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 transportation and logistics costs, increasing government debt because of Covid-19 spendings, increasing energy prices, wage bills are increasing, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation,
technology disruption, there is increasing trade war between United States & China, 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 -
High switching costs
– The high switching costs that Digeronimo Store 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.
Analytics focus
– Digeronimo Store 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 David E. Bell, Ann Leamon 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.
Effective Research and Development (R&D)
– Digeronimo Store 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 Victory Supermarkets: Expansion 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.
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.
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.
Learning organization
- Digeronimo Store 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 Digeronimo Store is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Victory Supermarkets: Expansion Strategy? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Digeronimo Store in the sector have low bargaining power. Victory Supermarkets: Expansion Strategy? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Digeronimo Store to manage not only supply disruptions but also source products at highly competitive prices.
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.
Ability to recruit top talent
– Digeronimo Store is one of the leading recruiters in the industry. Managers in the Victory Supermarkets: Expansion 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.
Organizational Resilience of Digeronimo Store
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Digeronimo Store does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Victory Supermarkets: Expansion Strategy? 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.
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 -
No frontier risks strategy
– After analyzing the HBR case study Victory Supermarkets: Expansion 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.
Increasing silos among functional specialists
– The organizational structure of Digeronimo Store is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Digeronimo Store needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Digeronimo Store to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Victory Supermarkets: Expansion Strategy?, in the dynamic environment Digeronimo Store has struggled to respond to the nimble upstart competition. Digeronimo Store has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Digeronimo Store products
– To increase the profitability and margins on the products, Digeronimo Store needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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.
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 -
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.
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.
Loyalty marketing
– Digeronimo Store 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.
Leveraging digital technologies
– Digeronimo Store 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.
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.
Creating value in data economy
– The success of analytics program of Digeronimo Store has opened avenues for new revenue streams for the organization in the industry. This can help Digeronimo Store to build a more holistic ecosystem as suggested in the Victory Supermarkets: Expansion Strategy? case study. Digeronimo Store can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Digeronimo Store can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Digeronimo Store 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Digeronimo Store 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 Digeronimo Store to hire the very best people irrespective of their geographical location.
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.
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.
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 Digeronimo Store 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.
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 -
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Digeronimo Store needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Environmental challenges
– Digeronimo Store 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. Digeronimo Store can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
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.
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.
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.
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.
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.
Regulatory challenges
– Digeronimo Store needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
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.
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? .
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.
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.
