Med-Mart: Transitioning the Business Model (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Med-Mart: Transitioning the Business Model (A)
Peter Kelly became CEO of Med-Mart, a home health supply company, shortly after his search fund acquired it in 1993. Unfortunately, at the time of purchase, Med-Mart's sales growth, inventories, and receivables had been grossly overstated, leading to a precarious financial situation once these errors were discovered after the acquisition was completed. During the summer of 1995, Kelly hired Tim Martin as Med-Mart's vice-president of sales to boost sales and help rescue Med-Mart from financial peril. However, Martin's proposal to increase sales involved refocusing Med-Mart from thousands of products down to just a few high-margin products, eliminating over 80% of current revenues. Kelly was wary of implementing such a drastic plan and knew that success was wholly dependent on the ability of the sales force to increase sales of the few remaining products dramatically. Kelly thought they could reorient the sales force to implement Med-Mart's proposed change in strategy effectively by changing the commission scheme. Kelly's next step was to design this new commission plan, considering the dollar value and timing of commission payments, as well as any thresholds, caps, or ramping of commissions. He wondered how the sales force would react to a compensation revamp and handle selling only one primary product.
Swot Analysis of "Med-Mart: Transitioning the Business Model (A)" written by James Lattin, Mark Leslie, Erin Yurday includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Med Kelly facing as an external strategic factors. Some of the topics covered in Med-Mart: Transitioning the Business Model (A) case study are - Strategic Management Strategies, Compensation, Entrepreneurship, Marketing, Sales, Strategy execution and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Med-Mart: Transitioning the Business Model (A) casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, wage bills are increasing, geopolitical disruptions, supply chains are disrupted by pandemic ,
increasing government debt because of Covid-19 spendings, increasing energy prices, etc
Introduction to SWOT Analysis of Med-Mart: Transitioning the Business Model (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Med-Mart: Transitioning the Business Model (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Med Kelly, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Med Kelly 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 Med-Mart: Transitioning the Business Model (A) can be done for the following purposes –
1. Strategic planning using facts provided in Med-Mart: Transitioning the Business Model (A) case study
2. Improving business portfolio management of Med Kelly
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 Med Kelly
Strengths Med-Mart: Transitioning the Business Model (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Med Kelly in Med-Mart: Transitioning the Business Model (A) Harvard Business Review case study are -
High switching costs
– The high switching costs that Med Kelly 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.
Successful track record of launching new products
– Med Kelly has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Med Kelly 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.
Training and development
– Med Kelly has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Med-Mart: Transitioning the Business Model (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Med Kelly 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 Med-Mart: Transitioning the Business Model (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.
High brand equity
– Med Kelly has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Med Kelly to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Med Kelly is present in almost all the verticals within the industry. This has provided firm in Med-Mart: Transitioning the Business Model (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.
Sustainable margins compare to other players in Sales & Marketing industry
– Med-Mart: Transitioning the Business Model (A) firm has clearly differentiated products in the market place. This has enabled Med Kelly to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Med Kelly to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Med Kelly 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 Med Kelly in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Med Kelly 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 industry. The technology infrastructure suggested by James Lattin, Mark Leslie, Erin Yurday can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Med Kelly 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 Med Kelly is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Med-Mart: Transitioning the Business Model (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Med Kelly 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 Med-Mart: Transitioning the Business Model (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Med Kelly is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Med-Mart: Transitioning the Business Model (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Med-Mart: Transitioning the Business Model (A) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Med-Mart: Transitioning the Business Model (A), is just above the industry average. Med Kelly 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Med Kelly 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Med-Mart: Transitioning the Business Model (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 Med Kelly 's lucrative customers.
Slow to strategic competitive environment developments
– As Med-Mart: Transitioning the Business Model (A) HBR case study mentions - Med Kelly 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.
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 Med Kelly supply chain. Even after few cautionary changes mentioned in the HBR case study - Med-Mart: Transitioning the Business Model (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Med Kelly vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Med Kelly 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 - Med-Mart: Transitioning the Business Model (A) should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Med Kelly has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Med Kelly is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Med Kelly needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Med Kelly to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Med-Mart: Transitioning the Business Model (A), in the dynamic environment Med Kelly has struggled to respond to the nimble upstart competition. Med Kelly has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Med Kelly products
– To increase the profitability and margins on the products, Med Kelly needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Med-Mart: Transitioning the Business Model (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 Med-Mart: Transitioning the Business Model (A) can leverage the sales team experience to cultivate customer relationships as Med Kelly is planning to shift buying processes online.
Opportunities Med-Mart: Transitioning the Business Model (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 Med-Mart: Transitioning the Business Model (A) are -
Buying journey improvements
– Med Kelly can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Med-Mart: Transitioning the Business Model (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.
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. Med Kelly 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 Med Kelly 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.
Developing new processes and practices
– Med Kelly 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.
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. Med Kelly can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Med Kelly 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.
Manufacturing automation
– Med Kelly can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Med Kelly is facing challenges because of the dominance of functional experts in the organization. Med-Mart: Transitioning the Business Model (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.
Creating value in data economy
– The success of analytics program of Med Kelly has opened avenues for new revenue streams for the organization in the industry. This can help Med Kelly to build a more holistic ecosystem as suggested in the Med-Mart: Transitioning the Business Model (A) case study. Med Kelly can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Med Kelly can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Med Kelly to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Med Kelly to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Med Kelly 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 Med-Mart: Transitioning the Business Model (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Med Kelly to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Med Kelly 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. Med Kelly 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 Med-Mart: Transitioning the Business Model (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Med-Mart: Transitioning the Business Model (A) are -
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 Med Kelly in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Med Kelly 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 Med-Mart: Transitioning the Business Model (A) .
Stagnating economy with rate increase
– Med Kelly 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Med Kelly 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.
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.
Increasing wage structure of Med Kelly
– 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 Med Kelly.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Med-Mart: Transitioning the Business Model (A), Med Kelly 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 .
Technology acceleration in Forth Industrial Revolution
– Med Kelly has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Med Kelly needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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. Med Kelly needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Med Kelly 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.
Environmental challenges
– Med Kelly 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. Med Kelly can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Consumer confidence and its impact on Med Kelly 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.
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. Med Kelly 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.
Weighted SWOT Analysis of Med-Mart: Transitioning the Business Model (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 Med-Mart: Transitioning the Business Model (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 Med-Mart: Transitioning the Business Model (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 Med-Mart: Transitioning the Business Model (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 Med-Mart: Transitioning the Business Model (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 Med Kelly needs to make to build a sustainable competitive advantage.
