Case Study Description of Compagnie Financiere Richemont S.A.
A consumer goods analyst has been asked to understand the governance structure and various risks facing Compagnie Financiere Richemont SA (Richemont), a Swiss-based luxury goods conglomerate. Richemont has emerged as one of the premier luxury brand houses in the world and is controlled by a single person, Johann Rupert. The case describes the development of Richemont and provides information on various aspects of the firm, including its many luxury brand houses, management's preferences and competitor information with which to conduct a comparator analysis.
Swot Analysis of "Compagnie Financiere Richemont S.A." written by Murray Bryant, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Richemont Financiere facing as an external strategic factors. Some of the topics covered in Compagnie Financiere Richemont S.A. case study are - Strategic Management Strategies, Strategy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Compagnie Financiere Richemont S.A. casestudy better are - – geopolitical disruptions, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, etc
Introduction to SWOT Analysis of Compagnie Financiere Richemont S.A.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Compagnie Financiere Richemont S.A. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Richemont Financiere, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Richemont Financiere 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 Compagnie Financiere Richemont S.A. can be done for the following purposes –
1. Strategic planning using facts provided in Compagnie Financiere Richemont S.A. case study
2. Improving business portfolio management of Richemont Financiere
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Richemont Financiere
Strengths Compagnie Financiere Richemont S.A. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Richemont Financiere in Compagnie Financiere Richemont S.A. Harvard Business Review case study are -
Effective Research and Development (R&D)
– Richemont Financiere 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 Compagnie Financiere Richemont S.A. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Richemont Financiere 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.
Superior customer experience
– The customer experience strategy of Richemont Financiere in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Richemont Financiere is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Richemont Financiere in the sector have low bargaining power. Compagnie Financiere Richemont S.A. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Richemont Financiere to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Richemont Financiere is one of the leading recruiters in the industry. Managers in the Compagnie Financiere Richemont S.A. 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 Finance & Accounting field
– Richemont Financiere 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 Richemont Financiere in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Richemont Financiere is present in almost all the verticals within the industry. This has provided firm in Compagnie Financiere Richemont S.A. 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.
Organizational Resilience of Richemont Financiere
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Richemont Financiere does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Richemont Financiere is one of the most innovative firm in sector. Manager in Compagnie Financiere Richemont S.A. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Richemont Financiere 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 Compagnie Financiere Richemont S.A. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Richemont Financiere digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Richemont Financiere 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.
Weaknesses Compagnie Financiere Richemont S.A. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Compagnie Financiere Richemont S.A. are -
Aligning sales with marketing
– It come across in the case study Compagnie Financiere Richemont S.A. 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 Compagnie Financiere Richemont S.A. can leverage the sales team experience to cultivate customer relationships as Richemont Financiere 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, Richemont Financiere is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Compagnie Financiere Richemont S.A. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Compagnie Financiere Richemont S.A., in the dynamic environment Richemont Financiere has struggled to respond to the nimble upstart competition. Richemont Financiere has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Compagnie Financiere Richemont S.A. 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 Richemont Financiere has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Richemont Financiere 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. Richemont Financiere 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Compagnie Financiere Richemont S.A. has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Richemont Financiere 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Richemont Financiere 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.
Products dominated business model
– Even though Richemont Financiere has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Compagnie Financiere Richemont S.A. should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Richemont Financiere 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Compagnie Financiere Richemont S.A., is just above the industry average. Richemont Financiere 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.
Slow to strategic competitive environment developments
– As Compagnie Financiere Richemont S.A. HBR case study mentions - Richemont Financiere 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.
Opportunities Compagnie Financiere Richemont S.A. | 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 Compagnie Financiere Richemont S.A. are -
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 Richemont Financiere 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Richemont Financiere in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Richemont Financiere is facing challenges because of the dominance of functional experts in the organization. Compagnie Financiere Richemont S.A. 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Richemont Financiere in the consumer business. Now Richemont Financiere can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Richemont Financiere can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Compagnie Financiere Richemont S.A. 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.
Creating value in data economy
– The success of analytics program of Richemont Financiere has opened avenues for new revenue streams for the organization in the industry. This can help Richemont Financiere to build a more holistic ecosystem as suggested in the Compagnie Financiere Richemont S.A. case study. Richemont Financiere can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Richemont Financiere can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Richemont Financiere can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Richemont Financiere 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Richemont Financiere 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, Richemont Financiere can use these opportunities to build new business models that can help the communities that Richemont Financiere operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Richemont Financiere 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. Richemont Financiere 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.
Leveraging digital technologies
– Richemont Financiere 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.
Threats Compagnie Financiere Richemont S.A. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Compagnie Financiere Richemont S.A. are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Richemont Financiere with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Richemont Financiere 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. Richemont Financiere can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Richemont Financiere business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Richemont Financiere is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Richemont Financiere 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.
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. Richemont Financiere 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Richemont Financiere 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 Compagnie Financiere Richemont S.A. .
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. Richemont Financiere needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Consumer confidence and its impact on Richemont Financiere 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.
Stagnating economy with rate increase
– Richemont Financiere 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 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.
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 Richemont Financiere in the Finance & Accounting sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Compagnie Financiere Richemont S.A., Richemont Financiere may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Weighted SWOT Analysis of Compagnie Financiere Richemont S.A. 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 Compagnie Financiere Richemont S.A. 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 Compagnie Financiere Richemont S.A. 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 Compagnie Financiere Richemont S.A. 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 Compagnie Financiere Richemont S.A. 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 Richemont Financiere needs to make to build a sustainable competitive advantage.
