Changing Channels: The Impact of the Internet on Distribution Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Changing Channels: The Impact of the Internet on Distribution Strategy
A new medium--the Internet and World Wide Web--is changing distribution channels like no other force since the Industrial Revolution. It is modifying many of the assumptions on which channel structure is based, and in some cases it is transforming and even obliterating channels themselves. As a result, many intermediaries will die out, while new channels and intermediaries will take their place. There are three essential purposes of distribution channels: to support economies of scope, to routinize transactions, and to search for information essential to both producer and consumer. However, the Internet and Web have brought about the death of distance, the homogenization of time, and the irrelevance of location. A matrix model of these developments, arrayed versus distribution channel functions, provides a guide to identifying which traditional channels will either undergo transformation or perish and where new channels will emerge. The matrix model suggests how existing firms and entrepreneurs can perform their distribution functions more efficiently. It enables identification of competitors poised to use the media to change the rules of the marketplace. Finally, it helps managers brainstorm ways in which an existing industry can be vulnerable and a totally new one defined.
Authors :: Leyland Pitt, Pierre R. Berthon, Jean-Paul Berthon
Swot Analysis of "Changing Channels: The Impact of the Internet on Distribution Strategy" written by Leyland Pitt, Pierre R. Berthon, Jean-Paul Berthon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Channels Distribution facing as an external strategic factors. Some of the topics covered in Changing Channels: The Impact of the Internet on Distribution Strategy case study are - Strategic Management Strategies, Marketing, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Changing Channels: The Impact of the Internet on Distribution Strategy casestudy better are - – there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, wage bills are increasing, technology disruption, challanges to central banks by blockchain based private currencies,
geopolitical disruptions, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Changing Channels: The Impact of the Internet on Distribution Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Changing Channels: The Impact of the Internet on Distribution Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Channels Distribution, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Channels Distribution 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 Changing Channels: The Impact of the Internet on Distribution Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Changing Channels: The Impact of the Internet on Distribution Strategy case study
2. Improving business portfolio management of Channels Distribution
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 Channels Distribution
Strengths Changing Channels: The Impact of the Internet on Distribution Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Channels Distribution in Changing Channels: The Impact of the Internet on Distribution Strategy Harvard Business Review case study are -
Analytics focus
– Channels Distribution 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 Leyland Pitt, Pierre R. Berthon, Jean-Paul Berthon 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.
Successful track record of launching new products
– Channels Distribution has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Channels Distribution 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.
Ability to recruit top talent
– Channels Distribution is one of the leading recruiters in the industry. Managers in the Changing Channels: The Impact of the Internet on Distribution 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.
High switching costs
– The high switching costs that Channels Distribution 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
– Changing Channels: The Impact of the Internet on Distribution Strategy firm has clearly differentiated products in the market place. This has enabled Channels Distribution to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Channels Distribution to invest into research and development (R&D) and innovation.
Innovation driven organization
– Channels Distribution is one of the most innovative firm in sector. Manager in Changing Channels: The Impact of the Internet on Distribution Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Sales & Marketing field
– Channels Distribution 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 Channels Distribution in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Channels Distribution is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Channels Distribution 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 Changing Channels: The Impact of the Internet on Distribution Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Channels Distribution in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Channels Distribution is present in almost all the verticals within the industry. This has provided firm in Changing Channels: The Impact of the Internet on Distribution 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Channels Distribution digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Channels Distribution 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.
Weaknesses Changing Channels: The Impact of the Internet on Distribution Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Changing Channels: The Impact of the Internet on Distribution Strategy are -
Products dominated business model
– Even though Channels Distribution 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 - Changing Channels: The Impact of the Internet on Distribution 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, Leyland Pitt, Pierre R. Berthon, Jean-Paul Berthon suggests that, Channels Distribution 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.
Aligning sales with marketing
– It come across in the case study Changing Channels: The Impact of the Internet on Distribution 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 Changing Channels: The Impact of the Internet on Distribution Strategy can leverage the sales team experience to cultivate customer relationships as Channels Distribution is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Channels Distribution 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. Channels Distribution 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.
Need for greater diversity
– Channels Distribution has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Skills based hiring
– The stress on hiring functional specialists at Channels Distribution 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Changing Channels: The Impact of the Internet on Distribution Strategy 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 Channels Distribution 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Changing Channels: The Impact of the Internet on Distribution Strategy HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Channels Distribution has relatively successful track record of launching new products.
High cash cycle compare to competitors
Channels Distribution 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Changing Channels: The Impact of the Internet on Distribution Strategy, in the dynamic environment Channels Distribution has struggled to respond to the nimble upstart competition. Channels Distribution has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Channels Distribution products
– To increase the profitability and margins on the products, Channels Distribution needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Changing Channels: The Impact of the Internet on Distribution 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 Changing Channels: The Impact of the Internet on Distribution Strategy are -
Using analytics as competitive advantage
– Channels Distribution 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 Changing Channels: The Impact of the Internet on Distribution Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Channels Distribution to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Channels Distribution can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Channels Distribution 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, Changing Channels: The Impact of the Internet on Distribution Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Channels Distribution can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Changing Channels: The Impact of the Internet on Distribution 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Channels Distribution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Channels Distribution 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, Channels Distribution can use these opportunities to build new business models that can help the communities that Channels Distribution operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Manufacturing automation
– Channels Distribution 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.
Leveraging digital technologies
– Channels Distribution 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.
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. Channels Distribution 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. Channels Distribution 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Channels Distribution 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Channels Distribution 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 Channels Distribution to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Channels Distribution 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.
Threats Changing Channels: The Impact of the Internet on Distribution Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Changing Channels: The Impact of the Internet on Distribution Strategy are -
Regulatory challenges
– Channels Distribution 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Channels Distribution 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 Changing Channels: The Impact of the Internet on Distribution Strategy .
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. Channels Distribution can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Channels Distribution 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 Channels Distribution.
High dependence on third party suppliers
– Channels Distribution 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.
Environmental challenges
– Channels Distribution 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. Channels Distribution can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Changing Channels: The Impact of the Internet on Distribution Strategy, Channels Distribution 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 .
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.
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 Channels Distribution in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing wage structure of Channels Distribution
– 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 Channels Distribution.
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. Channels Distribution needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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 Channels Distribution business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Changing Channels: The Impact of the Internet on Distribution 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 Changing Channels: The Impact of the Internet on Distribution 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 Changing Channels: The Impact of the Internet on Distribution 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 Changing Channels: The Impact of the Internet on Distribution 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 Changing Channels: The Impact of the Internet on Distribution 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 Channels Distribution needs to make to build a sustainable competitive advantage.
