Case Study Description of Redirecting Direct Selling: High-Touch Embraces High-Tech
Direct selling, defined as a sales channel without a fixed retail location, was built on the premise of leveraging an individual's social networks. This industry is being redirected by embracing social media; here, the challenge lies in providing the benefits of face-to-face selling, augmented by social media. An examination of the Direct Selling News 'Global 100 Top Direct Sellers' found that Facebook, YouTube, and Twitter represent the most widely employed social networks in the industry. While 76% of direct sellers utilize social media for promotional purposes, 55% use it for recruiting new distributors and 42% use it for reactive purposes. Consumers are the most popular target for social media, followed by distributors and communities. Social media has evolved as a driver of strategy, and will become even more important in the future. Improved customer relationships are developing by listening and reacting to concerns. The transparency created by social media is enhancing trust and ethical organizational cultures. Finally, consumer brand communities are emerging that increase brand value.
Swot Analysis of "Redirecting Direct Selling: High-Touch Embraces High-Tech" written by Linda Ferrell, O.C. Ferrell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Social Media facing as an external strategic factors. Some of the topics covered in Redirecting Direct Selling: High-Touch Embraces High-Tech case study are - Strategic Management Strategies, Sales and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Redirecting Direct Selling: High-Touch Embraces High-Tech casestudy better are - – increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, increasing energy prices, etc
Introduction to SWOT Analysis of Redirecting Direct Selling: High-Touch Embraces High-Tech
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Redirecting Direct Selling: High-Touch Embraces High-Tech case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Social Media, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Social Media 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 Redirecting Direct Selling: High-Touch Embraces High-Tech can be done for the following purposes –
1. Strategic planning using facts provided in Redirecting Direct Selling: High-Touch Embraces High-Tech case study
2. Improving business portfolio management of Social Media
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 Social Media
Strengths Redirecting Direct Selling: High-Touch Embraces High-Tech | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Social Media in Redirecting Direct Selling: High-Touch Embraces High-Tech Harvard Business Review case study are -
Innovation driven organization
– Social Media is one of the most innovative firm in sector. Manager in Redirecting Direct Selling: High-Touch Embraces High-Tech Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Social Media 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.
Strong track record of project management
– Social Media is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Redirecting Direct Selling: High-Touch Embraces High-Tech 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Social Media digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Social Media 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
– Social Media has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Social Media 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.
Diverse revenue streams
– Social Media is present in almost all the verticals within the industry. This has provided firm in Redirecting Direct Selling: High-Touch Embraces High-Tech 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Redirecting Direct Selling: High-Touch Embraces High-Tech firm has clearly differentiated products in the market place. This has enabled Social Media to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Social Media to invest into research and development (R&D) and innovation.
Organizational Resilience of Social Media
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Social Media does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Sales & Marketing field
– Social Media 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 Social Media in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Social Media 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 Social Media is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Redirecting Direct Selling: High-Touch Embraces High-Tech Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Social Media 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 Linda Ferrell, O.C. Ferrell 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.
Weaknesses Redirecting Direct Selling: High-Touch Embraces High-Tech | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Redirecting Direct Selling: High-Touch Embraces High-Tech are -
Low market penetration in new markets
– Outside its home market of Social Media, firm in the HBR case study Redirecting Direct Selling: High-Touch Embraces High-Tech needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Social Media 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.
Skills based hiring
– The stress on hiring functional specialists at Social Media 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 Redirecting Direct Selling: High-Touch Embraces High-Tech, is just above the industry average. Social Media 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.
Interest costs
– Compare to the competition, Social Media has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Social Media has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Redirecting Direct Selling: High-Touch Embraces High-Tech, it seems that the employees of Social Media 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 strategic competitive environment developments
– As Redirecting Direct Selling: High-Touch Embraces High-Tech HBR case study mentions - Social Media takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Social Media is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Redirecting Direct Selling: High-Touch Embraces High-Tech can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Social Media supply chain. Even after few cautionary changes mentioned in the HBR case study - Redirecting Direct Selling: High-Touch Embraces High-Tech, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Social Media vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Social Media is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Social Media needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Social Media to focus more on services rather than just following the product oriented approach.
Opportunities Redirecting Direct Selling: High-Touch Embraces High-Tech | 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 Redirecting Direct Selling: High-Touch Embraces High-Tech are -
Better consumer reach
– The expansion of the 5G network will help Social Media to increase its market reach. Social Media 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Social Media 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
– Social Media 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 Redirecting Direct Selling: High-Touch Embraces High-Tech - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Social Media 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 Social Media can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Social Media is facing challenges because of the dominance of functional experts in the organization. Redirecting Direct Selling: High-Touch Embraces High-Tech 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. Social Media can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Social Media can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Redirecting Direct Selling: High-Touch Embraces High-Tech 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.
Manufacturing automation
– Social Media 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Social Media can use these opportunities to build new business models that can help the communities that Social Media operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Leveraging digital technologies
– Social Media 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.
Building a culture of innovation
– managers at Social Media 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.
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. Social Media can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Social Media 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.
Threats Redirecting Direct Selling: High-Touch Embraces High-Tech External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Redirecting Direct Selling: High-Touch Embraces High-Tech are -
Shortening product life cycle
– it is one of the major threat that Social Media is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Social Media can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Social Media.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Redirecting Direct Selling: High-Touch Embraces High-Tech, Social Media 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 acceleration in Forth Industrial Revolution
– Social Media has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Social Media 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.
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 Social Media in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Social Media 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
– Social Media 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. Social Media can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Social Media 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 Redirecting Direct Selling: High-Touch Embraces High-Tech .
Stagnating economy with rate increase
– Social Media 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Social Media 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.
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. Social Media needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Social Media 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 Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Social Media needs to make to build a sustainable competitive advantage.
