MercadoLibre.com, eBay's Latin-American partner, needed to decide how far it was going to follow eBay's practice of offering "free listing days" and discounted special-feature days. Was this type of promotion prudent, given MercadoLibre.com's customer base, revenue expectations, and position in the Latin American market?
Authors :: F. Asis Martinez-Jerez, Joshua Bellin, James Dillon
Swot Analysis of "MercadoLibre.com" written by F. Asis Martinez-Jerez, Joshua Bellin, James Dillon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mercadolibre.com Ebay's facing as an external strategic factors. Some of the topics covered in MercadoLibre.com case study are - Strategic Management Strategies, Customers, Internet, Performance measurement and Sales & Marketing.
Some of the macro environment factors that can be used to understand the MercadoLibre.com casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, increasing energy prices,
there is increasing trade war between United States & China, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in MercadoLibre.com case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mercadolibre.com Ebay's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mercadolibre.com Ebay's 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 MercadoLibre.com can be done for the following purposes –
1. Strategic planning using facts provided in MercadoLibre.com case study
2. Improving business portfolio management of Mercadolibre.com Ebay's
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 Mercadolibre.com Ebay's
Strengths MercadoLibre.com | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mercadolibre.com Ebay's in MercadoLibre.com Harvard Business Review case study are -
High brand equity
– Mercadolibre.com Ebay's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mercadolibre.com Ebay's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Mercadolibre.com Ebay's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mercadolibre.com Ebay's 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.
Diverse revenue streams
– Mercadolibre.com Ebay's is present in almost all the verticals within the industry. This has provided firm in MercadoLibre.com 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.
Highly skilled collaborators
– Mercadolibre.com Ebay's 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 MercadoLibre.com HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Mercadolibre.com Ebay's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Mercadolibre.com Ebay's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Mercadolibre.com Ebay's 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.
Innovation driven organization
– Mercadolibre.com Ebay's is one of the most innovative firm in sector. Manager in MercadoLibre.com Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Sales & Marketing industry
– MercadoLibre.com firm has clearly differentiated products in the market place. This has enabled Mercadolibre.com Ebay's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Mercadolibre.com Ebay's to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Mercadolibre.com Ebay's 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 MercadoLibre.com - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Sales & Marketing field
– Mercadolibre.com Ebay's 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 Mercadolibre.com Ebay's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Mercadolibre.com Ebay's is one of the leading recruiters in the industry. Managers in the MercadoLibre.com are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Mercadolibre.com Ebay's 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 MercadoLibre.com | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MercadoLibre.com are -
Lack of clear differentiation of Mercadolibre.com Ebay's products
– To increase the profitability and margins on the products, Mercadolibre.com Ebay's needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mercadolibre.com Ebay's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study MercadoLibre.com can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study MercadoLibre.com, it seems that the employees of Mercadolibre.com Ebay's 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.
Low market penetration in new markets
– Outside its home market of Mercadolibre.com Ebay's, firm in the HBR case study MercadoLibre.com needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study MercadoLibre.com, in the dynamic environment Mercadolibre.com Ebay's has struggled to respond to the nimble upstart competition. Mercadolibre.com Ebay's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Mercadolibre.com Ebay's 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.
High cash cycle compare to competitors
Mercadolibre.com Ebay's 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.
Slow to strategic competitive environment developments
– As MercadoLibre.com HBR case study mentions - Mercadolibre.com Ebay's 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.
Slow decision making process
– As mentioned earlier in the report, Mercadolibre.com Ebay's 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. Mercadolibre.com Ebay's 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.
Interest costs
– Compare to the competition, Mercadolibre.com Ebay's 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.
High operating costs
– Compare to the competitors, firm in the HBR case study MercadoLibre.com 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 Mercadolibre.com Ebay's 's lucrative customers.
Opportunities MercadoLibre.com | 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 MercadoLibre.com are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Mercadolibre.com Ebay's 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. Mercadolibre.com Ebay's 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. Mercadolibre.com Ebay's 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.
Creating value in data economy
– The success of analytics program of Mercadolibre.com Ebay's has opened avenues for new revenue streams for the organization in the industry. This can help Mercadolibre.com Ebay's to build a more holistic ecosystem as suggested in the MercadoLibre.com case study. Mercadolibre.com Ebay's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mercadolibre.com Ebay's can use these opportunities to build new business models that can help the communities that Mercadolibre.com Ebay's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Mercadolibre.com Ebay's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mercadolibre.com Ebay's 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 Mercadolibre.com Ebay's 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 Mercadolibre.com Ebay's to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Mercadolibre.com Ebay's to increase its market reach. Mercadolibre.com Ebay's 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, Mercadolibre.com Ebay's 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, MercadoLibre.com, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Mercadolibre.com Ebay's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Mercadolibre.com Ebay's 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 Mercadolibre.com Ebay's in the consumer business. Now Mercadolibre.com Ebay's can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Mercadolibre.com Ebay's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats MercadoLibre.com External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study MercadoLibre.com are -
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
– Mercadolibre.com Ebay's 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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Mercadolibre.com Ebay's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mercadolibre.com Ebay's 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.
Increasing wage structure of Mercadolibre.com Ebay's
– 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 Mercadolibre.com Ebay's.
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 Mercadolibre.com Ebay's.
Consumer confidence and its impact on Mercadolibre.com Ebay's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study MercadoLibre.com, Mercadolibre.com Ebay's 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mercadolibre.com Ebay's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Technology acceleration in Forth Industrial Revolution
– Mercadolibre.com Ebay's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Mercadolibre.com Ebay's 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.
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. Mercadolibre.com Ebay's 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.
Stagnating economy with rate increase
– Mercadolibre.com Ebay's 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 MercadoLibre.com 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 MercadoLibre.com 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 MercadoLibre.com 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 MercadoLibre.com 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 MercadoLibre.com 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 Mercadolibre.com Ebay's needs to make to build a sustainable competitive advantage.