IBM China Development Lab Shanghai: Capability by Design SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of IBM China Development Lab Shanghai: Capability by Design
To maximize their effectiveness, color cases should be printed in color.When IBM shifted from a traditional territory-based multinational organization to what it called a globally integrated enterprise, it established its headquarters for "Growth Markets" in Shanghai and "Established Markets" in New York. This positioned its China Development Labs (CDL) in Shanghai as a key platform for serving growth markets including the BRIC countries and other rapidly developing regions. Though quite young, CDL Shanghai had grown to become one of IBM's largest labs. The case examines IBM's early-mover establishment of its corporate research lab and CDL, and through the examination of three product development vignettes looks at the systematic approach taken to the development of lab personnel and capabilities.
Swot Analysis of "IBM China Development Lab Shanghai: Capability by Design" written by Willy Shih, Kamen Bliznashki, Fan Zhao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cdl Shanghai facing as an external strategic factors. Some of the topics covered in IBM China Development Lab Shanghai: Capability by Design case study are - Strategic Management Strategies, IT, Knowledge management, Organizational structure and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the IBM China Development Lab Shanghai: Capability by Design casestudy better are - – supply chains are disrupted by pandemic , increasing household debt because of falling income levels, there is backlash against globalization, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs,
talent flight as more people leaving formal jobs, technology disruption, etc
Introduction to SWOT Analysis of IBM China Development Lab Shanghai: Capability by Design
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in IBM China Development Lab Shanghai: Capability by Design case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cdl Shanghai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cdl Shanghai 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 IBM China Development Lab Shanghai: Capability by Design can be done for the following purposes –
1. Strategic planning using facts provided in IBM China Development Lab Shanghai: Capability by Design case study
2. Improving business portfolio management of Cdl Shanghai
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 Cdl Shanghai
Strengths IBM China Development Lab Shanghai: Capability by Design | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cdl Shanghai in IBM China Development Lab Shanghai: Capability by Design Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Cdl Shanghai 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 Cdl Shanghai in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Cdl Shanghai 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 IBM China Development Lab Shanghai: Capability by Design - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Cdl Shanghai is one of the most innovative firm in sector. Manager in IBM China Development Lab Shanghai: Capability by Design Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Cdl Shanghai 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 Cdl Shanghai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in IBM China Development Lab Shanghai: Capability by Design Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Cdl Shanghai has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in IBM China Development Lab Shanghai: Capability by Design 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.
High brand equity
– Cdl Shanghai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cdl Shanghai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Cdl Shanghai has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cdl Shanghai 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 recruit top talent
– Cdl Shanghai is one of the leading recruiters in the industry. Managers in the IBM China Development Lab Shanghai: Capability by Design are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Cdl Shanghai in the sector have low bargaining power. IBM China Development Lab Shanghai: Capability by Design has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cdl Shanghai to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Cdl Shanghai is present in almost all the verticals within the industry. This has provided firm in IBM China Development Lab Shanghai: Capability by Design 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– IBM China Development Lab Shanghai: Capability by Design firm has clearly differentiated products in the market place. This has enabled Cdl Shanghai to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Cdl Shanghai to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Cdl Shanghai 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.
Weaknesses IBM China Development Lab Shanghai: Capability by Design | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of IBM China Development Lab Shanghai: Capability by Design are -
Slow to strategic competitive environment developments
– As IBM China Development Lab Shanghai: Capability by Design HBR case study mentions - Cdl Shanghai 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cdl Shanghai is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study IBM China Development Lab Shanghai: Capability by Design 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 decision making process
– As mentioned earlier in the report, Cdl Shanghai 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. Cdl Shanghai 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.
No frontier risks strategy
– After analyzing the HBR case study IBM China Development Lab Shanghai: Capability by Design, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study IBM China Development Lab Shanghai: Capability by Design 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 Cdl Shanghai 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Cdl Shanghai, firm in the HBR case study IBM China Development Lab Shanghai: Capability by Design needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study IBM China Development Lab Shanghai: Capability by Design 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 IBM China Development Lab Shanghai: Capability by Design can leverage the sales team experience to cultivate customer relationships as Cdl Shanghai is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Cdl Shanghai 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the IBM China Development Lab Shanghai: Capability by Design 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 Cdl Shanghai has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Cdl Shanghai supply chain. Even after few cautionary changes mentioned in the HBR case study - IBM China Development Lab Shanghai: Capability by Design, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cdl Shanghai vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Cdl Shanghai 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.
Opportunities IBM China Development Lab Shanghai: Capability by Design | 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 IBM China Development Lab Shanghai: Capability by Design are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cdl Shanghai is facing challenges because of the dominance of functional experts in the organization. IBM China Development Lab Shanghai: Capability by Design 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.
Using analytics as competitive advantage
– Cdl Shanghai 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 IBM China Development Lab Shanghai: Capability by Design - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cdl Shanghai to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Cdl Shanghai has opened avenues for new revenue streams for the organization in the industry. This can help Cdl Shanghai to build a more holistic ecosystem as suggested in the IBM China Development Lab Shanghai: Capability by Design case study. Cdl Shanghai can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Cdl Shanghai 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cdl Shanghai can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Cdl Shanghai 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. Cdl Shanghai 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.
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. Cdl Shanghai can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Cdl Shanghai can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Cdl Shanghai 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cdl Shanghai 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.
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 Cdl Shanghai 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.
Learning at scale
– Online learning technologies has now opened space for Cdl Shanghai 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.
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 Cdl Shanghai in the consumer business. Now Cdl Shanghai can target international markets with far fewer capital restrictions requirements than the existing system.
Threats IBM China Development Lab Shanghai: Capability by Design External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study IBM China Development Lab Shanghai: Capability by Design are -
Consumer confidence and its impact on Cdl Shanghai 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.
Stagnating economy with rate increase
– Cdl Shanghai 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.
High dependence on third party suppliers
– Cdl Shanghai 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.
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 Cdl Shanghai business can come under increasing regulations regarding data privacy, data security, etc.
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. Cdl Shanghai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Cdl Shanghai.
Regulatory challenges
– Cdl Shanghai needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Cdl Shanghai 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 Cdl Shanghai 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.
Environmental challenges
– Cdl Shanghai 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. Cdl Shanghai can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Technology acceleration in Forth Industrial Revolution
– Cdl Shanghai has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Cdl Shanghai 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.
Increasing wage structure of Cdl Shanghai
– 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 Cdl Shanghai.
Weighted SWOT Analysis of IBM China Development Lab Shanghai: Capability by Design 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 IBM China Development Lab Shanghai: Capability by Design 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 IBM China Development Lab Shanghai: Capability by Design 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 IBM China Development Lab Shanghai: Capability by Design 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 IBM China Development Lab Shanghai: Capability by Design 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 Cdl Shanghai needs to make to build a sustainable competitive advantage.