A Manager's Guide to Human Irrationalities SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of A Manager's Guide to Human Irrationalities
This is an MIT Sloan Management Review article. Dan Ariely is one of the world's foremost experts in behavioral economics, the study of how people behave when making business and financial decisions. Ariely's insights should make executives think twice about the wisdom of the decisions they regularly make -- as well as the inner processes they rely on to make those decisions. Why, for example, will managers veto a 10% cost increase for a $1 million project while thinking nothing of a 1% overrun on a $10 million budget -- even though the actual amount is the same? Why will they often agonize trying to choose between two close alternatives when they're frequently better off just flipping a coin? In this wide-ranging interview, Ariely talks about how Apple Inc.'s initial decision to price the iPhone at $600 only to drop it to $400 soon after might not have been a mistake but instead a very shrewd marketing maneuver. He also explains why a product monopoly might not necessarily be desirable because it can lead to consumer confusion, resulting in slow sales. With regards to hiring practices, Ariely strongly questions the interviewing processes routinely used and asserts that some companies might be better off hiring graduates from reputable colleges at random. Toward the end of the interview, he describes his research that has investigated ways in which teams might be better able to make group decisions. Lastly, Ariely explains one of his most valuable managerial insights -- that adding even just a little meaning to employees' work will often increase their motivation enormously.
Swot Analysis of "A Manager's Guide to Human Irrationalities" written by Alden M. Hayashi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ariely Decisions facing as an external strategic factors. Some of the topics covered in A Manager's Guide to Human Irrationalities case study are - Strategic Management Strategies, Product development, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the A Manager's Guide to Human Irrationalities casestudy better are - – increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of A Manager's Guide to Human Irrationalities
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A Manager's Guide to Human Irrationalities case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ariely Decisions, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ariely Decisions 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 A Manager's Guide to Human Irrationalities can be done for the following purposes –
1. Strategic planning using facts provided in A Manager's Guide to Human Irrationalities case study
2. Improving business portfolio management of Ariely Decisions
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 Ariely Decisions
Strengths A Manager's Guide to Human Irrationalities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ariely Decisions in A Manager's Guide to Human Irrationalities Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Ariely Decisions 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.
Successful track record of launching new products
– Ariely Decisions has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ariely Decisions 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
– Ariely Decisions has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in A Manager's Guide to Human Irrationalities 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.
Superior customer experience
– The customer experience strategy of Ariely Decisions in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– A Manager's Guide to Human Irrationalities firm has clearly differentiated products in the market place. This has enabled Ariely Decisions to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Ariely Decisions to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Ariely Decisions in the sector have low bargaining power. A Manager's Guide to Human Irrationalities has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ariely Decisions to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Ariely Decisions is present in almost all the verticals within the industry. This has provided firm in A Manager's Guide to Human Irrationalities 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
– Ariely Decisions has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ariely Decisions to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Ariely Decisions 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.
Ability to lead change in Leadership & Managing People field
– Ariely Decisions 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 Ariely Decisions in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Ariely Decisions 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
– Ariely Decisions 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 A Manager's Guide to Human Irrationalities HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses A Manager's Guide to Human Irrationalities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A Manager's Guide to Human Irrationalities are -
Workers concerns about automation
– As automation is fast increasing in the segment, Ariely Decisions 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study A Manager's Guide to Human Irrationalities, in the dynamic environment Ariely Decisions has struggled to respond to the nimble upstart competition. Ariely Decisions has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Ariely Decisions products
– To increase the profitability and margins on the products, Ariely Decisions needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study A Manager's Guide to Human Irrationalities 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 A Manager's Guide to Human Irrationalities can leverage the sales team experience to cultivate customer relationships as Ariely Decisions is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ariely Decisions is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A Manager's Guide to Human Irrationalities can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study A Manager's Guide to Human Irrationalities, it seems that the employees of Ariely Decisions 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.
Increasing silos among functional specialists
– The organizational structure of Ariely Decisions is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Ariely Decisions needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ariely Decisions to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As A Manager's Guide to Human Irrationalities HBR case study mentions - Ariely Decisions 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.
Need for greater diversity
– Ariely Decisions 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the A Manager's Guide to Human Irrationalities 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 Ariely Decisions has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Ariely Decisions 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. Ariely Decisions 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.
Opportunities A Manager's Guide to Human Irrationalities | 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 A Manager's Guide to Human Irrationalities are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ariely Decisions 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, A Manager's Guide to Human Irrationalities, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Ariely Decisions 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.
Better consumer reach
– The expansion of the 5G network will help Ariely Decisions to increase its market reach. Ariely Decisions 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.
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. Ariely Decisions 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. Ariely Decisions 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.
Manufacturing automation
– Ariely Decisions 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ariely Decisions 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ariely Decisions can use these opportunities to build new business models that can help the communities that Ariely Decisions operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Developing new processes and practices
– Ariely Decisions 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.
Learning at scale
– Online learning technologies has now opened space for Ariely Decisions 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ariely Decisions 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.
Using analytics as competitive advantage
– Ariely Decisions 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 A Manager's Guide to Human Irrationalities - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ariely Decisions to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Ariely Decisions has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ariely Decisions can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats A Manager's Guide to Human Irrationalities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study A Manager's Guide to Human Irrationalities are -
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.
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 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. Ariely Decisions needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Environmental challenges
– Ariely Decisions 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. Ariely Decisions can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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 Ariely Decisions.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study A Manager's Guide to Human Irrationalities, Ariely Decisions 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 Ariely Decisions in the Leadership & Managing People sector and impact the bottomline of the organization.
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 Ariely Decisions business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Ariely Decisions 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.
Technology acceleration in Forth Industrial Revolution
– Ariely Decisions has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Ariely Decisions needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing wage structure of Ariely Decisions
– 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 Ariely Decisions.
Shortening product life cycle
– it is one of the major threat that Ariely Decisions is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ariely Decisions 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 A Manager's Guide to Human Irrationalities .
Weighted SWOT Analysis of A Manager's Guide to Human Irrationalities 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 A Manager's Guide to Human Irrationalities 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 A Manager's Guide to Human Irrationalities 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 A Manager's Guide to Human Irrationalities 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 A Manager's Guide to Human Irrationalities 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 Ariely Decisions needs to make to build a sustainable competitive advantage.
