Swiss Army: Diversifying into the Fragrance Business SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Swiss Army: Diversifying into the Fragrance Business
In 2005, Victorinox, the original producer of the Swiss Army Knife, acquired Wenger, including the fragrance label "Swiss Army Fragrance." The acquisition of Wenger allowed Victorinox to become the only producer of the famous Swiss Army Knife as well as the key player in Swiss Army watches. Victorinox's head of marketing was asked to design a business strategy that would successfully allow the company to enter the fragrance industry. How should Victorinox diversify into the fragrance business? Should it aim to transfer its existing brand attributes to fragrance products? Or should it adopt a strategy that would include the use of another brand to market the perfumes? The head of marketing had to present a plan to the CEO of Victorinox on how best to brand and position the product, and how to compete in the fragrance industry. Authors are affiliated with Rollins College.
Authors :: Ilan Alon, Marc Fetscherin, Claudia Carvajal
Swot Analysis of "Swiss Army: Diversifying into the Fragrance Business" written by Ilan Alon, Marc Fetscherin, Claudia Carvajal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fragrance Victorinox facing as an external strategic factors. Some of the topics covered in Swiss Army: Diversifying into the Fragrance Business case study are - Strategic Management Strategies, Product development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Swiss Army: Diversifying into the Fragrance Business casestudy better are - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, technology disruption, digital marketing is dominated by two big players Facebook and Google,
geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Swiss Army: Diversifying into the Fragrance Business
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Swiss Army: Diversifying into the Fragrance Business case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fragrance Victorinox, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fragrance Victorinox 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 Swiss Army: Diversifying into the Fragrance Business can be done for the following purposes –
1. Strategic planning using facts provided in Swiss Army: Diversifying into the Fragrance Business case study
2. Improving business portfolio management of Fragrance Victorinox
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 Fragrance Victorinox
Strengths Swiss Army: Diversifying into the Fragrance Business | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fragrance Victorinox in Swiss Army: Diversifying into the Fragrance Business Harvard Business Review case study are -
Innovation driven organization
– Fragrance Victorinox is one of the most innovative firm in sector. Manager in Swiss Army: Diversifying into the Fragrance Business Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Fragrance Victorinox has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fragrance Victorinox to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Fragrance Victorinox is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Sales & Marketing industry
– Swiss Army: Diversifying into the Fragrance Business firm has clearly differentiated products in the market place. This has enabled Fragrance Victorinox to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Fragrance Victorinox to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Fragrance Victorinox 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.
Low bargaining power of suppliers
– Suppliers of Fragrance Victorinox in the sector have low bargaining power. Swiss Army: Diversifying into the Fragrance Business has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fragrance Victorinox to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Sales & Marketing field
– Fragrance Victorinox 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 Fragrance Victorinox in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Fragrance Victorinox is present in almost all the verticals within the industry. This has provided firm in Swiss Army: Diversifying into the Fragrance Business 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.
Training and development
– Fragrance Victorinox has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Swiss Army: Diversifying into the Fragrance Business 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.
Superior customer experience
– The customer experience strategy of Fragrance Victorinox in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Fragrance Victorinox 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 Fragrance Victorinox is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Swiss Army: Diversifying into the Fragrance Business Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Fragrance Victorinox 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 Swiss Army: Diversifying into the Fragrance Business - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Swiss Army: Diversifying into the Fragrance Business | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Swiss Army: Diversifying into the Fragrance Business are -
Capital Spending Reduction
– Even during the low interest decade, Fragrance Victorinox 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
Fragrance Victorinox 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 Fragrance Victorinox 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.
Low market penetration in new markets
– Outside its home market of Fragrance Victorinox, firm in the HBR case study Swiss Army: Diversifying into the Fragrance Business needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Swiss Army: Diversifying into the Fragrance Business HBR case study mentions - Fragrance Victorinox 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.
Interest costs
– Compare to the competition, Fragrance Victorinox 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 Swiss Army: Diversifying into the Fragrance Business 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 Fragrance Victorinox has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Fragrance Victorinox is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Fragrance Victorinox needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fragrance Victorinox to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Swiss Army: Diversifying into the Fragrance Business, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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 Fragrance Victorinox supply chain. Even after few cautionary changes mentioned in the HBR case study - Swiss Army: Diversifying into the Fragrance Business, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fragrance Victorinox vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Swiss Army: Diversifying into the Fragrance Business, is just above the industry average. Fragrance Victorinox 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.
Opportunities Swiss Army: Diversifying into the Fragrance Business | 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 Swiss Army: Diversifying into the Fragrance Business are -
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 Fragrance Victorinox in the consumer business. Now Fragrance Victorinox can target international markets with far fewer capital restrictions requirements than the existing system.
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. Fragrance Victorinox 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. Fragrance Victorinox 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.
Loyalty marketing
– Fragrance Victorinox has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fragrance Victorinox is facing challenges because of the dominance of functional experts in the organization. Swiss Army: Diversifying into the Fragrance Business 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
– Fragrance Victorinox 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.
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. Fragrance Victorinox 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, Fragrance Victorinox 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, Swiss Army: Diversifying into the Fragrance Business, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fragrance Victorinox 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fragrance Victorinox 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.
Developing new processes and practices
– Fragrance Victorinox 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.
Learning at scale
– Online learning technologies has now opened space for Fragrance Victorinox 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.
Manufacturing automation
– Fragrance Victorinox 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, Fragrance Victorinox can use these opportunities to build new business models that can help the communities that Fragrance Victorinox operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Threats Swiss Army: Diversifying into the Fragrance Business External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Swiss Army: Diversifying into the Fragrance Business are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fragrance Victorinox 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. Fragrance Victorinox needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fragrance Victorinox 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 Swiss Army: Diversifying into the Fragrance Business .
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 Fragrance Victorinox.
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 Fragrance Victorinox in the Sales & Marketing sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Fragrance Victorinox 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.
High dependence on third party suppliers
– Fragrance Victorinox 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.
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. Fragrance Victorinox can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fragrance Victorinox with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Fragrance Victorinox 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 wage structure of Fragrance Victorinox
– 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 Fragrance Victorinox.
Consumer confidence and its impact on Fragrance Victorinox 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.
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. Fragrance Victorinox 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.
Weighted SWOT Analysis of Swiss Army: Diversifying into the Fragrance Business 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 Swiss Army: Diversifying into the Fragrance Business 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 Swiss Army: Diversifying into the Fragrance Business 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 Swiss Army: Diversifying into the Fragrance Business 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 Swiss Army: Diversifying into the Fragrance Business 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 Fragrance Victorinox needs to make to build a sustainable competitive advantage.
