United Technologies Corporation: Supplier Development Initiative SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of United Technologies Corporation: Supplier Development Initiative
In mid-2000, United Technologies Corporation (UTC) was two years into a supplier development integration program. The major focus of this initiative was to strengthen relationships with "key" suppliers to fully leverage the supply chain. The qualities sought in the relationships included long-term commitments, confidential information sharing, cooperative continuous improvement efforts, and sharing risks and rewards. Both the nature of these relationships and the associated behaviors were new for UTC and represented a significant challenge. UTC believed it was making progress moving from supplier rationalization toward supplier integration. However, some UTC suppliers believed that they were not receiving any of the gains from these initiatives and viewed UTC as often focused only on cost cutting. UTC's Global Supply Management organization hoped to investigate individual supplier relationships and address supplier concerns. The objective was to assist high-potential suppliers so that they could improve their performance and, at the same time, align better with UTC's goals for a more productive and less costly set of reliable supply chain partners.
Swot Analysis of "United Technologies Corporation: Supplier Development Initiative" written by Robert E. Spekman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Utc Supplier facing as an external strategic factors. Some of the topics covered in United Technologies Corporation: Supplier Development Initiative case study are - Strategic Management Strategies, and Communication.
Some of the macro environment factors that can be used to understand the United Technologies Corporation: Supplier Development Initiative casestudy better are - – supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of United Technologies Corporation: Supplier Development Initiative
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in United Technologies Corporation: Supplier Development Initiative case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Utc Supplier, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Utc Supplier 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 United Technologies Corporation: Supplier Development Initiative can be done for the following purposes –
1. Strategic planning using facts provided in United Technologies Corporation: Supplier Development Initiative case study
2. Improving business portfolio management of Utc Supplier
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Utc Supplier
Strengths United Technologies Corporation: Supplier Development Initiative | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Utc Supplier in United Technologies Corporation: Supplier Development Initiative Harvard Business Review case study are -
Digital Transformation in Communication segment
- digital transformation varies from industry to industry. For Utc Supplier digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Utc Supplier has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Utc Supplier is one of the most innovative firm in sector. Manager in United Technologies Corporation: Supplier Development Initiative Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Utc Supplier has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Utc Supplier 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.
Training and development
– Utc Supplier has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in United Technologies Corporation: Supplier Development Initiative 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.
Sustainable margins compare to other players in Communication industry
– United Technologies Corporation: Supplier Development Initiative firm has clearly differentiated products in the market place. This has enabled Utc Supplier to fetch slight price premium compare to the competitors in the Communication industry. The sustainable margins have also helped Utc Supplier to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Utc Supplier is one of the leading recruiters in the industry. Managers in the United Technologies Corporation: Supplier Development Initiative are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Communication field
– Utc Supplier 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 Utc Supplier in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Utc Supplier has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Utc Supplier to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Utc Supplier in the sector have low bargaining power. United Technologies Corporation: Supplier Development Initiative has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Utc Supplier to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Utc Supplier 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 United Technologies Corporation: Supplier Development Initiative - 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
- Utc Supplier 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 Utc Supplier is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in United Technologies Corporation: Supplier Development Initiative Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Utc Supplier 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.
Weaknesses United Technologies Corporation: Supplier Development Initiative | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of United Technologies Corporation: Supplier Development Initiative are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study United Technologies Corporation: Supplier Development Initiative, in the dynamic environment Utc Supplier has struggled to respond to the nimble upstart competition. Utc Supplier has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Utc Supplier, firm in the HBR case study United Technologies Corporation: Supplier Development Initiative needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert E. Spekman suggests that, Utc Supplier 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.
Capital Spending Reduction
– Even during the low interest decade, Utc Supplier 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.
Interest costs
– Compare to the competition, Utc Supplier has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the United Technologies Corporation: Supplier Development Initiative 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 Utc Supplier has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study United Technologies Corporation: Supplier Development Initiative, it seems that the employees of Utc Supplier 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.
Need for greater diversity
– Utc Supplier 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
Utc Supplier 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.
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 Utc Supplier supply chain. Even after few cautionary changes mentioned in the HBR case study - United Technologies Corporation: Supplier Development Initiative, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Utc Supplier vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study United Technologies Corporation: Supplier Development Initiative, is just above the industry average. Utc Supplier 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 United Technologies Corporation: Supplier Development Initiative | 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 United Technologies Corporation: Supplier Development Initiative are -
Leveraging digital technologies
– Utc Supplier 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.
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. Utc Supplier can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Utc Supplier 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.
Loyalty marketing
– Utc Supplier 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.
Buying journey improvements
– Utc Supplier can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. United Technologies Corporation: Supplier Development Initiative 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Utc Supplier in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Communication segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Utc Supplier is facing challenges because of the dominance of functional experts in the organization. United Technologies Corporation: Supplier Development Initiative 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Utc Supplier 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 Utc Supplier to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Utc Supplier 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Utc Supplier can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, United Technologies Corporation: Supplier Development Initiative, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Utc Supplier 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Communication industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Utc Supplier 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. Utc Supplier 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Utc Supplier can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats United Technologies Corporation: Supplier Development Initiative External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study United Technologies Corporation: Supplier Development Initiative are -
Stagnating economy with rate increase
– Utc Supplier 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 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. Utc Supplier needs to understand the core reasons impacting the Communication industry. This will help it in building a better workplace.
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. Utc Supplier 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 acceleration in Forth Industrial Revolution
– Utc Supplier has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Utc Supplier needs to keep up with the evolution of technology in the Communication 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.
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 Utc Supplier in the Communication 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.
High dependence on third party suppliers
– Utc Supplier 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.
Environmental challenges
– Utc Supplier 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. Utc Supplier can take advantage of this fund but it will also bring new competitors in the Communication industry.
Consumer confidence and its impact on Utc Supplier demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Utc Supplier 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 Communication industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Utc Supplier with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Communication field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Utc Supplier 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 Utc Supplier is facing in Communication sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of United Technologies Corporation: Supplier Development Initiative 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 United Technologies Corporation: Supplier Development Initiative 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 United Technologies Corporation: Supplier Development Initiative 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 United Technologies Corporation: Supplier Development Initiative 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 United Technologies Corporation: Supplier Development Initiative 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 Utc Supplier needs to make to build a sustainable competitive advantage.