The misplaced controversy about internal consumption: Not just a direct selling phenomenon SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of The misplaced controversy about internal consumption: Not just a direct selling phenomenon
Internal consumption in the direct selling industry has been at the heart of many debates over the past couple of decades. In this article, we contend that internal consumption is a widespread practice at all levels of the distribution channel and not something limited to the direct selling or the multilevel marketing (MLM) retail arena. While government regulators in some countries attempt to use this practice in MLM as prima facie evidence of illegal pyramiding, the results presented here provide evidence of the widespread use of internal consumption in all aspects of retailing. Thus, to attribute internal consumption as a negative aspect solely within the direct selling marketplace shows a misplaced understanding with regard to personal use, discounts, and company recruiting efforts. At the same time, however, our research shows that discounted purchasing of product for personal use likely brings little value to the company since it does not appear to result in increased job satisfaction or organizational loyalty from either the affected employees or the customer base.
Swot Analysis of "The misplaced controversy about internal consumption: Not just a direct selling phenomenon" written by Victoria L. Crittenden, Gerald Albaum includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Consumption Internal facing as an external strategic factors. Some of the topics covered in The misplaced controversy about internal consumption: Not just a direct selling phenomenon case study are - Strategic Management Strategies, Personnel policies and Sales & Marketing.
Some of the macro environment factors that can be used to understand the The misplaced controversy about internal consumption: Not just a direct selling phenomenon casestudy better are - – wage bills are increasing, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing commodity prices, challanges to central banks by blockchain based private currencies, geopolitical disruptions,
there is backlash against globalization, technology disruption, etc
Introduction to SWOT Analysis of The misplaced controversy about internal consumption: Not just a direct selling phenomenon
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The misplaced controversy about internal consumption: Not just a direct selling phenomenon case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Consumption Internal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Consumption Internal 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon can be done for the following purposes –
1. Strategic planning using facts provided in The misplaced controversy about internal consumption: Not just a direct selling phenomenon case study
2. Improving business portfolio management of Consumption Internal
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 Consumption Internal
Strengths The misplaced controversy about internal consumption: Not just a direct selling phenomenon | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Consumption Internal in The misplaced controversy about internal consumption: Not just a direct selling phenomenon Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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.
Training and development
– Consumption Internal has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Consumption Internal digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Consumption Internal 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.
Learning organization
- Consumption Internal 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 Consumption Internal is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The misplaced controversy about internal consumption: Not just a direct selling phenomenon Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Sales & Marketing industry
– The misplaced controversy about internal consumption: Not just a direct selling phenomenon firm has clearly differentiated products in the market place. This has enabled Consumption Internal to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Consumption Internal to invest into research and development (R&D) and innovation.
Innovation driven organization
– Consumption Internal is one of the most innovative firm in sector. Manager in The misplaced controversy about internal consumption: Not just a direct selling phenomenon Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Consumption Internal in the sector have low bargaining power. The misplaced controversy about internal consumption: Not just a direct selling phenomenon has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Consumption Internal to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Sales & Marketing field
– Consumption Internal 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 Consumption Internal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Consumption Internal 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.
Strong track record of project management
– Consumption Internal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Consumption Internal is present in almost all the verticals within the industry. This has provided firm in The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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
– Consumption Internal has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Consumption Internal 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The misplaced controversy about internal consumption: Not just a direct selling phenomenon are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Consumption Internal is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Consumption Internal has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon, is just above the industry average. Consumption Internal 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.
Lack of clear differentiation of Consumption Internal products
– To increase the profitability and margins on the products, Consumption Internal needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 Consumption Internal has relatively successful track record of launching new products.
High cash cycle compare to competitors
Consumption Internal 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Consumption Internal needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon, in the dynamic environment Consumption Internal has struggled to respond to the nimble upstart competition. Consumption Internal has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Consumption Internal 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Consumption Internal 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon, it seems that the employees of Consumption Internal don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities The misplaced controversy about internal consumption: Not just a direct selling phenomenon | 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon are -
Leveraging digital technologies
– Consumption Internal 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 Consumption Internal 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.
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 Consumption Internal in the consumer business. Now Consumption Internal can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Consumption Internal 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.
Using analytics as competitive advantage
– Consumption Internal 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Consumption Internal to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Consumption Internal 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.
Manufacturing automation
– Consumption Internal 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.
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. Consumption Internal can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Consumption Internal 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 Consumption Internal to increase its market reach. Consumption Internal 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.
Buying journey improvements
– Consumption Internal can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The misplaced controversy about internal consumption: Not just a direct selling phenomenon suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Consumption Internal can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Consumption Internal can use these opportunities to build new business models that can help the communities that Consumption Internal operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Threats The misplaced controversy about internal consumption: Not just a direct selling phenomenon External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon are -
Increasing wage structure of Consumption Internal
– 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 Consumption Internal.
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. Consumption Internal can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Consumption Internal needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
Shortening product life cycle
– it is one of the major threat that Consumption Internal is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Consumption Internal.
Environmental challenges
– Consumption Internal 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. Consumption Internal 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 Consumption Internal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Consumption Internal 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.
Consumer confidence and its impact on Consumption Internal 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.
High dependence on third party suppliers
– Consumption Internal 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
– Consumption Internal 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 Consumption Internal needs to make to build a sustainable competitive advantage.
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