SWOT Analysis / TOWS Matrix for Houghton Mifflin (United States)
Based on various researches at Oak Spring University , Houghton Mifflin is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, technology disruption, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
increasing transportation and logistics costs, central banks are concerned over increasing inflation, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Houghton Mifflin can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Houghton Mifflin, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Houghton Mifflin 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 Houghton Mifflin can be done for the following purposes –
1. Strategic planning of Houghton Mifflin
2. Improving business portfolio management of Houghton Mifflin
3. Assessing feasibility of the new initiative in United States
4. Making a Schools sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Houghton Mifflin
Strengths of Houghton Mifflin | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Houghton Mifflin are -
Low bargaining power of suppliers
– Suppliers of Houghton Mifflin in the Services sector have low bargaining power. Houghton Mifflin has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Houghton Mifflin to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Houghton Mifflin comprises – understanding the underlying the factors in the Schools 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.
Cross disciplinary teams
– Horizontal connected teams at the Houghton Mifflin 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.
Effective Research and Development (R&D)
– Houghton Mifflin has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Houghton Mifflin staying ahead in the Schools industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Houghton Mifflin has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Houghton Mifflin to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Schools industry
– Houghton Mifflin has clearly differentiated products in the market place. This has enabled Houghton Mifflin to fetch slight price premium compare to the competitors in the Schools industry. The sustainable margins have also helped Houghton Mifflin to invest into research and development (R&D) and innovation.
Analytics focus
– Houghton Mifflin is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Schools industry. The technology infrastructure of United States is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Houghton Mifflin is present in almost all the verticals within the Schools industry. This has provided Houghton Mifflin 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.
Ability to recruit top talent
– Houghton Mifflin is one of the leading players in the Schools industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Houghton Mifflin
– The covid-19 pandemic has put organizational resilience at the centre of everthing Houghton Mifflin does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Schools
– Houghton Mifflin is one of the leading players in the Schools industry in United States. Over the years it has not only transformed the business landscape in the Schools industry in United States but also across the existing markets. The ability to lead change has enabled Houghton Mifflin in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Houghton Mifflin 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 Houghton Mifflin is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Houghton Mifflin emphasize – knowledge, initiative, and innovation.
Weaknesses of Houghton Mifflin | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Houghton Mifflin are -
Compensation and incentives
– The revenue per employee of Houghton Mifflin is just above the Schools industry average. It 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.
High dependence on Houghton Mifflin ‘s star products
– The top 2 products and services of Houghton Mifflin still accounts for major business revenue. This dependence on star products in Schools industry has resulted into insufficient focus on developing new products, even though Houghton Mifflin has relatively successful track record of launching new products.
Skills based hiring in Schools industry
– The stress on hiring functional specialists at Houghton Mifflin 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 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 Houghton Mifflin supply chain. Even after few cautionary changes, Houghton Mifflin is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Houghton Mifflin vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Houghton Mifflin has some of the most successful models in the Schools industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Houghton Mifflin should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Houghton Mifflin is dominated by functional specialists. It is not different from other players in the Schools industry, but Houghton Mifflin needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Houghton Mifflin to focus more on services in the Schools industry rather than just following the product oriented approach.
Need for greater diversity
– Houghton Mifflin 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.
Lack of clear differentiation of Houghton Mifflin products
– To increase the profitability and margins on the products, Houghton Mifflin needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, Houghton Mifflin has high operating costs in the Schools industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Houghton Mifflin lucrative customers.
Slow to strategic competitive environment developments
– As Houghton Mifflin is one of the leading players in the Schools industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Schools industry in last five years.
High cash cycle compare to competitors
Houghton Mifflin has a high cash cycle compare to other players in the Schools industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Houghton Mifflin Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Houghton Mifflin are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Houghton Mifflin in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Schools industry, and it will provide faster access to the consumers.
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. Houghton Mifflin can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Houghton Mifflin can use these opportunities to build new business models that can help the communities that Houghton Mifflin operates in. Secondly it can use opportunities from government spending in Schools sector.
Use of Bitcoin and other crypto currencies for transactions in Schools industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Houghton Mifflin in the Schools industry. Now Houghton Mifflin can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Houghton Mifflin has opened avenues for new revenue streams for the organization in Schools industry. This can help Houghton Mifflin to build a more holistic ecosystem for Houghton Mifflin products in the Schools industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Houghton Mifflin is facing challenges because of the dominance of functional experts in the organization. Houghton Mifflin can utilize new technology in the field of Schools industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Schools industry, but it has also influenced the consumer preferences. Houghton Mifflin can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Houghton Mifflin 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 Houghton Mifflin to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Houghton Mifflin has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Schools sector. This continuous investment in analytics has enabled Houghton Mifflin to build a competitive advantage using analytics. The analytics driven competitive advantage can help Houghton Mifflin to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Houghton Mifflin 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.
Better consumer reach
– The expansion of the 5G network will help Houghton Mifflin to increase its market reach. Houghton Mifflin 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.
Manufacturing automation
– Houghton Mifflin can use the latest technology developments to improve its manufacturing and designing process in Schools sector. 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 Schools industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Houghton Mifflin 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. Houghton Mifflin 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 Houghton Mifflin External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Houghton Mifflin are -
Easy access to finance
– Easy access to finance in Schools industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Houghton Mifflin can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Houghton Mifflin 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 Houghton Mifflin prominent markets.
Regulatory challenges
– Houghton Mifflin 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 Schools industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Houghton Mifflin may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Schools sector.
Stagnating economy with rate increase
– Houghton Mifflin 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 Schools industry.
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. Houghton Mifflin 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.
Shortening product life cycle
– it is one of the major threat that Houghton Mifflin is facing in Schools sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Houghton Mifflin 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 Schools industry and other sectors.
Environmental challenges
– Houghton Mifflin 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. Houghton Mifflin can take advantage of this fund but it will also bring new competitors in the Schools industry.
High dependence on third party suppliers
– Houghton Mifflin 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.
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. Houghton Mifflin needs to understand the core reasons impacting the Schools industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Schools industry are lowering. It can presents Houghton Mifflin with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Schools sector.
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.
Weighted SWOT Analysis of Houghton Mifflin Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Houghton Mifflin 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 Houghton Mifflin 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 Houghton Mifflin 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 Houghton Mifflin 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 Houghton Mifflin needs to make to build a sustainable competitive advantage.