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 - – geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs,
increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, 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 -
Highly skilled collaborators
– Cdl Shanghai 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 IBM China Development Lab Shanghai: Capability by Design HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
High switching costs
– The high switching costs that Cdl Shanghai 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
– 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.
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.
Strong track record of project management
– Cdl Shanghai is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the IBM China Development Lab Shanghai: Capability by Design 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.
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.
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.
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.
Organizational Resilience of Cdl Shanghai
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cdl Shanghai does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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 -
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 bargaining power of channel partners
– Because of the regulatory requirements, Willy Shih, Kamen Bliznashki, Fan Zhao suggests that, Cdl Shanghai 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.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cdl Shanghai 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.
Need for greater diversity
– Cdl Shanghai 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.
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.
Products dominated business model
– Even though Cdl Shanghai 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 - IBM China Development Lab Shanghai: Capability by Design should strive to include more intangible value offerings along with its core products and services.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study IBM China Development Lab Shanghai: Capability by Design, is just above the industry average. Cdl Shanghai 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.
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 -
Buying journey improvements
– Cdl Shanghai can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. IBM China Development Lab Shanghai: Capability by Design 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.
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.
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.
Building a culture of innovation
– managers at Cdl Shanghai can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cdl Shanghai 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.
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.
Manufacturing automation
– Cdl Shanghai 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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cdl Shanghai can use these opportunities to build new business models that can help the communities that Cdl Shanghai operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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 -
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 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.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cdl Shanghai 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 IBM China Development Lab Shanghai: Capability by Design .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cdl Shanghai with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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. Cdl Shanghai needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
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.
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.
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 Cdl Shanghai in the Leadership & Managing People sector and impact the bottomline of the organization.
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.