Case Study Description of Servientrega: Co-Founders in Competition
One of the biggest logistics services providers in Colombia, Servientrega started out as a one-man courier operation on the streets of Bogota in 1982. Jesus Guerrero, an enterprising messenger boy, set up his own delivery service at the age of 18. After attracting more clients than he could handle, he persuaded his sister Luz Mary to join the company and invest her savings in exchange for half of the shares. Before long, Servientrega was growing so fast that they employed other siblings. Jesus gave one brother a 5% share in the business, expecting his sister to do the same. However, she held on to her 50% and used her majority shareholder position to take over, forcing her brother out of the CEO job. Jesus began acquiring new logistics operations that he consolidated into the Guerrero Group, which today has 39 subsidiaries (including Servientrega) and employs 28,500 people. The lawsuits that plagued the former partners and put their venture at risk ultimately prompted Jesus to launch a competitor to Servientrega, RedServi.
Authors :: Morten Bennedsen, Alexander Guzman, Brian Henry, Maria Andrea Trujillo
Swot Analysis of "Servientrega: Co-Founders in Competition" written by Morten Bennedsen, Alexander Guzman, Brian Henry, Maria Andrea Trujillo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Servientrega Jesus facing as an external strategic factors. Some of the topics covered in Servientrega: Co-Founders in Competition case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Servientrega: Co-Founders in Competition casestudy better are - – geopolitical disruptions, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, technology disruption, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
increasing energy prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Servientrega: Co-Founders in Competition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Servientrega: Co-Founders in Competition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Servientrega Jesus, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Servientrega Jesus 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 Servientrega: Co-Founders in Competition can be done for the following purposes –
1. Strategic planning using facts provided in Servientrega: Co-Founders in Competition case study
2. Improving business portfolio management of Servientrega Jesus
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 Servientrega Jesus
Strengths Servientrega: Co-Founders in Competition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Servientrega Jesus in Servientrega: Co-Founders in Competition Harvard Business Review case study are -
Training and development
– Servientrega Jesus has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Servientrega: Co-Founders in Competition 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.
Organizational Resilience of Servientrega Jesus
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Servientrega Jesus does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Servientrega Jesus has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Leadership & Managing People industry
– Servientrega: Co-Founders in Competition firm has clearly differentiated products in the market place. This has enabled Servientrega Jesus to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Servientrega Jesus to invest into research and development (R&D) and innovation.
Analytics focus
– Servientrega Jesus 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 Morten Bennedsen, Alexander Guzman, Brian Henry, Maria Andrea Trujillo 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.
Low bargaining power of suppliers
– Suppliers of Servientrega Jesus in the sector have low bargaining power. Servientrega: Co-Founders in Competition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Servientrega Jesus to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Servientrega Jesus has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Servientrega Jesus to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Servientrega: Co-Founders in Competition 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
– Servientrega Jesus has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Servientrega Jesus 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.
Ability to lead change in Leadership & Managing People field
– Servientrega Jesus 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 Servientrega Jesus in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Servientrega Jesus is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Servientrega Jesus 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 Servientrega Jesus is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Servientrega: Co-Founders in Competition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Servientrega: Co-Founders in Competition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Servientrega: Co-Founders in Competition are -
Aligning sales with marketing
– It come across in the case study Servientrega: Co-Founders in Competition 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 Servientrega: Co-Founders in Competition can leverage the sales team experience to cultivate customer relationships as Servientrega Jesus is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Servientrega Jesus is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Servientrega Jesus needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Servientrega Jesus to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Servientrega: Co-Founders in Competition 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 Servientrega Jesus has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Servientrega Jesus 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, Servientrega Jesus 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.
Slow to strategic competitive environment developments
– As Servientrega: Co-Founders in Competition HBR case study mentions - Servientrega Jesus 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.
Low market penetration in new markets
– Outside its home market of Servientrega Jesus, firm in the HBR case study Servientrega: Co-Founders in Competition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Servientrega Jesus 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.
Slow decision making process
– As mentioned earlier in the report, Servientrega Jesus 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. Servientrega Jesus even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Morten Bennedsen, Alexander Guzman, Brian Henry, Maria Andrea Trujillo suggests that, Servientrega Jesus 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 operating costs
– Compare to the competitors, firm in the HBR case study Servientrega: Co-Founders in Competition 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 Servientrega Jesus 's lucrative customers.
Opportunities Servientrega: Co-Founders in Competition | 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 Servientrega: Co-Founders in Competition are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Servientrega Jesus in the consumer business. Now Servientrega Jesus can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Servientrega Jesus to increase its market reach. Servientrega Jesus 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Servientrega Jesus can use these opportunities to build new business models that can help the communities that Servientrega Jesus operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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. Servientrega Jesus can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Servientrega Jesus 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.
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. Servientrega Jesus 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. Servientrega Jesus 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.
Using analytics as competitive advantage
– Servientrega Jesus 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 Servientrega: Co-Founders in Competition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Servientrega Jesus to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Servientrega Jesus can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Servientrega: Co-Founders in Competition 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.
Manufacturing automation
– Servientrega Jesus 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Servientrega Jesus 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 Servientrega Jesus to hire the very best people irrespective of their geographical location.
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 Servientrega Jesus 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 Servientrega Jesus 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.
Leveraging digital technologies
– Servientrega Jesus 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 Servientrega: Co-Founders in Competition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Servientrega: Co-Founders in Competition are -
Shortening product life cycle
– it is one of the major threat that Servientrega Jesus is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Servientrega Jesus 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.
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. Servientrega Jesus can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Servientrega Jesus 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.
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. Servientrega Jesus needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Servientrega Jesus 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.
Consumer confidence and its impact on Servientrega Jesus 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.
Regulatory challenges
– Servientrega Jesus 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Servientrega Jesus 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 Servientrega: Co-Founders in Competition .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Servientrega: Co-Founders in Competition, Servientrega Jesus 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 .
Technology acceleration in Forth Industrial Revolution
– Servientrega Jesus has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Servientrega Jesus 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Servientrega Jesus business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Servientrega Jesus
– 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 Servientrega Jesus.
Weighted SWOT Analysis of Servientrega: Co-Founders in Competition 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 Servientrega: Co-Founders in Competition 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 Servientrega: Co-Founders in Competition 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 Servientrega: Co-Founders in Competition 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 Servientrega: Co-Founders in Competition 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 Servientrega Jesus needs to make to build a sustainable competitive advantage.