Renesas Electronics and the Automotive Microcontroller Supply Chain (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Renesas Electronics and the Automotive Microcontroller Supply Chain (A)
To maximize their effectiveness, color cases should be printed in color.The magnitude 9.0 earthquake that struck Japan in March, 2011 caused extensive damage to Renesas Electronics wafer fabrication facility, a critical link in the global automotive supply chain. Many OEMs sole-sourced customized microprocessors from the fab so its shutdown forced the "Big Three" of Detroit and Japan to shutdown production as well. Data from two automotive customers in particular, allowing the instructor to look at issues of delayed differentiation, sole-sourcing decisions, and/or Renesas' market position as a producer of low-volume customized components, in the context of supply chain disaster recovery. The two OEM's had different strategies with respect to cross-utilization of components between product lines. Therefore, a simple numerical assignment will show students the power of delayed differentiation in components. The OEM with higher cross-utilization (lower customization of components between product lines) had more flexibility in which vehicles they stopped producing during the shortage. Similarly, students can look at the impact of delayed differentiation at the product level by looking at the production process within the fab itself. Here Renesas's customization causes early differentiation. Again numbers are provided to work examples. Finally, broader questions around the viability of Renesas's market position can be discussed. How should they respond to the disaster in the short term? How can they assure customers they can handle future disruptions differently? And from the OEMs' perspective, do they need to change their product design to allow for the incorporation of alternative parts? Such parts have downsides of their own. The findings in the two numerical examples can be used to drive this discussion, or a general strategy framework may be applied.
Swot Analysis of "Renesas Electronics and the Automotive Microcontroller Supply Chain (A)" written by Willy Shih, Margaret Pierson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Renesas Differentiation facing as an external strategic factors. Some of the topics covered in Renesas Electronics and the Automotive Microcontroller Supply Chain (A) case study are - Strategic Management Strategies, Risk management, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Renesas Electronics and the Automotive Microcontroller Supply Chain (A) casestudy better are - – increasing commodity prices, increasing government debt because of Covid-19 spendings, there is backlash against globalization, geopolitical disruptions, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Renesas Electronics and the Automotive Microcontroller Supply Chain (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Renesas Electronics and the Automotive Microcontroller Supply Chain (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Renesas Differentiation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) can be done for the following purposes –
1. Strategic planning using facts provided in Renesas Electronics and the Automotive Microcontroller Supply Chain (A) case study
2. Improving business portfolio management of Renesas Differentiation
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 Renesas Differentiation
Strengths Renesas Electronics and the Automotive Microcontroller Supply Chain (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Renesas Differentiation in Renesas Electronics and the Automotive Microcontroller Supply Chain (A) Harvard Business Review case study are -
Ability to recruit top talent
– Renesas Differentiation is one of the leading recruiters in the industry. Managers in the Renesas Electronics and the Automotive Microcontroller Supply Chain (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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.
Highly skilled collaborators
– Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Leadership & Managing People field
– Renesas Differentiation 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 Renesas Differentiation in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Renesas Differentiation 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 Renesas Differentiation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Renesas Electronics and the Automotive Microcontroller Supply Chain (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Renesas Differentiation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Renesas Differentiation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Renesas Differentiation are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Strong track record of project management
– Renesas Differentiation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Renesas Differentiation is present in almost all the verticals within the industry. This has provided firm in Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Differentiation 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.
Weaknesses Renesas Electronics and the Automotive Microcontroller Supply Chain (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Renesas Electronics and the Automotive Microcontroller Supply Chain (A) are -
Products dominated business model
– Even though Renesas Differentiation 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 - Renesas Electronics and the Automotive Microcontroller Supply Chain (A) should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Renesas Differentiation 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.
Skills based hiring
– The stress on hiring functional specialists at Renesas Differentiation 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.
Lack of clear differentiation of Renesas Differentiation products
– To increase the profitability and margins on the products, Renesas Differentiation needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Renesas Differentiation, firm in the HBR case study Renesas Electronics and the Automotive Microcontroller Supply Chain (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Renesas Differentiation 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 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 Renesas Differentiation supply chain. Even after few cautionary changes mentioned in the HBR case study - Renesas Electronics and the Automotive Microcontroller Supply Chain (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Renesas Differentiation vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Renesas Electronics and the Automotive Microcontroller Supply Chain (A), it seems that the employees of Renesas Differentiation don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Differentiation 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Renesas Electronics and the Automotive Microcontroller Supply Chain (A), is just above the industry average. Renesas Differentiation 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Renesas Electronics and the Automotive Microcontroller Supply Chain (A), in the dynamic environment Renesas Differentiation has struggled to respond to the nimble upstart competition. Renesas Differentiation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Renesas Electronics and the Automotive Microcontroller Supply Chain (A) | 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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. Renesas Differentiation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Renesas Differentiation 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.
Creating value in data economy
– The success of analytics program of Renesas Differentiation has opened avenues for new revenue streams for the organization in the industry. This can help Renesas Differentiation to build a more holistic ecosystem as suggested in the Renesas Electronics and the Automotive Microcontroller Supply Chain (A) case study. Renesas Differentiation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Renesas Differentiation 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Renesas Differentiation can use these opportunities to build new business models that can help the communities that Renesas Differentiation operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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. Renesas Differentiation 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. Renesas Differentiation 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Renesas Differentiation 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 Renesas Differentiation to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Renesas Differentiation 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Renesas Differentiation is facing challenges because of the dominance of functional experts in the organization. Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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
– Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Renesas Differentiation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Renesas Differentiation in the consumer business. Now Renesas Differentiation can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Renesas Differentiation 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.
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. Renesas Differentiation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Renesas Electronics and the Automotive Microcontroller Supply Chain (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Renesas Electronics and the Automotive Microcontroller Supply Chain (A) are -
High dependence on third party suppliers
– Renesas Differentiation 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.
Increasing wage structure of Renesas Differentiation
– 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 Renesas Differentiation.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) .
Technology acceleration in Forth Industrial Revolution
– Renesas Differentiation has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Renesas Differentiation 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.
Regulatory challenges
– Renesas Differentiation 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.
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.
Stagnating economy with rate increase
– Renesas Differentiation 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 Renesas Differentiation 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. Renesas Differentiation 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.
Consumer confidence and its impact on Renesas Differentiation 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.
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. Renesas Differentiation 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 Renesas Differentiation in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Renesas Differentiation 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Electronics and the Automotive Microcontroller Supply Chain (A) 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 Renesas Differentiation needs to make to build a sustainable competitive advantage.