Axel Springer in 2014: Strategic Leadership of the Digital Transformation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Axel Springer in 2014: Strategic Leadership of the Digital Transformation
In 2013, Mathias Dopfner, CEO of the publishing house Axel Springer SE, a premier source of content in Germany, with its popular newspapers and magazines such as Bild and Die Welt, was evaluating the progress of his company's digital transformation. The advent of the digital revolution at the end of the twentieth century had caused an appreciable shift in the publishing industry. Traditional print media players were confronted with major technological advancements and changes in consumer tastes and how news was consumed. Thus, the challenge for Axel Springer was in finding fresh ways to disDopfner had directed Axel Springer to approach this task with a two-stage digital transformation strategy process. Beginning in 2006, the company focused on organic growth and late-stage digital acquisitions. This stage of the strategy process had centered around profitability and the infusion of digitization into the corporate culture. In 2013, the second stage of the strategy process was driven by Dopfner's formulation of the firm's corporate mission to become "The Leading Digital Publisher" and his defining the company's business as its branded content and not its distribution channels. With this new strategy, Axel Springer intended to espouse early-stage investments and entrepreneurship and grow revenue through three business models: paid content, marketing, and classified advertising. As of 2013, Dopfner's two-stage digital transformation strategy had been a stunning success. Axel Springer had more than 12,800 employees, total revenues of $3.9 billion, and EBITDA of $625 million. The company had exceeded the goals it had set for digital media contributions to revenue and EBITDA, achieved reach in 44 countries, and serviced 98 million unique digital visitors worldwide. Looking forward in April 2014, however, it was clear that the future still held many challenges. Dopfner knew that Axel Springer would need to continue to successfully balance digital and traditional media business strategies, further reestablish the firm's identity, and continue to pioneer the cultural transition within the organization. Most importantly, he realized the urgency of preparing his organization for the looming battle between digitally transforming old media content providers (like Axel Springer) and new giant digital technology experts (like Google) transforming themselves into media companies. He also pondered whether it would be possible, and if so how, to mobilize a sufficiently powerful coalition to help the digitally transforming old media content providers in that battle.
Authors :: Robert Burgelman, Robert Siegel, Jason Luther
Swot Analysis of "Axel Springer in 2014: Strategic Leadership of the Digital Transformation" written by Robert Burgelman, Robert Siegel, Jason Luther includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Axel Springer facing as an external strategic factors. Some of the topics covered in Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Axel Springer in 2014: Strategic Leadership of the Digital Transformation casestudy better are - – wage bills are increasing, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing government debt because of Covid-19 spendings,
competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Axel Springer in 2014: Strategic Leadership of the Digital Transformation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Axel Springer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation can be done for the following purposes –
1. Strategic planning using facts provided in Axel Springer in 2014: Strategic Leadership of the Digital Transformation case study
2. Improving business portfolio management of Axel Springer
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 Axel Springer
Strengths Axel Springer in 2014: Strategic Leadership of the Digital Transformation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Axel Springer in Axel Springer in 2014: Strategic Leadership of the Digital Transformation Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Axel Springer in the sector have low bargaining power. Axel Springer in 2014: Strategic Leadership of the Digital Transformation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Axel Springer to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Axel Springer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Axel Springer 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.
High switching costs
– The high switching costs that Axel Springer 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.
Learning organization
- Axel Springer 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 Axel Springer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Axel Springer in 2014: Strategic Leadership of the Digital Transformation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Axel Springer is one of the most innovative firm in sector. Manager in Axel Springer in 2014: Strategic Leadership of the Digital Transformation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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.
Training and development
– Axel Springer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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
– Axel Springer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Axel Springer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Axel Springer is present in almost all the verticals within the industry. This has provided firm in Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Axel Springer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Axel Springer 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.
Superior customer experience
– The customer experience strategy of Axel Springer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Axel Springer in 2014: Strategic Leadership of the Digital Transformation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Axel Springer in 2014: Strategic Leadership of the Digital Transformation are -
High cash cycle compare to competitors
Axel Springer 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.
Slow decision making process
– As mentioned earlier in the report, Axel Springer 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. Axel Springer 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation, in the dynamic environment Axel Springer has struggled to respond to the nimble upstart competition. Axel Springer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation, it seems that the employees of Axel Springer 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Axel Springer 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Axel Springer, firm in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Axel Springer is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Axel Springer products
– To increase the profitability and margins on the products, Axel Springer needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Axel Springer in 2014: Strategic Leadership of the Digital Transformation HBR case study mentions - Axel Springer 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.
Opportunities Axel Springer in 2014: Strategic Leadership of the Digital Transformation | 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Axel Springer 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.
Building a culture of innovation
– managers at Axel Springer 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Axel Springer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Axel Springer 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.
Manufacturing automation
– Axel Springer 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.
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. Axel Springer 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. Axel Springer 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Axel Springer 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 Axel Springer to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Axel Springer is facing challenges because of the dominance of functional experts in the organization. Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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.
Developing new processes and practices
– Axel Springer 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.
Loyalty marketing
– Axel Springer 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.
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 Axel Springer in the consumer business. Now Axel Springer 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 Axel Springer to increase its market reach. Axel Springer 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.
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. Axel Springer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Axel Springer in 2014: Strategic Leadership of the Digital Transformation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Axel Springer in 2014: Strategic Leadership of the Digital Transformation, Axel Springer 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 .
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 Axel Springer in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
Shortening product life cycle
– it is one of the major threat that Axel Springer 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 Axel Springer 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.
High dependence on third party suppliers
– Axel Springer 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.
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. Axel Springer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Axel Springer 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. Axel Springer can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Axel Springer 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation .
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. Axel Springer 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.
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.
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 Axel Springer.
Consumer confidence and its impact on Axel Springer 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.
Weighted SWOT Analysis of Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer in 2014: Strategic Leadership of the Digital Transformation 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 Axel Springer needs to make to build a sustainable competitive advantage.
