Markdown Optimization for an Indian Apparel Retailer SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Markdown Optimization for an Indian Apparel Retailer
Siddharth Sinha is the CEO of an apparel retailer WE SELL STYLE (WSS). The retail chain was set up in 2008, housing more than 100 brands. In 2015, they operated over 200 stores in all four regions of the country. They primarily focused on providing good quality fashion at a remarkably low price. Markdown planning has been an important aspect of the apparel business. It is important to understand that the demand for fashion apparel is seasonal - affected by current fashion, variations in the seasons, festivals and hence difficult to estimate. An apparel retailer could go off target - either by overestimating or underestimating the demand, with overestimating being prevalent. The ordering-manufacturing-stocking cycle is easily a 6-month cycle before the selling actually starts; with an expectation to improve sales year on year, the procurement team buys more, making an increase in the variety of colors and styles to offer more to the consumer. However, not all styles sell as expected, leaving higher than expected stocked inventory, which requires an impetus to sell. The impetus in the industry comes in the form of ''end of season sale (EOSS)''. Decision on the percentage of markdown for EOSS is one of the most critical tasks for an apparel retailer. This activity starts months ahead of the EOSS. The product team and the planning team sit together and come up with an EOSS plan at the style level. In the decision process, procurement and planning team use their domain expertise and judge the performance of style using metrics such as rate of sales, full price sell-through, inventory left, and more. The key decision is to quantify the degree of non-performance of styles that did not sell as forecasted and by how much to markdown for the EOSS.
Swot Analysis of "Markdown Optimization for an Indian Apparel Retailer" written by Deepak George, Karthik Kuram, Ramalakshmi Subramanian, Sumad Singh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Eoss Markdown facing as an external strategic factors. Some of the topics covered in Markdown Optimization for an Indian Apparel Retailer case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Markdown Optimization for an Indian Apparel Retailer casestudy better are - – wage bills are increasing, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices,
technology disruption, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Markdown Optimization for an Indian Apparel Retailer
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Markdown Optimization for an Indian Apparel Retailer case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Eoss Markdown, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Eoss Markdown operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Markdown Optimization for an Indian Apparel Retailer can be done for the following purposes –
1. Strategic planning using facts provided in Markdown Optimization for an Indian Apparel Retailer case study
2. Improving business portfolio management of Eoss Markdown
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Eoss Markdown
Strengths Markdown Optimization for an Indian Apparel Retailer | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Eoss Markdown in Markdown Optimization for an Indian Apparel Retailer Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Eoss Markdown in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Eoss Markdown is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Eoss Markdown is one of the leading recruiters in the industry. Managers in the Markdown Optimization for an Indian Apparel Retailer are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Sales & Marketing field
– Eoss Markdown is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Eoss Markdown in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Eoss Markdown are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Eoss Markdown 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 Markdown Optimization for an Indian Apparel Retailer HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Eoss Markdown is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Eoss Markdown is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Markdown Optimization for an Indian Apparel Retailer Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Eoss Markdown is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Deepak George, Karthik Kuram, Ramalakshmi Subramanian, Sumad Singh can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Sales & Marketing industry
– Markdown Optimization for an Indian Apparel Retailer firm has clearly differentiated products in the market place. This has enabled Eoss Markdown to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Eoss Markdown to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Eoss Markdown has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Markdown Optimization for an Indian Apparel Retailer - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Eoss Markdown digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Eoss Markdown has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Eoss Markdown has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Eoss Markdown has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Markdown Optimization for an Indian Apparel Retailer | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Markdown Optimization for an Indian Apparel Retailer are -
Lack of clear differentiation of Eoss Markdown products
– To increase the profitability and margins on the products, Eoss Markdown needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Markdown Optimization for an Indian Apparel Retailer, is just above the industry average. Eoss Markdown needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Increasing silos among functional specialists
– The organizational structure of Eoss Markdown is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Eoss Markdown needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Eoss Markdown 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 Markdown Optimization for an Indian Apparel Retailer, in the dynamic environment Eoss Markdown has struggled to respond to the nimble upstart competition. Eoss Markdown has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Markdown Optimization for an Indian Apparel Retailer, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Markdown Optimization for an Indian Apparel Retailer 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 Eoss Markdown has relatively successful track record of launching new products.
Products dominated business model
– Even though Eoss Markdown has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Markdown Optimization for an Indian Apparel Retailer should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Eoss Markdown is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Markdown Optimization for an Indian Apparel Retailer can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Markdown Optimization for an Indian Apparel Retailer 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 Markdown Optimization for an Indian Apparel Retailer can leverage the sales team experience to cultivate customer relationships as Eoss Markdown is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Eoss Markdown has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Eoss Markdown even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Eoss Markdown supply chain. Even after few cautionary changes mentioned in the HBR case study - Markdown Optimization for an Indian Apparel Retailer, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Eoss Markdown vulnerable to further global disruptions in South East Asia.
Opportunities Markdown Optimization for an Indian Apparel Retailer | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Markdown Optimization for an Indian Apparel Retailer are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Eoss Markdown is facing challenges because of the dominance of functional experts in the organization. Markdown Optimization for an Indian Apparel Retailer case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Eoss Markdown can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Eoss Markdown in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Eoss Markdown 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Eoss Markdown to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Eoss Markdown to hire the very best people irrespective of their geographical location.
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 Eoss Markdown 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.
Learning at scale
– Online learning technologies has now opened space for Eoss Markdown 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
– Eoss Markdown 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 Markdown Optimization for an Indian Apparel Retailer - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Eoss Markdown to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Eoss Markdown can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Eoss Markdown can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Eoss Markdown can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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. Eoss Markdown can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Eoss Markdown in the consumer business. Now Eoss Markdown can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Markdown Optimization for an Indian Apparel Retailer External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Markdown Optimization for an Indian Apparel Retailer are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Markdown Optimization for an Indian Apparel Retailer, Eoss Markdown may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Eoss Markdown will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Eoss Markdown.
Technology acceleration in Forth Industrial Revolution
– Eoss Markdown has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Eoss Markdown needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Eoss Markdown 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.
Consumer confidence and its impact on Eoss Markdown 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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Eoss Markdown can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Eoss Markdown 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. Eoss Markdown can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High dependence on third party suppliers
– Eoss Markdown high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Eoss Markdown 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.
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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Eoss Markdown in the Sales & Marketing sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Eoss Markdown can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Markdown Optimization for an Indian Apparel Retailer Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Markdown Optimization for an Indian Apparel Retailer needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Markdown Optimization for an Indian Apparel Retailer is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Markdown Optimization for an Indian Apparel Retailer is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Markdown Optimization for an Indian Apparel Retailer is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Eoss Markdown needs to make to build a sustainable competitive advantage.
