Case Study Description of L.L. Bean, Inc.: Corporate Strategy
L.L. Bean, Inc., a Maine-based manufacturer and mail-order retailer of sporting goods and apparel, has grown from $3 million in sales (1967) to over $120 million (1980). Current projections predict an annual compounded growth of 25% through 1985. Management must decide how to achieve this growth: through mail order, by opening more retail stores, by increasing manufacturing operations, or by going international. In managing growth, the company president is determined to maintain the highly personal service, excellent product quality, and friendly, informal working environment which he considers key to the company's popularity with customers and employees.
Swot Analysis of "L.L. Bean, Inc.: Corporate Strategy" written by Hirotaka Takeuchi, Penny Pittman Merliss includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that L.l Bean facing as an external strategic factors. Some of the topics covered in L.L. Bean, Inc.: Corporate Strategy case study are - Strategic Management Strategies, Strategic planning, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the L.L. Bean, Inc.: Corporate Strategy casestudy better are - – increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions,
increasing commodity prices, increasing energy prices, etc
Introduction to SWOT Analysis of L.L. Bean, Inc.: Corporate Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L.L. Bean, Inc.: Corporate Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the L.l Bean, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which L.l Bean 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 L.L. Bean, Inc.: Corporate Strategy can be done for the following purposes –
1. Strategic planning using facts provided in L.L. Bean, Inc.: Corporate Strategy case study
2. Improving business portfolio management of L.l Bean
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 L.l Bean
Strengths L.L. Bean, Inc.: Corporate Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of L.l Bean in L.L. Bean, Inc.: Corporate Strategy Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– L.l Bean 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 L.l Bean in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- L.l Bean 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 L.l Bean is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in L.L. Bean, Inc.: Corporate Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– L.l Bean has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled L.l Bean to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Sales & Marketing industry
– L.L. Bean, Inc.: Corporate Strategy firm has clearly differentiated products in the market place. This has enabled L.l Bean to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped L.l Bean to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– L.l Bean 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 L.L. Bean, Inc.: Corporate Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the L.l Bean 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.
Superior customer experience
– The customer experience strategy of L.l Bean in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– L.l Bean is one of the leading recruiters in the industry. Managers in the L.L. Bean, Inc.: Corporate Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of L.l Bean in the sector have low bargaining power. L.L. Bean, Inc.: Corporate Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps L.l Bean to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of L.l Bean
– The covid-19 pandemic has put organizational resilience at the centre of everthing that L.l Bean does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– L.l Bean 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 Hirotaka Takeuchi, Penny Pittman Merliss 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.
High switching costs
– The high switching costs that L.l Bean 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.
Weaknesses L.L. Bean, Inc.: Corporate Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L.L. Bean, Inc.: Corporate Strategy are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, L.l Bean is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study L.L. Bean, Inc.: Corporate Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, L.l Bean 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. L.l Bean even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study L.L. Bean, Inc.: Corporate Strategy, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of L.l Bean products
– To increase the profitability and margins on the products, L.l Bean needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study L.L. Bean, Inc.: Corporate Strategy 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 L.l Bean 's lucrative customers.
Slow to strategic competitive environment developments
– As L.L. Bean, Inc.: Corporate Strategy HBR case study mentions - L.l Bean 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.
Increasing silos among functional specialists
– The organizational structure of L.l Bean is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. L.l Bean needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help L.l Bean to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, L.l Bean 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study L.L. Bean, Inc.: Corporate Strategy, is just above the industry average. L.l Bean 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.
Skills based hiring
– The stress on hiring functional specialists at L.l Bean 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
– L.l Bean 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.
Opportunities L.L. Bean, Inc.: Corporate Strategy | 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 L.L. Bean, Inc.: Corporate Strategy are -
Loyalty marketing
– L.l Bean 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, L.l Bean 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, L.L. Bean, Inc.: Corporate Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. L.l Bean 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. L.l Bean 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.
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 L.l Bean 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.
Leveraging digital technologies
– L.l Bean 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.
Better consumer reach
– The expansion of the 5G network will help L.l Bean to increase its market reach. L.l Bean 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.
Creating value in data economy
– The success of analytics program of L.l Bean has opened avenues for new revenue streams for the organization in the industry. This can help L.l Bean to build a more holistic ecosystem as suggested in the L.L. Bean, Inc.: Corporate Strategy case study. L.l Bean can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– L.l Bean 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.
Buying journey improvements
– L.l Bean can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L.L. Bean, Inc.: Corporate Strategy 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, L.l Bean can use these opportunities to build new business models that can help the communities that L.l Bean operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects L.l Bean can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, L.l Bean 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for L.l Bean 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 L.l Bean to hire the very best people irrespective of their geographical location.
Threats L.L. Bean, Inc.: Corporate Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L.L. Bean, Inc.: Corporate Strategy are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for L.l Bean 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.
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.
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. L.l Bean 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.
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.
Stagnating economy with rate increase
– L.l Bean 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.
Consumer confidence and its impact on L.l Bean 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.
Increasing wage structure of L.l Bean
– 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 L.l Bean.
Shortening product life cycle
– it is one of the major threat that L.l Bean is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of L.l Bean.
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 L.l Bean business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– L.l Bean 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.
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. L.l Bean can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents L.l Bean with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of L.L. Bean, Inc.: Corporate Strategy 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 L.L. Bean, Inc.: Corporate Strategy 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 L.L. Bean, Inc.: Corporate Strategy 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 L.L. Bean, Inc.: Corporate Strategy 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 L.L. Bean, Inc.: Corporate Strategy 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 L.l Bean needs to make to build a sustainable competitive advantage.
