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 - – wage bills are increasing, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels,
supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, 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 -
Strong track record of project management
– Nkt Photonics is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
Diverse revenue streams
– Nkt Photonics is present in almost all the verticals within the industry. This has provided firm in NKT Photonics A/S: Doing Business at the Technological Frontiers 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.
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.
Operational resilience
– The operational resilience strategy in the NKT Photonics A/S: Doing Business at the Technological Frontiers 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.
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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Nkt Photonics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nkt Photonics 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.
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.
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 -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study NKT Photonics A/S: Doing Business at the Technological Frontiers, in the dynamic environment Nkt Photonics has struggled to respond to the nimble upstart competition. Nkt Photonics 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, 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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study NKT Photonics A/S: Doing Business at the Technological Frontiers, it seems that the employees of Nkt Photonics 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.
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.
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.
Low market penetration in new markets
– Outside its home market of Nkt Photonics, firm in the HBR case study NKT Photonics A/S: Doing Business at the Technological Frontiers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study NKT Photonics A/S: Doing Business at the Technological Frontiers 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 Nkt Photonics 's lucrative 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.
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 -
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nkt Photonics to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Nkt Photonics to hire the very best people irrespective of their geographical location.
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. Nkt Photonics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Nkt Photonics 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.
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Nkt Photonics 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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nkt Photonics can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, NKT Photonics A/S: Doing Business at the Technological Frontiers, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 -
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.
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.
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.
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.
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.
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.
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 .
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 .
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. Nkt Photonics 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.
Shortening product life cycle
– it is one of the major threat that Nkt Photonics is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Nkt Photonics 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. Nkt Photonics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
