Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience
This teaching case discusses the decisions facing GlobShop, a global travel-retail company, in its efforts to offshore a significant portion of its information technology (IT) work. In response to the business challenges that arose due to the September 11, 2001 terrorist attacks, the company decided to outsource many of its IT activities to an Indian vendor. This case traces the key decisions made by the CIO and the challenges that were encountered during the planning and execution of the company's offshore sourcing strategy. These decisions pertain to the choice of tasks to be offshored, decisions about the vendor and the nature of sourcing arrangement, managing the vendor relationship and change management issues induced by offshoring. As GlobShop nears the completion of its 3-year agreement with the offshore vendor, the CIO is faced with decisions regarding continuing offshore outsourcing, extending the contract and related implications for the future of IT organization at GlobShop.
Authors :: C. Ranganathan, Poornima Krishnan, Ron Glickman
Swot Analysis of "Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience" written by C. Ranganathan, Poornima Krishnan, Ron Glickman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Globshop Offshore facing as an external strategic factors. Some of the topics covered in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience case study are - Strategic Management Strategies, Operations management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing household debt because of falling income levels, increasing transportation and logistics costs, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, etc
Introduction to SWOT Analysis of Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Globshop Offshore, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Globshop Offshore 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience can be done for the following purposes –
1. Strategic planning using facts provided in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience case study
2. Improving business portfolio management of Globshop Offshore
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 Globshop Offshore
Strengths Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Globshop Offshore in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience Harvard Business Review case study are -
Effective Research and Development (R&D)
– Globshop Offshore 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience - 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
- Globshop Offshore 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 Globshop Offshore is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Globshop Offshore is one of the most innovative firm in sector. Manager in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Globshop Offshore 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.
Low bargaining power of suppliers
– Suppliers of Globshop Offshore in the sector have low bargaining power. Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Globshop Offshore to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Globshop Offshore has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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.
Ability to lead change in Leadership & Managing People field
– Globshop Offshore 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 Globshop Offshore in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Globshop Offshore is present in almost all the verticals within the industry. This has provided firm in Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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.
High brand equity
– Globshop Offshore has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Globshop Offshore to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Globshop Offshore is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Globshop Offshore 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Globshop Offshore has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Globshop Offshore 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.
Weaknesses Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience are -
Lack of clear differentiation of Globshop Offshore products
– To increase the profitability and margins on the products, Globshop Offshore needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Globshop Offshore 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. Globshop Offshore 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience, it seems that the employees of Globshop Offshore don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Globshop Offshore 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.
High cash cycle compare to competitors
Globshop Offshore 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience, in the dynamic environment Globshop Offshore has struggled to respond to the nimble upstart competition. Globshop Offshore has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Globshop Offshore supply chain. Even after few cautionary changes mentioned in the HBR case study - Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Globshop Offshore vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Globshop Offshore is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Globshop Offshore 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience can leverage the sales team experience to cultivate customer relationships as Globshop Offshore is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Globshop Offshore, firm in the HBR case study Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience | 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience are -
Loyalty marketing
– Globshop Offshore 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Globshop Offshore 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.
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. Globshop Offshore 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 Globshop Offshore 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 Globshop Offshore in the consumer business. Now Globshop Offshore can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Globshop Offshore 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.
Using analytics as competitive advantage
– Globshop Offshore 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Globshop Offshore to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Globshop Offshore can use these opportunities to build new business models that can help the communities that Globshop Offshore operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Leveraging digital technologies
– Globshop Offshore 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.
Manufacturing automation
– Globshop Offshore 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.
Creating value in data economy
– The success of analytics program of Globshop Offshore has opened avenues for new revenue streams for the organization in the industry. This can help Globshop Offshore to build a more holistic ecosystem as suggested in the Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience case study. Globshop Offshore can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Globshop Offshore can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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.
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. Globshop Offshore 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. Globshop Offshore 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.
Threats Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Globshop Offshore 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 Globshop Offshore
– 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 Globshop Offshore.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience, Globshop Offshore 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 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
– Globshop Offshore has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Globshop Offshore 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 Globshop Offshore business can come under increasing regulations regarding data privacy, data security, etc.
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 Globshop Offshore in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Globshop Offshore needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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. Globshop Offshore can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Globshop Offshore is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Globshop Offshore.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Globshop Offshore 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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 Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop's Experience 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 Globshop Offshore needs to make to build a sustainable competitive advantage.
