Sephora Direct: Investing in Social Media, Video, and Mobile SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Sephora Direct: Investing in Social Media, Video, and Mobile
Julie Bornstein, senior vice president of Sephora Direct, is seeking to double her budget for social media and other digital marketing initiatives for 2011. A number of digital efforts implemented in the past two years seem to be bearing fruit, and there is a desire to intensify Sephora's social media, online video, and mobile presence. Bornstein must justify the need for the additional funding, determine how best to allocate the money across the various platforms, and establish effective ways to measure return on investment (ROI) for digital marketing spending . She must also take into account that the funding requested will likely come at the expense of Sephora's traditional marketing programs. Importantly, Bornstein needs to begin thinking about a cohesive long-term strategy that clearly identifies the role digital platforms play and how they help Sephora maintain its leadership position in the prestige beauty care space. The constant emergence of new players, such as Groupon and Shop Socially, the growing power of social media platforms such as Facebook, and the way consumer behavior and user generated content are rapidly evolving in a digital era, make her task all the more challenging.
Swot Analysis of "Sephora Direct: Investing in Social Media, Video, and Mobile" written by Elie Ofek, Alison Berkley Wagonfeld includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bornstein Sephora facing as an external strategic factors. Some of the topics covered in Sephora Direct: Investing in Social Media, Video, and Mobile case study are - Strategic Management Strategies, Communication, Government, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Sephora Direct: Investing in Social Media, Video, and Mobile casestudy better are - – there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, geopolitical disruptions, increasing energy prices, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, wage bills are increasing,
supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Sephora Direct: Investing in Social Media, Video, and Mobile
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sephora Direct: Investing in Social Media, Video, and Mobile case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bornstein Sephora, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bornstein Sephora 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 Sephora Direct: Investing in Social Media, Video, and Mobile can be done for the following purposes –
1. Strategic planning using facts provided in Sephora Direct: Investing in Social Media, Video, and Mobile case study
2. Improving business portfolio management of Bornstein Sephora
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 Bornstein Sephora
Strengths Sephora Direct: Investing in Social Media, Video, and Mobile | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bornstein Sephora in Sephora Direct: Investing in Social Media, Video, and Mobile Harvard Business Review case study are -
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Bornstein Sephora digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bornstein Sephora 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.
Training and development
– Bornstein Sephora has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sephora Direct: Investing in Social Media, Video, and Mobile 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
– Bornstein Sephora 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 Elie Ofek, Alison Berkley Wagonfeld 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.
Highly skilled collaborators
– Bornstein Sephora 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 Sephora Direct: Investing in Social Media, Video, and Mobile HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Bornstein Sephora 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Sephora Direct: Investing in Social Media, Video, and Mobile firm has clearly differentiated products in the market place. This has enabled Bornstein Sephora to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Bornstein Sephora to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Bornstein Sephora 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.
Ability to lead change in Sales & Marketing field
– Bornstein Sephora 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 Bornstein Sephora in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Bornstein Sephora is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Sephora Direct: Investing in Social Media, Video, and Mobile 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.
Effective Research and Development (R&D)
– Bornstein Sephora 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 Sephora Direct: Investing in Social Media, Video, and Mobile - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Bornstein Sephora in the sector have low bargaining power. Sephora Direct: Investing in Social Media, Video, and Mobile has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bornstein Sephora to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Sephora Direct: Investing in Social Media, Video, and Mobile | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sephora Direct: Investing in Social Media, Video, and Mobile are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sephora Direct: Investing in Social Media, Video, and Mobile, is just above the industry average. Bornstein Sephora 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sephora Direct: Investing in Social Media, Video, and Mobile, it seems that the employees of Bornstein Sephora don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Bornstein Sephora 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.
Capital Spending Reduction
– Even during the low interest decade, Bornstein Sephora 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 operating costs
– Compare to the competitors, firm in the HBR case study Sephora Direct: Investing in Social Media, Video, and Mobile 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 Bornstein Sephora 's lucrative customers.
Products dominated business model
– Even though Bornstein Sephora 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 - Sephora Direct: Investing in Social Media, Video, and Mobile should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Bornstein Sephora 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.
Skills based hiring
– The stress on hiring functional specialists at Bornstein Sephora 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sephora Direct: Investing in Social Media, Video, and Mobile 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 Bornstein Sephora has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bornstein Sephora is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sephora Direct: Investing in Social Media, Video, and Mobile can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Bornstein Sephora is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Bornstein Sephora needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bornstein Sephora to focus more on services rather than just following the product oriented approach.
Opportunities Sephora Direct: Investing in Social Media, Video, and Mobile | 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 Sephora Direct: Investing in Social Media, Video, and Mobile are -
Developing new processes and practices
– Bornstein Sephora 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.
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 Bornstein Sephora 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.
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. Bornstein Sephora can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bornstein Sephora 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bornstein Sephora can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Bornstein Sephora can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Bornstein Sephora in the consumer business. Now Bornstein Sephora can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bornstein Sephora can use these opportunities to build new business models that can help the communities that Bornstein Sephora operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Learning at scale
– Online learning technologies has now opened space for Bornstein Sephora 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.
Building a culture of innovation
– managers at Bornstein Sephora 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.
Loyalty marketing
– Bornstein Sephora 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.
Creating value in data economy
– The success of analytics program of Bornstein Sephora has opened avenues for new revenue streams for the organization in the industry. This can help Bornstein Sephora to build a more holistic ecosystem as suggested in the Sephora Direct: Investing in Social Media, Video, and Mobile case study. Bornstein Sephora can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Bornstein Sephora 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. Bornstein Sephora 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 Sephora Direct: Investing in Social Media, Video, and Mobile External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sephora Direct: Investing in Social Media, Video, and Mobile are -
Increasing wage structure of Bornstein Sephora
– 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 Bornstein Sephora.
High dependence on third party suppliers
– Bornstein Sephora 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sephora Direct: Investing in Social Media, Video, and Mobile, Bornstein Sephora 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 .
Shortening product life cycle
– it is one of the major threat that Bornstein Sephora is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Bornstein Sephora 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.
Consumer confidence and its impact on Bornstein Sephora 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.
Regulatory challenges
– Bornstein Sephora 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, Bornstein Sephora 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 Sephora Direct: Investing in Social Media, Video, and Mobile .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bornstein Sephora with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Bornstein Sephora business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bornstein Sephora 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.
Stagnating economy with rate increase
– Bornstein Sephora 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.
Weighted SWOT Analysis of Sephora Direct: Investing in Social Media, Video, and Mobile 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 Sephora Direct: Investing in Social Media, Video, and Mobile 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 Sephora Direct: Investing in Social Media, Video, and Mobile 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 Sephora Direct: Investing in Social Media, Video, and Mobile 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 Sephora Direct: Investing in Social Media, Video, and Mobile 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 Bornstein Sephora needs to make to build a sustainable competitive advantage.
