Creating a Luxury Experience at Value Retail SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Creating a Luxury Experience at Value Retail
Value Retail PLC owned and managed a number of premium shopping destinations (Villages) across Europe. Soon the company would be moving into an entirely new market: China. The company's Villages had proven popular with both shoppers (many of whom were international tourists who had come to Europe specifically to visit one of Value Retail's Villages) and brands, a number of which were luxury brands that had historically avoided selling product at outlet locations. The company's Founder and Chairman, Scott Malkin, looked to the future challenges his company might face in China, as well as to the challenges his company faced around human resource management and organizational control as the company grew in size and formalized parts of its processes, and how his company would be impacted by the ongoing changes in the retail industry, including the rise of online shopping.
Swot Analysis of "Creating a Luxury Experience at Value Retail" written by Jose B. Alvarez, Matthew Preble includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Villages Retail facing as an external strategic factors. Some of the topics covered in Creating a Luxury Experience at Value Retail case study are - Strategic Management Strategies, Human resource management, Organizational culture, Strategy, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Creating a Luxury Experience at Value Retail casestudy better are - – challanges to central banks by blockchain based private currencies, there is backlash against globalization, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, technology disruption, central banks are concerned over increasing inflation,
geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Creating a Luxury Experience at Value Retail
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Creating a Luxury Experience at Value Retail case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Villages Retail, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Villages Retail 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 Creating a Luxury Experience at Value Retail can be done for the following purposes –
1. Strategic planning using facts provided in Creating a Luxury Experience at Value Retail case study
2. Improving business portfolio management of Villages Retail
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 Villages Retail
Strengths Creating a Luxury Experience at Value Retail | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Villages Retail in Creating a Luxury Experience at Value Retail Harvard Business Review case study are -
Training and development
– Villages Retail has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Creating a Luxury Experience at Value Retail 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.
Analytics focus
– Villages Retail 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 Jose B. Alvarez, Matthew Preble 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.
Strong track record of project management
– Villages Retail is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Villages Retail 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.
Learning organization
- Villages Retail 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 Villages Retail is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Creating a Luxury Experience at Value Retail Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Villages Retail 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 Creating a Luxury Experience at Value Retail HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Creating a Luxury Experience at Value Retail 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Creating a Luxury Experience at Value Retail firm has clearly differentiated products in the market place. This has enabled Villages Retail to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Villages Retail to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Villages Retail 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 Creating a Luxury Experience at Value Retail - 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
– Villages Retail has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Villages Retail to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Villages Retail digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Villages Retail 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.
Innovation driven organization
– Villages Retail is one of the most innovative firm in sector. Manager in Creating a Luxury Experience at Value Retail Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Creating a Luxury Experience at Value Retail | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Creating a Luxury Experience at Value Retail are -
Increasing silos among functional specialists
– The organizational structure of Villages Retail is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Villages Retail needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Villages Retail to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Villages Retail 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. Villages Retail 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.
Skills based hiring
– The stress on hiring functional specialists at Villages Retail 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.
Need for greater diversity
– Villages Retail has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Interest costs
– Compare to the competition, Villages Retail 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.
Aligning sales with marketing
– It come across in the case study Creating a Luxury Experience at Value Retail 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 Creating a Luxury Experience at Value Retail can leverage the sales team experience to cultivate customer relationships as Villages Retail is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Creating a Luxury Experience at Value Retail, is just above the industry average. Villages Retail 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 operating costs
– Compare to the competitors, firm in the HBR case study Creating a Luxury Experience at Value Retail 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 Villages Retail 's lucrative customers.
Products dominated business model
– Even though Villages Retail 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 - Creating a Luxury Experience at Value Retail should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Villages Retail 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.
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 Villages Retail supply chain. Even after few cautionary changes mentioned in the HBR case study - Creating a Luxury Experience at Value Retail, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Villages Retail vulnerable to further global disruptions in South East Asia.
Opportunities Creating a Luxury Experience at Value Retail | 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 Creating a Luxury Experience at Value Retail are -
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. Villages Retail can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Villages Retail 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.
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. Villages Retail 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. Villages Retail 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.
Building a culture of innovation
– managers at Villages Retail 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.
Buying journey improvements
– Villages Retail can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Creating a Luxury Experience at Value Retail 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.
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 Villages Retail 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.
Better consumer reach
– The expansion of the 5G network will help Villages Retail to increase its market reach. Villages Retail 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Villages Retail 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, Creating a Luxury Experience at Value Retail, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Villages Retail 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Villages Retail 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 Villages Retail to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Villages Retail 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.
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 Villages Retail in the consumer business. Now Villages Retail can target international markets with far fewer capital restrictions requirements than the existing system.
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. Villages Retail can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Creating a Luxury Experience at Value Retail External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Creating a Luxury Experience at Value Retail are -
Shortening product life cycle
– it is one of the major threat that Villages Retail is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Creating a Luxury Experience at Value Retail, Villages Retail 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 .
Increasing wage structure of Villages Retail
– 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 Villages Retail.
Environmental challenges
– Villages Retail 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. Villages Retail can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Technology acceleration in Forth Industrial Revolution
– Villages Retail has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Villages Retail 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Villages Retail 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.
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 Villages Retail.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Villages Retail with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Villages Retail 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.
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 Villages Retail in the Sales & Marketing sector and impact the bottomline of the organization.
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.
Regulatory challenges
– Villages Retail needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Villages Retail 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 Creating a Luxury Experience at Value Retail .
Weighted SWOT Analysis of Creating a Luxury Experience at Value Retail 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 Creating a Luxury Experience at Value Retail 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 Creating a Luxury Experience at Value Retail 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 Creating a Luxury Experience at Value Retail 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 Creating a Luxury Experience at Value Retail 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 Villages Retail needs to make to build a sustainable competitive advantage.