsmann Synergies is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Bertelsmann - Corporate Structures for Value Creation (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bertelsmann - Corporate Structures for Value Creation (B) are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bertelsmann - Corporate Structures for Value Creation (B) 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 Bertelsmann Synergies has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Bertelsmann Synergies is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Bertelsmann Synergies needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bertelsmann Synergies to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bertelsmann Synergies is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bertelsmann - Corporate Structures for Value Creation (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Bertelsmann Synergies products
– To increase the profitability and margins on the products, Bertelsmann Synergies 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 Bertelsmann - Corporate Structures for Value Creation (B), is just above the industry average. Bertelsmann Synergies 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 Bertelsmann - Corporate Structures for Value Creation (B) HBR case study mentions - Bertelsmann Synergies 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.
Need for greater diversity
– Bertelsmann Synergies 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.
Capital Spending Reduction
– Even during the low interest decade, Bertelsmann Synergies 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, D. Charles Galunic, Immanuel Hermreck, Steven Moran suggests that, Bertelsmann Synergies 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.
Slow decision making process
– As mentioned earlier in the report, Bertelsmann Synergies 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. Bertelsmann Synergies 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Bertelsmann Synergies 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.
Opportunities Bertelsmann - Corporate Structures for Value Creation (B) | 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 Bertelsmann - Corporate Structures for Value Creation (B) are -
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 Bertelsmann Synergies 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 Bertelsmann Synergies in the consumer business. Now Bertelsmann Synergies can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bertelsmann Synergies is facing challenges because of the dominance of functional experts in the organization. Bertelsmann - Corporate Structures for Value Creation (B) 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.
Using analytics as competitive advantage
– Bertelsmann Synergies 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 Bertelsmann - Corporate Structures for Value Creation (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bertelsmann Synergies to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Bertelsmann Synergies 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 Bertelsmann Synergies has opened avenues for new revenue streams for the organization in the industry. This can help Bertelsmann Synergies to build a more holistic ecosystem as suggested in the Bertelsmann - Corporate Structures for Value Creation (B) case study. Bertelsmann Synergies 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, Bertelsmann Synergies 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, Bertelsmann - Corporate Structures for Value Creation (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Bertelsmann Synergies 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.
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. Bertelsmann Synergies 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. Bertelsmann Synergies 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.
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. Bertelsmann Synergies can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Bertelsmann Synergies 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.
Manufacturing automation
– Bertelsmann Synergies 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bertelsmann Synergies can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Bertelsmann - Corporate Structures for Value Creation (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bertelsmann - Corporate Structures for Value Creation (B) are -
Regulatory challenges
– Bertelsmann Synergies 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.
Shortening product life cycle
– it is one of the major threat that Bertelsmann Synergies is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Bertelsmann Synergies
– 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 Bertelsmann Synergies.
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. Bertelsmann Synergies can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Bertelsmann Synergies in the Leadership & Managing People sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Bertelsmann Synergies 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bertelsmann Synergies with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Bertelsmann Synergies 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.
Technology acceleration in Forth Industrial Revolution
– Bertelsmann Synergies has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Bertelsmann Synergies 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 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. Bertelsmann Synergies needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Bertelsmann Synergies.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bertelsmann Synergies 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.
Weighted SWOT Analysis of Bertelsmann - Corporate Structures for Value Creation (B) 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 Bertelsmann - Corporate Structures for Value Creation (B) 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 Bertelsmann - Corporate Structures for Value Creation (B) 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 Bertelsmann - Corporate Structures for Value Creation (B) 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 Bertelsmann - Corporate Structures for Value Creation (B) 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 Bertelsmann Synergies needs to make to build a sustainable competitive advantage.