Harvard Case - Swisscom's Entry into the On-Demand Home Service Economy: Partner or Acquire? Rent-a-Geek from Mila (A) - Swisscom's Partnership with an On-Demand Home Service Marketplace Start-Up
"Swisscom's Entry into the On-Demand Home Service Economy: Partner or Acquire? Rent-a-Geek from Mila (A) - Swisscom's Partnership with an On-Demand Home Service Marketplace Start-Up" Harvard business case study is written by Laura Londono Giraldo, Marie-Ann Betschinger, Russell Fralich. It deals with the challenges in the field of Strategy. The case study is 10 page(s) long and it was first published on : Sep 25, 2019
At Fern Fort University, we recommend that Swisscom continue its strategic partnership with Mila, leveraging its existing expertise in technology and analytics, and digital transformation. Swisscom should focus on building a robust ecosystem around Mila, fostering innovation and growth in the on-demand home service market. This approach will allow Swisscom to capitalize on the disruptive potential of the on-demand economy while minimizing the risks associated with a full acquisition.
2. Background
This case study examines Swisscom's strategic decision regarding its entry into the on-demand home service economy. Swisscom, a leading telecommunications company in Switzerland, is presented with the opportunity to partner with Mila, a start-up offering an on-demand marketplace for home services. The case explores the potential benefits and risks associated with both a partnership and an acquisition, highlighting the strategic considerations for Swisscom.
The main protagonists in this case are:
- Swisscom: A telecommunications giant seeking to expand its services and capitalize on new market opportunities.
- Mila: A start-up company operating in the on-demand home service market, offering a platform connecting customers with skilled professionals.
3. Analysis of the Case Study
To analyze Swisscom's strategic options, we can utilize several frameworks:
1. Porter's Five Forces:
- Threat of New Entrants: The on-demand home service market is relatively easy to enter, with low barriers to entry. This presents a significant threat to Mila and Swisscom's potential market share.
- Bargaining Power of Buyers: Customers have a high degree of bargaining power, as they can easily switch between platforms.
- Bargaining Power of Suppliers: The bargaining power of suppliers (skilled professionals) is moderate, as they can choose to work with multiple platforms.
- Threat of Substitutes: The threat of substitutes is high, as customers can choose to perform services themselves or engage with traditional service providers.
- Competitive Rivalry: The market is characterized by intense competition, with several established players and emerging start-ups.
2. SWOT Analysis:
Swisscom:
- Strengths: Strong brand recognition, established infrastructure, extensive customer base, technological expertise.
- Weaknesses: Limited experience in the on-demand home service market, potential for cultural clashes with a start-up.
- Opportunities: Expanding into a new and growing market, leveraging its technology and data capabilities.
- Threats: Competition from established players, potential for regulatory changes, risk of losing control over the partnership.
Mila:
- Strengths: Innovative business model, strong user base, agile and responsive to market needs.
- Weaknesses: Limited financial resources, lack of brand recognition, potential for scaling challenges.
- Opportunities: Expanding its market reach through a strategic partnership, accessing Swisscom's resources and expertise.
- Threats: Competition from larger players, potential for losing control to Swisscom, risk of being acquired by a competitor.
3. Value Chain Analysis:
Swisscom's partnership with Mila offers potential for value creation across the entire value chain:
- Inbound Logistics: Access to a wider pool of skilled professionals through Mila's platform.
- Operations: Improved efficiency and customer service through technology and data analytics.
- Outbound Logistics: Enhanced customer reach through Swisscom's existing infrastructure.
- Marketing & Sales: Joint marketing efforts to attract new customers and promote the platform.
- Service: Improved customer experience through a seamless integration of services.
4. Business Model Innovation:
The partnership represents a business model innovation for Swisscom, allowing it to enter a new market segment and leverage its existing assets in a different context. This approach allows Swisscom to experiment with new revenue streams and explore the potential of the on-demand economy without committing to a full acquisition.
