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 commodity prices, increasing transportation and logistics costs, increasing household debt because of falling income levels, 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 energy prices, there is increasing trade war between United States & China,
customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, 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 -
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.
High brand equity
– Social Media has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Social Media to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Ability to recruit top talent
– Social Media is one of the leading recruiters in the industry. Managers in the Redirecting Direct Selling: High-Touch Embraces High-Tech are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Low bargaining power of suppliers
– Suppliers of Social Media in the sector have low bargaining power. Redirecting Direct Selling: High-Touch Embraces High-Tech has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Social Media to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Social Media 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.
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.
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.
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.
Superior customer experience
– The customer experience strategy of Social Media in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Social Media has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Redirecting Direct Selling: High-Touch Embraces High-Tech 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.
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 -
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 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Redirecting Direct Selling: High-Touch Embraces High-Tech, in the dynamic environment Social Media has struggled to respond to the nimble upstart competition. Social Media has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Redirecting Direct Selling: High-Touch Embraces High-Tech 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 Social Media 's lucrative customers.
Products dominated business model
– Even though Social Media 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 - Redirecting Direct Selling: High-Touch Embraces High-Tech should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Social Media 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.
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.
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 bargaining power of channel partners
– Because of the regulatory requirements, Linda Ferrell, O.C. Ferrell suggests that, Social Media 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.
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 -
Learning at scale
– Online learning technologies has now opened space for Social Media 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.
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.
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.
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.
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.
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 Social Media 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.
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.
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.
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.
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.
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.
Developing new processes and practices
– Social Media 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.
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 -
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.
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.
Consumer confidence and its impact on Social Media 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.
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.
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.
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. Social Media 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.
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 Social Media 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, 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 .
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.
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.
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.
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.
Regulatory challenges
– Social Media 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.
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.