SWOT Analysis Matrix

Januari 31, 2023Desember 7, 2022 falma.u99 analysis, matrix

Definition of SWOT Analysis

What is SWOT Analysis & Matrix? How you can use SWOT Analysis for Rocket Internet: Rise of the German Silicon Valley?
At EMBA PRO , we specialize at analyzing & providing comprehensive, corporate SWOT Analysis of Rocket Internet: Rise of the German Silicon Valley? case study. Rocket Internet: Rise of the German Silicon Valley? “referred as Rocket Internet in this analysis ” is a Harvard Business Review (HBR) case study used for MBA & EMBA programs. It is written by Bryan Hong, Dave Tang and deals with topics in areas such as Innovation & Entrepreneurship Managing uncertainty, Technology

SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that Rocket Internet encounters both internally and in macro environment that it operates in. Strengths and Weaknesses are often restricted to company’s internal – resources, skills and limitations.

Opportunities and Threats are factors that are analyzed in view of the prevalent market forces and other factors such as political, legal & environmental, economic , social, health & safety, and technological.

According to global executive survey done by Harvard Business Review & Brightline Initiative – Only 20% of the strategic targets set by organizations are realized. Rest 80% of the strategic targets are not achieved because of incomprehensive planning, limited resource allocation, and poor execution.

The successful organizations such as Rocket Internet are the one who able to predict market trends better than others, provide resources to develop products and services to leverage those trends, able to counter competitors’ threats, and meet customers’ expected value proposition.

Case Description of Rocket Internet: Rise of the German Silicon Valley? Case Study
Rocket Internet, a unique technology incubator based in Germany, invests in and develops startups in Europe and emerging markets that are versions of successful technology firms primarily located in the United States, such as eBay, Zappos, Amazon and Groupon. Fundamentally, the company seeks to reduce the uncertainty of entrepreneurial startup ventures by imitating proven business models and replicating them in other geographic regions. Rocket Internet has recently begun to expand into emerging markets more aggressively, and its chief executive officer must now decide on the best strategy to continue the firm’s global expansion.

Case Authors : Bryan Hong, Dave Tang

Topic : Innovation & Entrepreneurship

Related Areas : Managing uncertainty, Technology

Case Study Solution & Analysis of Rocket Internet: Rise of the German Silicon Valley?

PESTEL / PEST / STEP Analysis of Rocket Internet: Rise of the German Silicon Valley? Case Study

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What are the Four Elements of SWOT Analysis? How to use them for Rocket Internet: Rise of the German Silicon Valley? case study?
The four key elements of SWOT analysis are – Strengths, Weaknesses, Opportunities & Threats. Rocket Internet can use strengths to create niche positioning in the market, can strive to reduce & remove weaknesses so that it can better compete with competitors, look out to leverage opportunities provided by industry structure, regulations and other development in external environment, and finally make provisions and develop strategies to mitigate threats that can undermine the business model of Rocket Internet.

OpportunitiesThreats Strengths

Strength Opportunities (SO) StrategiesUsing Rocket Internet strengths to consolidate and expand the market position.

Strength Threats (ST) StrategiesRocket Internet can use two approaches – building on present strengths, or analyze the trend and build processes to two pronged market penetration approach.

Weaknesses

Weakness Opportunities (WO) StrategiesBuilding strategies based on consumer oriented product development and marketing approach.

Weaknesses Threats (WT) StrategiesRocket Internet should just get out of these business areas and focus on strength and threats box , or on weakness and opportunities box.

For more detailed SWOT Matrix strategy please go through the detailed analysis of strengths, weaknesses, opportunities, and threats in next section.

What are Strengths in SWOT Analysis

Strengths – Rocket Internet: Rise of the German Silicon Valley?
Strengths are the Rocket Internet capabilities and resources that it can leverage to build a sustainable competitive advantage in the marketplace. Strengths come from positive aspects of five key resources & capabilities – financial resources, activities & processes, human resources, physical resources such as land, building, and past experiences and successes .

– Managing Regulations and Business Environment – Rocket Internet operates in an environment where it faces numerous regulations and government diktats. In Managing uncertainty, Technology areas, the firm needs to navigate environment by building strong relationship with lobby groups and political network.

– Successful Go To Market Track Record – Rocket Internet has a highly successful track record of both launching new products in the domestic market but also catering to the various market based on the insights from local consumers. According to Bryan Hong, Dave Tang , Rocket Internet has tested various concepts in different markets and come up with successful Innovation & Entrepreneurship solutions.

– Strong Balance Sheet and Financial Statement of Rocket Internet can help it to invest in new and diverse projects that can further diversify the revenue stream and increase Return on Sales (RoS) & other metrics.

– Intellectual Property Rights – Rocket Internet has garnered a wide array of patents and copyrights through innovation and buying those rights from the creators. This can help Rocket Internet in thwarting the challenges of competitors in various industries Managing uncertainty, Technology.

– Strong Brand Equity and Brand Awareness – Rocket Internet has some of the most recognized brands in the domestic market it operates in. According to Bryan Hong, Dave Tang , brand recognition plays a significant role in attracting new customers looking for solutions in Managing uncertainty, Technology adjacent industries.

– First Mover Advantage – Rocket Internet has first mover advantage in number of segments. It has experimented in various areas Managing uncertainty, Technology. The Innovation & Entrepreneurship solutions & strategies has helped Rocket Internet in coming up with unique solution to tap the un-catered markets.

– Superior product and services quality can help Rocket Internet to further increase its market share as the current customer are extremely loyal to it. According to Bryan Hong, Dave Tang in Rocket Internet: Rise of the German Silicon Valley? study – there are enough evidences that with such a high quality of products and services, Rocket Internet can compete with other global players in international market.

