Case Study Description of Victory Supermarkets: Expansion Strategy?
Jay DiGeronimo, president of a 16-store supermarket chain, is trying to decide the timing and method for expanding his chain. The family-owned company could continue in a maintenance mode, with each family member running one store. It could expand slowly using a new Market Square concept. Or it could try to double its size in the next ten years. What are the costs and benefits of each approach? Should the company continue opening Market Squares, even though that format has higher opening and operating expenses than more conventional operations?
Swot Analysis of "Victory Supermarkets: Expansion Strategy?" written by David E. Bell, Ann Leamon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Digeronimo Store facing as an external strategic factors. Some of the topics covered in Victory Supermarkets: Expansion Strategy? case study are - Strategic Management Strategies, Decision making, Financial management, Growth strategy, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Victory Supermarkets: Expansion Strategy? casestudy better are - – increasing household debt because of falling income levels, central banks are concerned over increasing inflation, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, technology disruption, there is increasing trade war between United States & China, increasing commodity prices,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Victory Supermarkets: Expansion Strategy?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Victory Supermarkets: Expansion Strategy? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Digeronimo Store, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Digeronimo Store 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 Victory Supermarkets: Expansion Strategy? can be done for the following purposes –
1. Strategic planning using facts provided in Victory Supermarkets: Expansion Strategy? case study
2. Improving business portfolio management of Digeronimo Store
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 Digeronimo Store
Strengths Victory Supermarkets: Expansion Strategy? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Digeronimo Store in Victory Supermarkets: Expansion Strategy? Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– Digeronimo Store 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 Digeronimo Store in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Digeronimo Store digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Digeronimo Store 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.
High brand equity
– Digeronimo Store has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Digeronimo Store 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
– Victory Supermarkets: Expansion Strategy? firm has clearly differentiated products in the market place. This has enabled Digeronimo Store to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Digeronimo Store to invest into research and development (R&D) and innovation.
Training and development
– Digeronimo Store has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Victory Supermarkets: Expansion Strategy? 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.
Highly skilled collaborators
– Digeronimo Store 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 Victory Supermarkets: Expansion Strategy? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Digeronimo Store is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Digeronimo Store in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Digeronimo Store has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Digeronimo Store 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
– Digeronimo Store is present in almost all the verticals within the industry. This has provided firm in Victory Supermarkets: Expansion Strategy? 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.
Cross disciplinary teams
– Horizontal connected teams at the Digeronimo Store 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
– Digeronimo Store is one of the most innovative firm in sector. Manager in Victory Supermarkets: Expansion Strategy? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Victory Supermarkets: Expansion Strategy? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Victory Supermarkets: Expansion Strategy? are -
Products dominated business model
– Even though Digeronimo Store 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 - Victory Supermarkets: Expansion Strategy? should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Digeronimo Store 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.
Low market penetration in new markets
– Outside its home market of Digeronimo Store, firm in the HBR case study Victory Supermarkets: Expansion Strategy? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Digeronimo Store 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.
Interest costs
– Compare to the competition, Digeronimo Store 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 bargaining power of channel partners
– Because of the regulatory requirements, David E. Bell, Ann Leamon suggests that, Digeronimo Store 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.
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 Digeronimo Store supply chain. Even after few cautionary changes mentioned in the HBR case study - Victory Supermarkets: Expansion Strategy?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Digeronimo Store vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Victory Supermarkets: Expansion Strategy? 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 Victory Supermarkets: Expansion Strategy? can leverage the sales team experience to cultivate customer relationships as Digeronimo Store is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Victory Supermarkets: Expansion Strategy? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Digeronimo Store has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Digeronimo Store is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Victory Supermarkets: Expansion 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.
Need for greater diversity
– Digeronimo Store 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 Victory Supermarkets: Expansion 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 Victory Supermarkets: Expansion Strategy? are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Digeronimo Store 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.
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 Digeronimo Store in the consumer business. Now Digeronimo Store can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Digeronimo Store is facing challenges because of the dominance of functional experts in the organization. Victory Supermarkets: Expansion Strategy? 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.
Learning at scale
– Online learning technologies has now opened space for Digeronimo Store 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.
Manufacturing automation
– Digeronimo Store 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.
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. Digeronimo Store 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. Digeronimo Store 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.
Buying journey improvements
– Digeronimo Store can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Victory Supermarkets: Expansion 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Digeronimo Store 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.
Better consumer reach
– The expansion of the 5G network will help Digeronimo Store to increase its market reach. Digeronimo Store 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.
Using analytics as competitive advantage
– Digeronimo Store 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 Victory Supermarkets: Expansion Strategy? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Digeronimo Store to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Digeronimo Store can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Digeronimo Store can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Digeronimo Store 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, Victory Supermarkets: Expansion 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.
Threats Victory Supermarkets: Expansion Strategy? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Victory Supermarkets: Expansion Strategy? are -
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. Digeronimo Store 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 Digeronimo Store with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Digeronimo Store 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.
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 Digeronimo Store.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Victory Supermarkets: Expansion Strategy?, Digeronimo Store 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 .
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 Digeronimo Store in the Sales & Marketing sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Digeronimo Store is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Digeronimo Store 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 Victory Supermarkets: Expansion Strategy? .
High dependence on third party suppliers
– Digeronimo Store 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.
Increasing wage structure of Digeronimo Store
– 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 Digeronimo Store.
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
– Digeronimo Store has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Digeronimo Store 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.
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 Digeronimo Store business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Victory Supermarkets: Expansion 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 Victory Supermarkets: Expansion 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 Victory Supermarkets: Expansion 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 Victory Supermarkets: Expansion 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 Victory Supermarkets: Expansion 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 Digeronimo Store needs to make to build a sustainable competitive advantage.