Chips on the Side (B): The Buy-Out of Avago Technologies SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Chips on the Side (B): The Buy-Out of Avago Technologies
A consortium of private equity firms (KKR and Silver Lake Partners) is in the process of acquiring the semi-conductor division of Agilent. To prepare for the signing of the acquisition agreement and the subsequent transfer of ownership, the deal team is revisiting their investment thesis with respect to upsides and risks. Please visit the dedicated case website http://cases.insead.edu/chips-on-the-side/ (copy and paste the url into a browser).
Authors :: Michael Prahl, Claudia Zeisberger, Vikas A. Aggarwal, Swati Sawjiany
Swot Analysis of "Chips on the Side (B): The Buy-Out of Avago Technologies" written by Michael Prahl, Claudia Zeisberger, Vikas A. Aggarwal, Swati Sawjiany includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chips Avago facing as an external strategic factors. Some of the topics covered in Chips on the Side (B): The Buy-Out of Avago Technologies case study are - Strategic Management Strategies, Mergers & acquisitions, Risk management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Chips on the Side (B): The Buy-Out of Avago Technologies casestudy better are - – increasing commodity prices, technology disruption, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels,
increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Chips on the Side (B): The Buy-Out of Avago Technologies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chips on the Side (B): The Buy-Out of Avago Technologies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chips Avago, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chips Avago 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 Chips on the Side (B): The Buy-Out of Avago Technologies can be done for the following purposes –
1. Strategic planning using facts provided in Chips on the Side (B): The Buy-Out of Avago Technologies case study
2. Improving business portfolio management of Chips Avago
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 Chips Avago
Strengths Chips on the Side (B): The Buy-Out of Avago Technologies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chips Avago in Chips on the Side (B): The Buy-Out of Avago Technologies Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Chips Avago 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 Chips Avago in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Chips Avago 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.
Organizational Resilience of Chips Avago
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Chips Avago does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Chips Avago 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 Chips on the Side (B): The Buy-Out of Avago Technologies HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Chips Avago has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Chips on the Side (B): The Buy-Out of Avago Technologies 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.
Learning organization
- Chips Avago 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 Chips Avago is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Chips on the Side (B): The Buy-Out of Avago Technologies Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Leadership & Managing People industry
– Chips on the Side (B): The Buy-Out of Avago Technologies firm has clearly differentiated products in the market place. This has enabled Chips Avago to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Chips Avago to invest into research and development (R&D) and innovation.
Innovation driven organization
– Chips Avago is one of the most innovative firm in sector. Manager in Chips on the Side (B): The Buy-Out of Avago Technologies Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Chips Avago has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chips Avago to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Chips Avago is one of the leading recruiters in the industry. Managers in the Chips on the Side (B): The Buy-Out of Avago Technologies are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Chips Avago 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 Chips Avago in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Chips on the Side (B): The Buy-Out of Avago Technologies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chips on the Side (B): The Buy-Out of Avago Technologies are -
High operating costs
– Compare to the competitors, firm in the HBR case study Chips on the Side (B): The Buy-Out of Avago Technologies 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 Chips Avago 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Chips on the Side (B): The Buy-Out of Avago Technologies, it seems that the employees of Chips Avago 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Chips Avago 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.
Skills based hiring
– The stress on hiring functional specialists at Chips Avago 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Chips on the Side (B): The Buy-Out of Avago Technologies, in the dynamic environment Chips Avago has struggled to respond to the nimble upstart competition. Chips Avago has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Chips Avago 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 - Chips on the Side (B): The Buy-Out of Avago Technologies should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Chips on the Side (B): The Buy-Out of Avago Technologies that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Chips on the Side (B): The Buy-Out of Avago Technologies can leverage the sales team experience to cultivate customer relationships as Chips Avago is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Prahl, Claudia Zeisberger, Vikas A. Aggarwal, Swati Sawjiany suggests that, Chips Avago 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.
Increasing silos among functional specialists
– The organizational structure of Chips Avago is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Chips Avago needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chips Avago to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Chips on the Side (B): The Buy-Out of Avago Technologies, is just above the industry average. Chips Avago 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.
No frontier risks strategy
– After analyzing the HBR case study Chips on the Side (B): The Buy-Out of Avago Technologies, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Chips on the Side (B): The Buy-Out of Avago Technologies | 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 Chips on the Side (B): The Buy-Out of Avago Technologies are -
Learning at scale
– Online learning technologies has now opened space for Chips Avago 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, Chips Avago is facing challenges because of the dominance of functional experts in the organization. Chips on the Side (B): The Buy-Out of Avago Technologies 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chips Avago can use these opportunities to build new business models that can help the communities that Chips Avago operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Leveraging digital technologies
– Chips Avago 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.
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. Chips Avago can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Chips Avago 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. Chips Avago 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chips Avago 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.
Creating value in data economy
– The success of analytics program of Chips Avago has opened avenues for new revenue streams for the organization in the industry. This can help Chips Avago to build a more holistic ecosystem as suggested in the Chips on the Side (B): The Buy-Out of Avago Technologies case study. Chips Avago can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Chips Avago can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Chips on the Side (B): The Buy-Out of Avago Technologies 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.
Building a culture of innovation
– managers at Chips Avago 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.
Using analytics as competitive advantage
– Chips Avago 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 Chips on the Side (B): The Buy-Out of Avago Technologies - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chips Avago to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Chips Avago to increase its market reach. Chips Avago 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chips Avago can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Chips on the Side (B): The Buy-Out of Avago Technologies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Chips on the Side (B): The Buy-Out of Avago Technologies are -
High dependence on third party suppliers
– Chips Avago 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.
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. Chips Avago can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Chips Avago needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Environmental challenges
– Chips Avago 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. Chips Avago can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Chips Avago business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chips Avago with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Chips Avago is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Chips Avago 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.
Consumer confidence and its impact on Chips Avago 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.
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.
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 Chips Avago in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Chips Avago 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 Chips on the Side (B): The Buy-Out of Avago Technologies .
Technology acceleration in Forth Industrial Revolution
– Chips Avago has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Chips Avago 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.
Weighted SWOT Analysis of Chips on the Side (B): The Buy-Out of Avago Technologies 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 Chips on the Side (B): The Buy-Out of Avago Technologies 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 Chips on the Side (B): The Buy-Out of Avago Technologies 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 Chips on the Side (B): The Buy-Out of Avago Technologies 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 Chips on the Side (B): The Buy-Out of Avago Technologies 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 Chips Avago needs to make to build a sustainable competitive advantage.