What are Weakness in SWOT Analysis

Weakness- Rocket Internet: Rise of the German Silicon Valley?
Weaknesses are the areas, capabilities or skills in which Rocket Internet lacks. It limits the ability of the firm to build a sustainable competitive advantage. Weaknesses come from lack or absence of five key resources & capabilities – human resources, financial resources, physical resources such as land, building, past experiences and successes, and activities & processes .

– Track record on environment consideration is not very encouraging – Rocket Internet track record on environmental issues is not very encouraging. According to Bryan Hong, Dave Tang , this can lead to consumer backlash as customers are now considering environmental protections as integral to part of doing business.

– Implementation of Technology in Processes – Even though Rocket Internet has integrated technology in the backend processes it has still not able to harness the power of technology in the front end processes.

– Project Management is too focused on internal delivery rather than considering all the interests of external stakeholders. This approach can lead to poor public relation and customer backlash.

– Lack of critical talent – I believe that Rocket Internet is suffering from lack of critical talent especially in the field of technology & digital transformation. Rocket Internet is struggling to restructure processes in light of developments in the field of Artificial Intelligence (AI) and machine learning.

– Lack of Work force diversity – I believe that Rocket Internet is not diverse enough given that most of its growth so far is in its domestic market. According to Bryan Hong, Dave Tang , this can reduce the potential of success of Rocket Internet in the international market.

– Rocket Internet business model can be easily replicated even with the number of patents and copyrights the company possess. The intellectual property rights are very difficult to implement in the industry that Rocket Internet operates in. According to Bryan Hong, Dave Tang , Intellectual Property Rights are effective in thwarting same size competition but it is difficult to stop start ups disrupting markets at various other levels.

What are Opportunities in SWOT Analysis

Opportunities- Rocket Internet: Rise of the German Silicon Valley?
Opportunities are macro environment factors and developments that Rocket Internet can leverage either to consolidate existing market position or use them for further expansion. Opportunities can emerge from various factors such as – changes in consumer preferences, technological innovations, political developments & policy changes, economic growth, and increase in consumer disposable income .

– Increasing Standardization – Rocket Internet can leverage this trend to reduce the number of offerings in the market and focus the marketing efforts on only the most successful products.

– Lucrative Opportunities in International Markets – Globalization has led to opportunities in the international market. Rocket Internet is in prime position to tap on those opportunities and grow the market share. According to Bryan Hong, Dave Tang , growth in international market can also help Rocket Internet to diversify the risk as it will be less dependent on the domestic market for revenue.

– Increase in Consumer Disposable Income – Rocket Internet can use the increasing disposable income to build a new business model where customers start paying progressively for using its products. According to Bryan Hong, Dave Tang of Rocket Internet: Rise of the German Silicon Valley? case study, Rocket Internet can use this trend to expand in adjacent areas Managing uncertainty, Technology.

– Changing Technology Landscape – Machine learning and Artificial Intelligence boom is transforming the technology landscape that Rocket Internet operates in. According to Bryan Hong, Dave Tang , Rocket Internet can use these developments in improving efficiencies, lowering costs, and transforming processes.

– Reducing Cost of Market Entry and Marketing into International Markets – According to Bryan Hong, Dave Tang, globalization along with boom in digital marketing and social media has considerably reduced the risks of market entry and marketing in international market.

– Growing Market Size and Evolving Preferences of Consumers – Over the last decade and half the market size has grown at brisk pace. The influx of new customers has also led to evolution of consumer preferences and tastes. This presents Rocket Internet two big challenges – how to maintain loyal customers and how to cater to the new customers. Rocket Internet has tried to diversify first using different brands and then by adding various features based on customer preferences.

What are Threats in SWOT Analysis

Threats- Rocket Internet: Rise of the German Silicon Valley?
Threats are macro environment factors and developments that can derail business model of Rocket Internet. Threats can emerge from various factors such as – technological innovations, economic growth, political developments & policy changes, increase in consumer disposable income, and changes in consumer preferences .

– International Geo-Political Factors – Since the Trump election, geo-political factors have taken a turn for growing protectionism. Developments such as Brexit, Russian sanctions, foreign exchange crisis & inflation in Venezuela, lower oil prices etc are impacting international business environment. Rocket Internet should closely focus on these events and make them integral to strategy making.

– Culture of sticky prices in the industry – Rocket Internet operates in an industry where there is a culture of sticky prices. According to Bryan Hong, Dave Tang of Rocket Internet: Rise of the German Silicon Valley? case study, this can lead to inability on part of the organization to increase prices that its premium prices deserve.

– Threats of New Entrants because of Reducing Costs and Increasing Efficiencies – As Rocket Internet can leverage low cost of reaching customers using social media and e-commerce, so can the competitors – both local and international competitors.

– Increasing costs component for working in developed market because of environmental regulations – Rocket Internet has to deal with these costs as governments are trying to levy higher environmental taxes to promote cleaner options. For Rocket Internet it may result into higher logistics costs and higher packaging costs.

– US China Trade Relations – Rocket Internet has focused on China for its next phase of growth. But there is growing tension between US China trade relations and it can lead to protectionism, more friction into international trade, rising costs both in terms of labor cost and cost of doing business.

– Government Regulations and Bureaucracy – Rocket Internet should keep a close eye on the fast changing government regulations under the growing pressure from protest groups and non government organization especially regarding to environmental and labor safety aspects.

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PESTEL / STEP / PEST Analysis of Rocket Internet: Rise of the German Silicon Valley?

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SWOT Analysis and Solution of Rocket Internet: Rise of the German Silicon Valley?

References & Further Readings
Bryan Hong, Dave Tang (2018), “Rocket Internet: Rise of the German Silicon Valley? Harvard Business Review Case Study. Published by HBR Publications.