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 - – technology disruption, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing energy prices, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy,
there is increasing trade war between United States & China, increasing commodity prices, 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 -
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.
Highly skilled collaborators
– Consumption Internal 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
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.
Analytics focus
– Consumption Internal 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 Victoria L. Crittenden, Gerald Albaum 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.
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.
Superior customer experience
– The customer experience strategy of Consumption Internal in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
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 -
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.
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.
Aligning sales with marketing
– It come across in the case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon can leverage the sales team experience to cultivate customer relationships as Consumption Internal is planning to shift buying processes online.
Products dominated business model
– Even though Consumption Internal 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 - The misplaced controversy about internal consumption: Not just a direct selling phenomenon should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
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.
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.
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 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.
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 -
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.
Developing new processes and practices
– Consumption Internal 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.
Building a culture of innovation
– managers at Consumption Internal 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.
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.
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. Consumption Internal 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. Consumption Internal 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.
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.
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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Consumption Internal can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, The misplaced controversy about internal consumption: Not just a direct selling phenomenon, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Consumption Internal has opened avenues for new revenue streams for the organization in the industry. This can help Consumption Internal to build a more holistic ecosystem as suggested in the The misplaced controversy about internal consumption: Not just a direct selling phenomenon case study. Consumption Internal can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Consumption Internal 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.
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.
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 -
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.
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 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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Consumption Internal has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Consumption Internal 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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The misplaced controversy about internal consumption: Not just a direct selling phenomenon, Consumption Internal 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 .
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 Consumption Internal business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Consumption Internal 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 The misplaced controversy about internal consumption: Not just a direct selling phenomenon .
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. Consumption Internal 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.
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.
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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