Case Study Description of Gravity Payments: $70,000 Minimum Salary Company
In April 2015, Dan Price, chief executive officer and founder of Gravity Payments, a private credit card processing and financial services company, announced that every employee would receive a minimum annual salary of US$70,000 over the next three years. Price said he was concerned about the increasing pay gap in the United States and news of his bold move went viral, causing debate over employee compensation plans and the wealth gap in society. At first, there was applause for his radical actions, causing an initial rise in new business. However, there was almost an immediate backlash both internally and externally. One senior worker at the company resigned, claiming that lesser-skilled workers would simply clock in and out while highly skilled workers were not similarly compensated with raises. A lawsuit was filed by Price's brother, a minority shareholder, who believed that the move would hurt the company. A number of clients left Gravity Payments while other companies criticized the move, saying it made them look stingy. Price attempted to tackle pay inequality by increasing salaries, but this created controversy. Employees were not the only stakeholders affected by Price's actions. What should Price do now? Won-Yong Oh is affiliated with UNIV OF CALGARY.
Swot Analysis of "Gravity Payments: $70,000 Minimum Salary Company" written by Won-Yong Oh, Youngkyun Chang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gravity Price's facing as an external strategic factors. Some of the topics covered in Gravity Payments: $70,000 Minimum Salary Company case study are - Strategic Management Strategies, Motivating people and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Gravity Payments: $70,000 Minimum Salary Company casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Gravity Payments: $70,000 Minimum Salary Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gravity Payments: $70,000 Minimum Salary Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gravity Price's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gravity Price'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 Gravity Payments: $70,000 Minimum Salary Company can be done for the following purposes –
1. Strategic planning using facts provided in Gravity Payments: $70,000 Minimum Salary Company case study
2. Improving business portfolio management of Gravity Price'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 Gravity Price's
Strengths Gravity Payments: $70,000 Minimum Salary Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gravity Price's in Gravity Payments: $70,000 Minimum Salary Company Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Gravity Price's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Gravity Payments: $70,000 Minimum Salary Company 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.
Successful track record of launching new products
– Gravity Price's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gravity Price'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.
Analytics focus
– Gravity Price'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 Won-Yong Oh, Youngkyun Chang 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.
High brand equity
– Gravity Price's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gravity Price's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Gravity Price's is one of the leading recruiters in the industry. Managers in the Gravity Payments: $70,000 Minimum Salary Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Leadership & Managing People field
– Gravity Price'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 Gravity Price'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 Gravity Price'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.
Highly skilled collaborators
– Gravity Price's 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 Gravity Payments: $70,000 Minimum Salary Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Gravity Price's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Gravity Payments: $70,000 Minimum Salary Company 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Gravity Payments: $70,000 Minimum Salary Company firm has clearly differentiated products in the market place. This has enabled Gravity Price's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Gravity Price's to invest into research and development (R&D) and innovation.
Strong track record of project management
– Gravity Price'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.
Weaknesses Gravity Payments: $70,000 Minimum Salary Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gravity Payments: $70,000 Minimum Salary Company are -
Products dominated business model
– Even though Gravity Price'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 - Gravity Payments: $70,000 Minimum Salary Company should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Gravity Payments: $70,000 Minimum Salary Company, 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 bargaining power of channel partners
– Because of the regulatory requirements, Won-Yong Oh, Youngkyun Chang suggests that, Gravity Price'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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Price's has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Gravity Payments: $70,000 Minimum Salary Company, is just above the industry average. Gravity Price'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.
Lack of clear differentiation of Gravity Price's products
– To increase the profitability and margins on the products, Gravity Price's needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Gravity Payments: $70,000 Minimum Salary Company, in the dynamic environment Gravity Price's has struggled to respond to the nimble upstart competition. Gravity Price's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Gravity Price'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.
Capital Spending Reduction
– Even during the low interest decade, Gravity Price'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.
Aligning sales with marketing
– It come across in the case study Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Payments: $70,000 Minimum Salary Company can leverage the sales team experience to cultivate customer relationships as Gravity Price's is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Price's 's lucrative customers.
Opportunities Gravity Payments: $70,000 Minimum Salary Company | 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 Gravity Payments: $70,000 Minimum Salary Company are -
Loyalty marketing
– Gravity Price'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.
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. Gravity Price's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Gravity Price'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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Gravity Price's is facing challenges because of the dominance of functional experts in the organization. Gravity Payments: $70,000 Minimum Salary Company 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.
Better consumer reach
– The expansion of the 5G network will help Gravity Price's to increase its market reach. Gravity Price'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.
Using analytics as competitive advantage
– Gravity Price'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 Gravity Payments: $70,000 Minimum Salary Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Gravity Price's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gravity Price's 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, Gravity Payments: $70,000 Minimum Salary Company, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Gravity Price's can use these opportunities to build new business models that can help the communities that Gravity Price'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 Gravity Price'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.
Developing new processes and practices
– Gravity Price'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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gravity Price's 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 Gravity Price's to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gravity Price's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Gravity Price'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.
Threats Gravity Payments: $70,000 Minimum Salary Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Price's.
Technology acceleration in Forth Industrial Revolution
– Gravity Price'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, Gravity Price'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.
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. Gravity Price's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
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. Gravity Price'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.
Stagnating economy with rate increase
– Gravity Price's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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 Gravity Price's in the Leadership & Managing People sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Gravity Payments: $70,000 Minimum Salary Company, Gravity Price'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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Gravity Price's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Gravity Price'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 Gravity Price's.
Consumer confidence and its impact on Gravity Price'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.
Shortening product life cycle
– it is one of the major threat that Gravity Price's is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Gravity Price'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.
Weighted SWOT Analysis of Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Payments: $70,000 Minimum Salary Company 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 Gravity Price's needs to make to build a sustainable competitive advantage.
