DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A)
This is a classic transformation case, made more complex by the fact that it involves a huge organization led by a youthful company insider, RenA? Obermann. The two-part case study covers the period from 2006 to 2010. The case starts in late 2006, shortly after Obermann was promoted to replace Kai-Uwe Ricke at Deutsche Telekom (DT), one of the standard-bearers of the German economy.When he took over as chief executive, the former state-owned telecom monopoly was in bad shape. Having long been one of the dominant players in Europe, DT's share price had collapsed in just a few years, as had its grip on its home market. Shortly before Obermann was appointed, DT's share of new broadband customers in Germany - its traditional stronghold - fell to below 10 percent. And with its 260,000 strong workforce, DT's labor costs compared to sales were up to twice as high as those of its main European rivals. Still living on past glories, the company was heavily siloed and bloated. While its structure was not suited to the new market realities, few employees felt a strong need for anything more than incremental change. Yet many analysts foresaw either bankruptcy or break-up for DT within a matter of three or four years. Under Obermann's leadership, DT underwent a dramatic transformation, regaining its dominant position in the large domestic market within three years - but it remained too early to declare a full-fledged turnaround. Case A describes Deutsche Telekom's competitive challenges prior to RenA? Obermann's appointment as CEO. It gives a few background details on the new CEO and describes some of the key moves he made during his first two years at the helm - and his success in stabilizing DT. Case B covers the second phase of DT's recovery and the continued drive to create a single integrated company, to overcome resistance and to encourage new behaviors. Learning objectives: The cases cover three key themes: 1) The advantages and disadvantages of a strong organizational culture. 2) The process of organizational transformation and the challenge of building on success. 3) Some of the psychological challenges of leadership.
Swot Analysis of "DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A)" written by Shlomo Ben-Hur, Jamie Anderson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dt Dt's facing as an external strategic factors. Some of the topics covered in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) case study are - Strategic Management Strategies, Leadership, Organizational culture, Strategy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) casestudy better are - – wage bills are increasing, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion,
challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dt Dt's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dt Dt's 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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) can be done for the following purposes –
1. Strategic planning using facts provided in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) case study
2. Improving business portfolio management of Dt Dt's
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 Dt Dt's
Strengths DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dt Dt's in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Dt Dt's in the sector have low bargaining power. DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dt Dt's to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Dt Dt's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dt Dt's 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.
Strong track record of project management
– Dt Dt's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Dt Dt's 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 Shlomo Ben-Hur, Jamie Anderson 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.
Learning organization
- Dt Dt's 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 Dt Dt's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Dt Dt's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dt Dt's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Leadership & Managing People field
– Dt Dt's 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 Dt Dt's 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 Dt Dt's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Leadership & Managing People industry
– DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) firm has clearly differentiated products in the market place. This has enabled Dt Dt's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Dt Dt's to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Dt Dt's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dt Dt's 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.
Training and development
– Dt Dt's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) 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.
Cross disciplinary teams
– Horizontal connected teams at the Dt Dt's 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.
Weaknesses DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) are -
Interest costs
– Compare to the competition, Dt Dt's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A), in the dynamic environment Dt Dt's has struggled to respond to the nimble upstart competition. Dt Dt's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dt Dt's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Dt Dt's 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. Dt Dt's 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 cash cycle compare to competitors
Dt Dt's 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.
Slow to strategic competitive environment developments
– As DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) HBR case study mentions - Dt Dt's 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
– Dt Dt's 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 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 Dt Dt's supply chain. Even after few cautionary changes mentioned in the HBR case study - DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dt Dt's vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) 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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) can leverage the sales team experience to cultivate customer relationships as Dt Dt's is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Dt Dt's, firm in the HBR case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Dt Dt's 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 - DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) should strive to include more intangible value offerings along with its core products and services.
Opportunities DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dt Dt's can use these opportunities to build new business models that can help the communities that Dt Dt's operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Dt Dt's 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.
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. Dt Dt's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dt Dt's is facing challenges because of the dominance of functional experts in the organization. DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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.
Building a culture of innovation
– managers at Dt Dt's 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.
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. Dt Dt's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Dt Dt's 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.
Manufacturing automation
– Dt Dt's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dt Dt's 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.
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 Dt Dt's in the consumer business. Now Dt Dt's can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Dt Dt's 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.
Buying journey improvements
– Dt Dt's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) 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.
Creating value in data economy
– The success of analytics program of Dt Dt's has opened avenues for new revenue streams for the organization in the industry. This can help Dt Dt's to build a more holistic ecosystem as suggested in the DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) case study. Dt Dt's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) are -
Technology acceleration in Forth Industrial Revolution
– Dt Dt's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Dt Dt's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dt Dt's 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, Dt Dt's 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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) .
Regulatory challenges
– Dt Dt's 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.
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 Dt Dt's business can come under increasing regulations regarding data privacy, data security, etc.
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 Dt Dt's in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing wage structure of Dt Dt's
– 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 Dt Dt's.
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. Dt Dt's 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. Dt Dt's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
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. Dt Dt's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A), Dt Dt's 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 .
Shortening product life cycle
– it is one of the major threat that Dt Dt's is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 Dt Dt's needs to make to build a sustainable competitive advantage.