Markdown Optimization for an Indian Apparel Retailer SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Markdown Optimization for an Indian Apparel Retailer
Siddharth Sinha is the CEO of an apparel retailer WE SELL STYLE (WSS). The retail chain was set up in 2008, housing more than 100 brands. In 2015, they operated over 200 stores in all four regions of the country. They primarily focused on providing good quality fashion at a remarkably low price. Markdown planning has been an important aspect of the apparel business. It is important to understand that the demand for fashion apparel is seasonal - affected by current fashion, variations in the seasons, festivals and hence difficult to estimate. An apparel retailer could go off target - either by overestimating or underestimating the demand, with overestimating being prevalent. The ordering-manufacturing-stocking cycle is easily a 6-month cycle before the selling actually starts; with an expectation to improve sales year on year, the procurement team buys more, making an increase in the variety of colors and styles to offer more to the consumer. However, not all styles sell as expected, leaving higher than expected stocked inventory, which requires an impetus to sell. The impetus in the industry comes in the form of ''end of season sale (EOSS)''. Decision on the percentage of markdown for EOSS is one of the most critical tasks for an apparel retailer. This activity starts months ahead of the EOSS. The product team and the planning team sit together and come up with an EOSS plan at the style level. In the decision process, procurement and planning team use their domain expertise and judge the performance of style using metrics such as rate of sales, full price sell-through, inventory left, and more. The key decision is to quantify the degree of non-performance of styles that did not sell as forecasted and by how much to markdown for the EOSS.
Swot Analysis of "Markdown Optimization for an Indian Apparel Retailer" written by Deepak George, Karthik Kuram, Ramalakshmi Subramanian, Sumad Singh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Eoss Markdown facing as an external strategic factors. Some of the topics covered in Markdown Optimization for an Indian Apparel Retailer case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Markdown Optimization for an Indian Apparel Retailer casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing transportation and logistics costs, supply chains are disrupted by pandemic , geopolitical disruptions, wage bills are increasing,
talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Markdown Optimization for an Indian Apparel Retailer
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Markdown Optimization for an Indian Apparel Retailer case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Eoss Markdown, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Eoss Markdown 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 Markdown Optimization for an Indian Apparel Retailer can be done for the following purposes –
1. Strategic planning using facts provided in Markdown Optimization for an Indian Apparel Retailer case study
2. Improving business portfolio management of Eoss Markdown
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 Eoss Markdown
Strengths Markdown Optimization for an Indian Apparel Retailer | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Eoss Markdown in Markdown Optimization for an Indian Apparel Retailer Harvard Business Review case study are -
High switching costs
– The high switching costs that Eoss Markdown has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Eoss Markdown has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Eoss Markdown 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
– Eoss Markdown is present in almost all the verticals within the industry. This has provided firm in Markdown Optimization for an Indian Apparel Retailer 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Eoss Markdown digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Eoss Markdown 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.
Ability to recruit top talent
– Eoss Markdown is one of the leading recruiters in the industry. Managers in the Markdown Optimization for an Indian Apparel Retailer are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Eoss Markdown is one of the most innovative firm in sector. Manager in Markdown Optimization for an Indian Apparel Retailer Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Eoss Markdown 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 Markdown Optimization for an Indian Apparel Retailer - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Eoss Markdown 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 Eoss Markdown is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Markdown Optimization for an Indian Apparel Retailer Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Sales & Marketing field
– Eoss Markdown 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 Eoss Markdown in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Eoss Markdown 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 Deepak George, Karthik Kuram, Ramalakshmi Subramanian, Sumad Singh 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Markdown Optimization for an Indian Apparel Retailer firm has clearly differentiated products in the market place. This has enabled Eoss Markdown to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Eoss Markdown to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Eoss Markdown 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.
Weaknesses Markdown Optimization for an Indian Apparel Retailer | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Markdown Optimization for an Indian Apparel Retailer are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Markdown Optimization for an Indian Apparel Retailer, in the dynamic environment Eoss Markdown has struggled to respond to the nimble upstart competition. Eoss Markdown has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Eoss Markdown, firm in the HBR case study Markdown Optimization for an Indian Apparel Retailer needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Markdown Optimization for an Indian Apparel Retailer, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Markdown Optimization for an Indian Apparel Retailer, is just above the industry average. Eoss Markdown 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 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 Eoss Markdown supply chain. Even after few cautionary changes mentioned in the HBR case study - Markdown Optimization for an Indian Apparel Retailer, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Eoss Markdown vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Eoss Markdown 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 - Markdown Optimization for an Indian Apparel Retailer should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Eoss Markdown 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 operating costs
– Compare to the competitors, firm in the HBR case study Markdown Optimization for an Indian Apparel Retailer 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 Eoss Markdown 's lucrative customers.
Interest costs
– Compare to the competition, Eoss Markdown 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.
Slow decision making process
– As mentioned earlier in the report, Eoss Markdown 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. Eoss Markdown 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Deepak George, Karthik Kuram, Ramalakshmi Subramanian, Sumad Singh suggests that, Eoss Markdown is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Markdown Optimization for an Indian Apparel Retailer | 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 Markdown Optimization for an Indian Apparel Retailer are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Eoss Markdown is facing challenges because of the dominance of functional experts in the organization. Markdown Optimization for an Indian Apparel Retailer case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Eoss Markdown has opened avenues for new revenue streams for the organization in the industry. This can help Eoss Markdown to build a more holistic ecosystem as suggested in the Markdown Optimization for an Indian Apparel Retailer case study. Eoss Markdown can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Eoss Markdown 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Eoss Markdown 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 Eoss Markdown to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Eoss Markdown 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.
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. Eoss Markdown can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Eoss Markdown can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Markdown Optimization for an Indian Apparel Retailer 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Eoss Markdown 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, Markdown Optimization for an Indian Apparel Retailer, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Eoss Markdown in the consumer business. Now Eoss Markdown can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Eoss Markdown 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Eoss Markdown can use these opportunities to build new business models that can help the communities that Eoss Markdown operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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. Eoss Markdown 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. Eoss Markdown 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.
Developing new processes and practices
– Eoss Markdown 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.
Threats Markdown Optimization for an Indian Apparel Retailer External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Markdown Optimization for an Indian Apparel Retailer are -
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 Eoss Markdown business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Eoss Markdown
– 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 Eoss Markdown.
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 Eoss Markdown in the Sales & Marketing sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Eoss Markdown with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Eoss Markdown 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.
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 Eoss Markdown.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Markdown Optimization for an Indian Apparel Retailer, Eoss Markdown may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Technology acceleration in Forth Industrial Revolution
– Eoss Markdown has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Eoss Markdown 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.
Shortening product life cycle
– it is one of the major threat that Eoss Markdown is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Eoss Markdown 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. Eoss Markdown can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Eoss Markdown 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 Markdown Optimization for an Indian Apparel Retailer 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 Markdown Optimization for an Indian Apparel Retailer 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 Markdown Optimization for an Indian Apparel Retailer 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 Markdown Optimization for an Indian Apparel Retailer 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 Markdown Optimization for an Indian Apparel Retailer 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 Eoss Markdown needs to make to build a sustainable competitive advantage.