StepSmart Fitness, a manufacturer of exercise equipment, is undergoing a sweeping reorganization. The new CEO has terminated the District Sales Director and Regional VP and promoted 30-year-old Benjamin Cooper to manage the underperforming New England district. A first-time manager with no one to train him or explain the causes of the district's underperformance, Cooper has 10 weeks to diagnose the problems and make recommendations that will ensure a turnaround in the territory in less than 16 months. Left to his own devices, Cooper must review the sales data, the incomplete notes left by his predecessor, and his own thoughts after spending a day in the field with each sales person. Then he must make decisions about termination or probation for current employees, the hiring of additional salespeople, ways to increase productivity, and potential new methods of evaluating salesperson performance. He is set to present his conclusions to his also-newly-appointed manager, the Regional VP for the Northeast, in a few days.
Authors :: Robert J. Dolan, Benson P. Shapiro, Alisa Zalosh
Swot Analysis of "StepSmart Fitness" written by Robert J. Dolan, Benson P. Shapiro, Alisa Zalosh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cooper Stepsmart facing as an external strategic factors. Some of the topics covered in StepSmart Fitness case study are - Strategic Management Strategies, Developing employees, Marketing, Reorganization, Sales, Succession planning and Sales & Marketing.
Some of the macro environment factors that can be used to understand the StepSmart Fitness casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of StepSmart Fitness
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in StepSmart Fitness case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cooper Stepsmart, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cooper Stepsmart 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 StepSmart Fitness can be done for the following purposes –
1. Strategic planning using facts provided in StepSmart Fitness case study
2. Improving business portfolio management of Cooper Stepsmart
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cooper Stepsmart
Strengths StepSmart Fitness | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cooper Stepsmart in StepSmart Fitness Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– StepSmart Fitness firm has clearly differentiated products in the market place. This has enabled Cooper Stepsmart to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Cooper Stepsmart to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Cooper Stepsmart in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Cooper Stepsmart has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cooper Stepsmart 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.
Innovation driven organization
– Cooper Stepsmart is one of the most innovative firm in sector. Manager in StepSmart Fitness Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Cooper Stepsmart is present in almost all the verticals within the industry. This has provided firm in StepSmart Fitness 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.
Ability to lead change in Sales & Marketing field
– Cooper Stepsmart 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 Cooper Stepsmart in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Cooper Stepsmart 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Cooper Stepsmart digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cooper Stepsmart 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.
Strong track record of project management
– Cooper Stepsmart is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Cooper Stepsmart 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 StepSmart Fitness - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the StepSmart Fitness Harvard Business Review case study comprises – understanding the underlying the factors in the 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.
High brand equity
– Cooper Stepsmart has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cooper Stepsmart to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses StepSmart Fitness | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of StepSmart Fitness are -
Increasing silos among functional specialists
– The organizational structure of Cooper Stepsmart is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Cooper Stepsmart needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cooper Stepsmart to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Cooper Stepsmart 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. Cooper Stepsmart 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.
No frontier risks strategy
– After analyzing the HBR case study StepSmart Fitness, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study StepSmart Fitness, in the dynamic environment Cooper Stepsmart has struggled to respond to the nimble upstart competition. Cooper Stepsmart has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study StepSmart Fitness, is just above the industry average. Cooper Stepsmart 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 cash cycle compare to competitors
Cooper Stepsmart has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 Cooper Stepsmart supply chain. Even after few cautionary changes mentioned in the HBR case study - StepSmart Fitness, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cooper Stepsmart vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Cooper Stepsmart 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 - StepSmart Fitness should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cooper Stepsmart is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study StepSmart Fitness can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Cooper Stepsmart 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.
Lack of clear differentiation of Cooper Stepsmart products
– To increase the profitability and margins on the products, Cooper Stepsmart needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities StepSmart Fitness | 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 StepSmart Fitness are -
Leveraging digital technologies
– Cooper Stepsmart 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cooper Stepsmart 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, StepSmart Fitness, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Cooper Stepsmart can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Cooper Stepsmart 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.
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 Cooper Stepsmart in the consumer business. Now Cooper Stepsmart can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cooper Stepsmart can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Cooper Stepsmart 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 Sales & Marketing segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cooper Stepsmart in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, 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. Cooper Stepsmart can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Cooper Stepsmart 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.
Developing new processes and practices
– Cooper Stepsmart can develop new processes and procedures in Sales & Marketing 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.
Better consumer reach
– The expansion of the 5G network will help Cooper Stepsmart to increase its market reach. Cooper Stepsmart 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.
Using analytics as competitive advantage
– Cooper Stepsmart 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 StepSmart Fitness - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cooper Stepsmart to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats StepSmart Fitness External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study StepSmart Fitness are -
High dependence on third party suppliers
– Cooper Stepsmart 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cooper Stepsmart in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cooper Stepsmart with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study StepSmart Fitness, Cooper Stepsmart may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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 Cooper Stepsmart in the Sales & Marketing sector and impact the bottomline 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.
Increasing wage structure of Cooper Stepsmart
– 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 Cooper Stepsmart.
Shortening product life cycle
– it is one of the major threat that Cooper Stepsmart is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Cooper Stepsmart.
Stagnating economy with rate increase
– Cooper Stepsmart 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.
Environmental challenges
– Cooper Stepsmart 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. Cooper Stepsmart can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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. Cooper Stepsmart needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cooper Stepsmart 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 StepSmart Fitness .
Weighted SWOT Analysis of StepSmart Fitness 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 StepSmart Fitness 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 StepSmart Fitness 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 StepSmart Fitness 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 StepSmart Fitness 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 Cooper Stepsmart needs to make to build a sustainable competitive advantage.