Case Study Description of Mountain Equipment Co-op: Digital Strategy
The vice-president of marketing and communications at Mountain Equipment Co-op, a retailer of outdoor sporting goods, is examining its marketing strategy following the decision to stop producing its physical catalogue. The 40-year-old retailer wants to broaden its reach beyond its hard-core group of customers. Although it currently has an online presence, it needs to further develop its online sales and outreach programs.
Swot Analysis of "Mountain Equipment Co-op: Digital Strategy" written by Raymond Pirouz, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Op Mountain facing as an external strategic factors. Some of the topics covered in Mountain Equipment Co-op: Digital Strategy case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Mountain Equipment Co-op: Digital Strategy casestudy better are - – central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, wage bills are increasing, technology disruption,
geopolitical disruptions, increasing energy prices, etc
Introduction to SWOT Analysis of Mountain Equipment Co-op: Digital Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Mountain Equipment Co-op: Digital Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Op Mountain, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Op Mountain 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 Mountain Equipment Co-op: Digital Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Mountain Equipment Co-op: Digital Strategy case study
2. Improving business portfolio management of Op Mountain
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 Op Mountain
Strengths Mountain Equipment Co-op: Digital Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Op Mountain in Mountain Equipment Co-op: Digital Strategy Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Op Mountain in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Op Mountain 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 Raymond Pirouz, Ken Mark 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Op Mountain digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Op Mountain 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 lead change in Sales & Marketing field
– Op Mountain 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 Op Mountain in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Op Mountain is present in almost all the verticals within the industry. This has provided firm in Mountain Equipment Co-op: Digital 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.
Successful track record of launching new products
– Op Mountain has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Op Mountain 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.
Operational resilience
– The operational resilience strategy in the Mountain Equipment Co-op: Digital 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.
Ability to recruit top talent
– Op Mountain is one of the leading recruiters in the industry. Managers in the Mountain Equipment Co-op: Digital 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.
Innovation driven organization
– Op Mountain is one of the most innovative firm in sector. Manager in Mountain Equipment Co-op: Digital Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Op Mountain
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Op Mountain does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Op Mountain is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Op Mountain has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Mountain Equipment Co-op: Digital Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mountain Equipment Co-op: Digital Strategy are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Mountain Equipment Co-op: Digital Strategy, in the dynamic environment Op Mountain has struggled to respond to the nimble upstart competition. Op Mountain has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Mountain Equipment Co-op: Digital 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 Mountain Equipment Co-op: Digital Strategy can leverage the sales team experience to cultivate customer relationships as Op Mountain is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Mountain Equipment Co-op: Digital Strategy, is just above the industry average. Op Mountain 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Op Mountain is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Mountain Equipment Co-op: Digital 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.
Low market penetration in new markets
– Outside its home market of Op Mountain, firm in the HBR case study Mountain Equipment Co-op: Digital Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Op Mountain is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Op Mountain needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Op Mountain to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Op Mountain 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 - Mountain Equipment Co-op: Digital Strategy should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Raymond Pirouz, Ken Mark suggests that, Op Mountain 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 cash cycle compare to competitors
Op Mountain 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.
Interest costs
– Compare to the competition, Op Mountain 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 to strategic competitive environment developments
– As Mountain Equipment Co-op: Digital Strategy HBR case study mentions - Op Mountain takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Mountain Equipment Co-op: Digital 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 Mountain Equipment Co-op: Digital Strategy 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, Op Mountain can use these opportunities to build new business models that can help the communities that Op Mountain operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Op Mountain 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.
Creating value in data economy
– The success of analytics program of Op Mountain has opened avenues for new revenue streams for the organization in the industry. This can help Op Mountain to build a more holistic ecosystem as suggested in the Mountain Equipment Co-op: Digital Strategy case study. Op Mountain can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Op Mountain 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.
Leveraging digital technologies
– Op Mountain 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.
Loyalty marketing
– Op Mountain 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.
Better consumer reach
– The expansion of the 5G network will help Op Mountain to increase its market reach. Op Mountain 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Op Mountain 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
– Op Mountain can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Mountain Equipment Co-op: Digital 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.
Using analytics as competitive advantage
– Op Mountain 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 Mountain Equipment Co-op: Digital Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Op Mountain to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Op Mountain in the consumer business. Now Op Mountain can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Op Mountain 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.
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. Op Mountain can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Mountain Equipment Co-op: Digital Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Mountain Equipment Co-op: Digital Strategy are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Op Mountain 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.
Increasing wage structure of Op Mountain
– 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 Op Mountain.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Op Mountain with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Op Mountain can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Op Mountain business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Op Mountain 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.
Stagnating economy with rate increase
– Op Mountain 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.
Environmental challenges
– Op Mountain 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. Op Mountain can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Consumer confidence and its impact on Op Mountain demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Op Mountain 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 Mountain Equipment Co-op: Digital Strategy .
Technology acceleration in Forth Industrial Revolution
– Op Mountain has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Op Mountain 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.
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 Op Mountain.
Shortening product life cycle
– it is one of the major threat that Op Mountain 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 Mountain Equipment Co-op: Digital 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 Mountain Equipment Co-op: Digital 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 Mountain Equipment Co-op: Digital 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 Mountain Equipment Co-op: Digital 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 Mountain Equipment Co-op: Digital 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 Op Mountain needs to make to build a sustainable competitive advantage.