NKT Photonics A/S: Doing Business at the Technological Frontiers SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of NKT Photonics A/S: Doing Business at the Technological Frontiers
To improve its profitability, NKT Photonics A/S (NKT), a small Danish company operating in the global photonics industry, was getting ready to undertake the commercialization process of its highly advanced optical fibre technology. NKT's chief executive officer (CEO) was considering two options for accomplishing this goal: (1) establishing strategic partnerships with system integrators in order to gain access to commercial customers, or (2) repositioning NKT as a system integrator by embarking on an acquisition strategy. Turning the company into a more commercial entity would mean a complete change of culture. It might also result in the loss of some top engineering and scientific minds and perhaps even the company's reputation. The CEO wondered if there a way to effectively introduce a business mindset to the organization while still preserving its innovation-based DNA. Torben Pedersen is affiliated with Bocconi University, Milan, Italy, formerly at Copenhagen Bus School. Githa Kurdahl is affiliated with Copenhagen Business School.
Swot Analysis of "NKT Photonics A/S: Doing Business at the Technological Frontiers" written by Torben Pedersen, Githa Kurdahl includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nkt Photonics facing as an external strategic factors. Some of the topics covered in NKT Photonics A/S: Doing Business at the Technological Frontiers case study are - Strategic Management Strategies, Collaboration, Disruptive innovation, Joint ventures, Organizational culture, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the NKT Photonics A/S: Doing Business at the Technological Frontiers casestudy better are - – talent flight as more people leaving formal jobs, wage bills are increasing, increasing commodity prices, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic ,
digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of NKT Photonics A/S: Doing Business at the Technological Frontiers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in NKT Photonics A/S: Doing Business at the Technological Frontiers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nkt Photonics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nkt Photonics 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 NKT Photonics A/S: Doing Business at the Technological Frontiers can be done for the following purposes –
1. Strategic planning using facts provided in NKT Photonics A/S: Doing Business at the Technological Frontiers case study
2. Improving business portfolio management of Nkt Photonics
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 Nkt Photonics
Strengths NKT Photonics A/S: Doing Business at the Technological Frontiers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nkt Photonics in NKT Photonics A/S: Doing Business at the Technological Frontiers Harvard Business Review case study are -
High brand equity
– Nkt Photonics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nkt Photonics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Nkt Photonics is one of the most innovative firm in sector. Manager in NKT Photonics A/S: Doing Business at the Technological Frontiers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Nkt Photonics 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 Torben Pedersen, Githa Kurdahl 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– NKT Photonics A/S: Doing Business at the Technological Frontiers firm has clearly differentiated products in the market place. This has enabled Nkt Photonics to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Nkt Photonics to invest into research and development (R&D) and innovation.
Learning organization
- Nkt Photonics 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 Nkt Photonics is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in NKT Photonics A/S: Doing Business at the Technological Frontiers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Nkt Photonics are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Nkt Photonics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nkt Photonics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Nkt Photonics 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 NKT Photonics A/S: Doing Business at the Technological Frontiers HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Nkt Photonics 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 NKT Photonics A/S: Doing Business at the Technological Frontiers - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Nkt Photonics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nkt Photonics 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.
High switching costs
– The high switching costs that Nkt Photonics 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 Nkt Photonics in the sector have low bargaining power. NKT Photonics A/S: Doing Business at the Technological Frontiers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nkt Photonics to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses NKT Photonics A/S: Doing Business at the Technological Frontiers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of NKT Photonics A/S: Doing Business at the Technological Frontiers are -
High bargaining power of channel partners
– Because of the regulatory requirements, Torben Pedersen, Githa Kurdahl suggests that, Nkt Photonics 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.
Need for greater diversity
– Nkt Photonics 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.
Aligning sales with marketing
– It come across in the case study NKT Photonics A/S: Doing Business at the Technological Frontiers 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 NKT Photonics A/S: Doing Business at the Technological Frontiers can leverage the sales team experience to cultivate customer relationships as Nkt Photonics is planning to shift buying processes online.
Interest costs
– Compare to the competition, Nkt Photonics 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.
Capital Spending Reduction
– Even during the low interest decade, Nkt Photonics 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 cash cycle compare to competitors
Nkt Photonics 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nkt Photonics is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study NKT Photonics A/S: Doing Business at the Technological Frontiers 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 to strategic competitive environment developments
– As NKT Photonics A/S: Doing Business at the Technological Frontiers HBR case study mentions - Nkt Photonics 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Nkt Photonics 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.
Slow decision making process
– As mentioned earlier in the report, Nkt Photonics 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. Nkt Photonics 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.
Increasing silos among functional specialists
– The organizational structure of Nkt Photonics is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Nkt Photonics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nkt Photonics to focus more on services rather than just following the product oriented approach.
Opportunities NKT Photonics A/S: Doing Business at the Technological Frontiers | 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 NKT Photonics A/S: Doing Business at the Technological Frontiers 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. Nkt Photonics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nkt Photonics can use these opportunities to build new business models that can help the communities that Nkt Photonics 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. Nkt Photonics 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. Nkt Photonics 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nkt Photonics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Nkt Photonics 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 NKT Photonics A/S: Doing Business at the Technological Frontiers - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nkt Photonics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Nkt Photonics can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. NKT Photonics A/S: Doing Business at the Technological Frontiers 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
– Nkt Photonics 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.
Developing new processes and practices
– Nkt Photonics 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.
Loyalty marketing
– Nkt Photonics 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.
Manufacturing automation
– Nkt Photonics 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, Nkt Photonics 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.
Better consumer reach
– The expansion of the 5G network will help Nkt Photonics to increase its market reach. Nkt Photonics 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nkt Photonics 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.
Threats NKT Photonics A/S: Doing Business at the Technological Frontiers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study NKT Photonics A/S: Doing Business at the Technological Frontiers are -
Consumer confidence and its impact on Nkt Photonics 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.
Technology acceleration in Forth Industrial Revolution
– Nkt Photonics has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Nkt Photonics 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.
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.
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. Nkt Photonics needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nkt Photonics 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, Nkt Photonics 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 NKT Photonics A/S: Doing Business at the Technological Frontiers .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study NKT Photonics A/S: Doing Business at the Technological Frontiers, Nkt Photonics 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 .
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 Nkt Photonics in the Leadership & Managing People sector and impact the bottomline of the organization.
Regulatory challenges
– Nkt Photonics 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.
Increasing wage structure of Nkt Photonics
– 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 Nkt Photonics.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nkt Photonics 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.
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 Nkt Photonics.
Environmental challenges
– Nkt Photonics 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. Nkt Photonics can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Weighted SWOT Analysis of NKT Photonics A/S: Doing Business at the Technological Frontiers 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 NKT Photonics A/S: Doing Business at the Technological Frontiers 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 NKT Photonics A/S: Doing Business at the Technological Frontiers 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 NKT Photonics A/S: Doing Business at the Technological Frontiers 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 NKT Photonics A/S: Doing Business at the Technological Frontiers 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 Nkt Photonics needs to make to build a sustainable competitive advantage.