5. Strategic Alliances:
The partnership with Mila is a strategic alliance that allows Swisscom to access new markets and technologies while minimizing the risks associated with a full acquisition. This approach allows both companies to leverage each other's strengths and share resources, ultimately creating a win-win situation.
4. Recommendations
Swisscom should continue its strategic partnership with Mila and focus on building a robust ecosystem around the platform. This approach involves:
- Investing in Mila's growth: Supporting Mila's expansion through financial resources and technical expertise.
- Integrating Mila's platform with Swisscom's services: Offering seamless access to on-demand home services through Swisscom's existing channels.
- Developing joint marketing campaigns: Promoting the partnership and attracting new customers to the platform.
- Leveraging Swisscom's data and analytics capabilities: Utilizing data to improve customer experience, optimize service offerings, and identify new market opportunities.
- Establishing a clear governance structure: Defining roles and responsibilities, ensuring alignment between both companies' goals.
5. Basis of Recommendations
This recommendation considers:
- Core competencies and consistency with mission: The partnership aligns with Swisscom's core competencies in technology and digital transformation, allowing it to leverage its existing strengths in a new market.
- External customers and internal clients: The partnership offers value to both external customers seeking convenient access to home services and internal clients within Swisscom seeking new revenue streams and growth opportunities.
- Competitors: The partnership helps Swisscom compete effectively in the rapidly evolving on-demand home service market, allowing it to stay ahead of the curve by leveraging Mila's agility and innovation.
- Attractiveness ' quantitative measures: While the case study does not provide specific financial data, the potential for growth in the on-demand home service market and the synergy between Swisscom and Mila's capabilities suggest a strong financial return on investment.
6. Conclusion
Swisscom's partnership with Mila presents a strategic opportunity to enter the on-demand home service economy while mitigating the risks associated with a full acquisition. By leveraging its existing strengths and fostering innovation, Swisscom can capitalize on the growth potential of this market and solidify its position as a leading provider of digital services.
7. Discussion
Alternative options include:
- Full acquisition of Mila: This would give Swisscom complete control over the platform but would also involve significant financial investment and potential integration challenges.
- Maintaining a purely strategic partnership: This would limit Swisscom's involvement and potential for value creation but would also minimize the risks associated with a full acquisition.
The chosen recommendation balances the potential for value creation with the risks associated with different strategic options. It acknowledges the need for a strong partnership structure to ensure alignment between both companies' goals and to leverage each other's strengths effectively.
8. Next Steps
Swisscom should implement the following steps to ensure the success of the partnership:
- Develop a detailed partnership agreement: Defining roles, responsibilities, and performance metrics.
- Establish a joint steering committee: Overseeing the partnership and addressing any challenges.
- Invest in the integration of Mila's platform with Swisscom's services: Ensuring a seamless customer experience.
- Develop a joint marketing strategy: Promoting the partnership and attracting new customers.
- Monitor the partnership's performance: Regularly evaluating progress and making adjustments as needed.
By taking these steps, Swisscom can ensure a successful partnership with Mila and capitalize on the growth potential of the on-demand home service economy.
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Case Description
Christian (Chris) Viatte, head of service experience and innovation at Swisscom, market leader in Switzerland's telecommunications industry, strode into his office and dropped into his chair. Some of Swisscom's top executives would soon be holding a meeting to discuss the company's partnership with Mila, an on-demand home service marketplace start-up. Under Chris's leadership, Swisscom and Mila had created Swisscom Friends, a service solution connecting Swisscom customers with vetted, tech-savvy people in their neighbourhood who could help them with small service requests. By 2015, Mila and Swisscom had built up a service crowd of more than 1,500 active "Friends" throughout Switzerland, and Swisscom now had to consider the future of what was still a purely contractual relationship. Should Swisscom partially or even fully acquire Mila? Should it withdraw from the partnership and offer the service on its own? Should it become more involved in Mila's management? This two-part case discusses the development and management of the partnership between Swisscom and Mila, particularly how Mila grew from being a contractual partner to a fully owned subsidiary of Swisscom.
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