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 - – geopolitical disruptions, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google,
technology disruption, supply chains are disrupted by pandemic , 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 -
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.
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.
Diverse revenue streams
– Dt Dt's is present in almost all the verticals within the industry. This has provided firm in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 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.
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.
Innovation driven organization
– Dt Dt's is one of the most innovative firm in sector. Manager in DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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.
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.
Effective Research and Development (R&D)
– Dt Dt's 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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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.
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 -
High bargaining power of channel partners
– Because of the regulatory requirements, Shlomo Ben-Hur, Jamie Anderson suggests that, Dt Dt's 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.
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.
Lack of clear differentiation of Dt Dt's products
– To increase the profitability and margins on the products, Dt Dt's needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Dt Dt's 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.
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.
No frontier risks strategy
– After analyzing the HBR case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A), 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.
High operating costs
– Compare to the competitors, firm in the HBR case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (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 Dt Dt's 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A), is just above the industry average. Dt Dt's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A), it seems that the employees of Dt Dt's 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) 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 Dt Dt's has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Dt Dt's 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.
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 -
Learning at scale
– Online learning technologies has now opened space for Dt Dt's 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.
Using analytics as competitive advantage
– Dt Dt's 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 DEUTSCHE TELEKOM: A TRANSFORMATION JOURNEY (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dt Dt's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
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.
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 Dt Dt's 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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Dt Dt's to increase its market reach. Dt Dt's 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.
Developing new processes and practices
– Dt Dt's 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.
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 -
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 Dt Dt's.
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.
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.
Consumer confidence and its impact on Dt Dt's 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.
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.
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.
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 .
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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dt Dt's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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) .
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.