Webvan: Groceries on the Internet SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Webvan: Groceries on the Internet
This case is available in only hard copy format (HBP does not have digital distribution rights to the content). As a result, a digital Educator Copy of the case is not available through this web site.What are the prospects for grocery shopping on the Web? This case invites a comparison of seven business models, with particular emphasis on Webvan. Why does the investment community value Webvan at $7.8 billion after less than six months of operating experience, and Peapod, which has had seven years to learn the ropes, at $200 million? Explores online consumer-shopping behavior, the economics of online and offline grocery distribution, and the challenges of uniting a pure information business with a mundane package delivery service.
Swot Analysis of "Webvan: Groceries on the Internet" written by John Deighton, Kayla Bakshi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Webvan Grocery facing as an external strategic factors. Some of the topics covered in Webvan: Groceries on the Internet case study are - Strategic Management Strategies, Marketing, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Webvan: Groceries on the Internet casestudy better are - – challanges to central banks by blockchain based private currencies, technology disruption, talent flight as more people leaving formal jobs, increasing commodity prices, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models,
competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, etc
Introduction to SWOT Analysis of Webvan: Groceries on the Internet
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Webvan: Groceries on the Internet case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Webvan Grocery, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Webvan Grocery 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 Webvan: Groceries on the Internet can be done for the following purposes –
1. Strategic planning using facts provided in Webvan: Groceries on the Internet case study
2. Improving business portfolio management of Webvan Grocery
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 Webvan Grocery
Strengths Webvan: Groceries on the Internet | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Webvan Grocery in Webvan: Groceries on the Internet Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– Webvan: Groceries on the Internet firm has clearly differentiated products in the market place. This has enabled Webvan Grocery to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Webvan Grocery to invest into research and development (R&D) and innovation.
Analytics focus
– Webvan Grocery 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 John Deighton, Kayla Bakshi 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.
Low bargaining power of suppliers
– Suppliers of Webvan Grocery in the sector have low bargaining power. Webvan: Groceries on the Internet has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Webvan Grocery to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Webvan Grocery 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 Webvan Grocery is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Webvan: Groceries on the Internet Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Webvan Grocery is one of the most innovative firm in sector. Manager in Webvan: Groceries on the Internet Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Webvan Grocery has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Webvan Grocery to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Webvan Grocery 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 Webvan: Groceries on the Internet HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Webvan: Groceries on the Internet 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)
– Webvan Grocery 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 Webvan: Groceries on the Internet - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Webvan Grocery has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Webvan: Groceries on the Internet 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.
Cross disciplinary teams
– Horizontal connected teams at the Webvan Grocery 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 Webvan Grocery in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Webvan: Groceries on the Internet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Webvan: Groceries on the Internet are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Webvan: Groceries on the Internet, is just above the industry average. Webvan Grocery 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.
Products dominated business model
– Even though Webvan Grocery 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 - Webvan: Groceries on the Internet should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Webvan: Groceries on the Internet that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Webvan: Groceries on the Internet can leverage the sales team experience to cultivate customer relationships as Webvan Grocery is planning to shift buying processes online.
Interest costs
– Compare to the competition, Webvan Grocery 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.
Capital Spending Reduction
– Even during the low interest decade, Webvan Grocery 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.
No frontier risks strategy
– After analyzing the HBR case study Webvan: Groceries on the Internet, 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.
Increasing silos among functional specialists
– The organizational structure of Webvan Grocery is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Webvan Grocery needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Webvan Grocery to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Webvan Grocery needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Webvan Grocery products
– To increase the profitability and margins on the products, Webvan Grocery needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, John Deighton, Kayla Bakshi suggests that, Webvan Grocery 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Webvan Grocery is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Webvan: Groceries on the Internet can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Webvan: Groceries on the Internet | 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 Webvan: Groceries on the Internet are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Webvan Grocery can use these opportunities to build new business models that can help the communities that Webvan Grocery operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Webvan Grocery 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.
Better consumer reach
– The expansion of the 5G network will help Webvan Grocery to increase its market reach. Webvan Grocery 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.
Manufacturing automation
– Webvan Grocery 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Webvan Grocery is facing challenges because of the dominance of functional experts in the organization. Webvan: Groceries on the Internet 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Webvan Grocery 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.
Buying journey improvements
– Webvan Grocery can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Webvan: Groceries on the Internet 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Webvan Grocery can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Webvan Grocery 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. Webvan Grocery 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.
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 Webvan Grocery in the consumer business. Now Webvan Grocery can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Webvan Grocery 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.
Using analytics as competitive advantage
– Webvan Grocery has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Webvan: Groceries on the Internet - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Webvan Grocery to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Webvan Grocery has opened avenues for new revenue streams for the organization in the industry. This can help Webvan Grocery to build a more holistic ecosystem as suggested in the Webvan: Groceries on the Internet case study. Webvan Grocery can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Webvan: Groceries on the Internet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Webvan: Groceries on the Internet are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Webvan Grocery 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 Webvan: Groceries on the Internet .
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 Webvan Grocery in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Webvan Grocery 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.
Environmental challenges
– Webvan Grocery needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Webvan Grocery can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Shortening product life cycle
– it is one of the major threat that Webvan Grocery is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Webvan Grocery 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
– Webvan Grocery 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Webvan Grocery 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 Webvan Grocery business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Webvan Grocery 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.
Technology acceleration in Forth Industrial Revolution
– Webvan Grocery has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Webvan Grocery 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. Webvan Grocery 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.
Increasing wage structure of Webvan Grocery
– 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 Webvan Grocery.
Weighted SWOT Analysis of Webvan: Groceries on the Internet 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 Webvan: Groceries on the Internet 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 Webvan: Groceries on the Internet 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 Webvan: Groceries on the Internet 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 Webvan: Groceries on the Internet 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 Webvan Grocery needs to make to build a sustainable competitive advantage.