Case Study Description of Selling CFLs at Wal-Mart
In early 2009, Wal-Mart executive Andy Barron realized the firm's lighting business was facing a challenge. After achieving a goal of selling 100 million compact fluorescent light (CFL) bulbs by the end of 2007, sales of the energy-efficient bulbs had started to plateau, leading to a dim outlook for 2009. Barron needed to examine what barriers might be keeping consumers from adopting more of the bulbs, which offer both cost savings and environmental benefits. In this 2-part case students study the historic price points and sales of CFL bulbs, Wal-Mart's 2007 promotion of CFL lighting, and research about consumer adoption of the bulbs in order to understand how the retailer might achieve its goals. The case asks: How can consumer habits be changed? How can new products overcome barriers to adoption? What can managers do to promote sales of new products, given human behavior where biases, values and emotions have an impact on the choices people make? How can economic theories explain consumer behavior as it occurs in the real world? The Epilogue to the first case asks students to discuss what developments occurred after the 2009 implementation and how they impacted CFL sales.
Swot Analysis of "Selling CFLs at Wal-Mart" written by Eric J. Johnson, Daniel M. Bartels includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bulbs Cfl facing as an external strategic factors. Some of the topics covered in Selling CFLs at Wal-Mart case study are - Strategic Management Strategies, Sustainability and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Selling CFLs at Wal-Mart casestudy better are - – wage bills are increasing, geopolitical disruptions, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing commodity prices, supply chains are disrupted by pandemic ,
increasing household debt because of falling income levels, there is backlash against globalization, etc
Introduction to SWOT Analysis of Selling CFLs at Wal-Mart
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Selling CFLs at Wal-Mart case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bulbs Cfl, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bulbs Cfl 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 Selling CFLs at Wal-Mart can be done for the following purposes –
1. Strategic planning using facts provided in Selling CFLs at Wal-Mart case study
2. Improving business portfolio management of Bulbs Cfl
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 Bulbs Cfl
Strengths Selling CFLs at Wal-Mart | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bulbs Cfl in Selling CFLs at Wal-Mart Harvard Business Review case study are -
Ability to recruit top talent
– Bulbs Cfl is one of the leading recruiters in the industry. Managers in the Selling CFLs at Wal-Mart 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
- Bulbs Cfl 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 Bulbs Cfl is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Selling CFLs at Wal-Mart Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Bulbs Cfl 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 Selling CFLs at Wal-Mart - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Sales & Marketing field
– Bulbs Cfl 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 Bulbs Cfl in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Bulbs Cfl 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.
Operational resilience
– The operational resilience strategy in the Selling CFLs at Wal-Mart 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.
Highly skilled collaborators
– Bulbs Cfl has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Selling CFLs at Wal-Mart HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Bulbs Cfl in the sector have low bargaining power. Selling CFLs at Wal-Mart has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bulbs Cfl to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Bulbs Cfl has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Selling CFLs at Wal-Mart 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.
Strong track record of project management
– Bulbs Cfl is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Bulbs Cfl digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bulbs Cfl 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.
Superior customer experience
– The customer experience strategy of Bulbs Cfl in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Selling CFLs at Wal-Mart | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Selling CFLs at Wal-Mart are -
Workers concerns about automation
– As automation is fast increasing in the segment, Bulbs Cfl needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Bulbs Cfl 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Selling CFLs at Wal-Mart, in the dynamic environment Bulbs Cfl has struggled to respond to the nimble upstart competition. Bulbs Cfl has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Bulbs Cfl, firm in the HBR case study Selling CFLs at Wal-Mart needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Eric J. Johnson, Daniel M. Bartels suggests that, Bulbs Cfl 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.
Need for greater diversity
– Bulbs Cfl 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.
Lack of clear differentiation of Bulbs Cfl products
– To increase the profitability and margins on the products, Bulbs Cfl needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Selling CFLs at Wal-Mart 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 Bulbs Cfl 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Bulbs Cfl 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.
Interest costs
– Compare to the competition, Bulbs Cfl 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bulbs Cfl is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Selling CFLs at Wal-Mart can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Selling CFLs at Wal-Mart | 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 Selling CFLs at Wal-Mart are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bulbs Cfl is facing challenges because of the dominance of functional experts in the organization. Selling CFLs at Wal-Mart 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bulbs Cfl 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, Selling CFLs at Wal-Mart, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bulbs Cfl 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 Bulbs Cfl to hire the very best people irrespective of their geographical location.
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 Bulbs Cfl in the consumer business. Now Bulbs Cfl can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Bulbs Cfl to increase its market reach. Bulbs Cfl 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.
Using analytics as competitive advantage
– Bulbs Cfl 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 Selling CFLs at Wal-Mart - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bulbs Cfl 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 Bulbs Cfl 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, Bulbs Cfl can use these opportunities to build new business models that can help the communities that Bulbs Cfl operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Leveraging digital technologies
– Bulbs Cfl 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. Bulbs Cfl 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. Bulbs Cfl 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.
Buying journey improvements
– Bulbs Cfl can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Selling CFLs at Wal-Mart 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.
Learning at scale
– Online learning technologies has now opened space for Bulbs Cfl 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.
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 Bulbs Cfl 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.
Threats Selling CFLs at Wal-Mart External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Selling CFLs at Wal-Mart are -
Consumer confidence and its impact on Bulbs Cfl 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.
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 Bulbs Cfl in the Sales & Marketing sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Bulbs Cfl has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Bulbs Cfl 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bulbs Cfl 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 Selling CFLs at Wal-Mart .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bulbs Cfl 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.
Stagnating economy with rate increase
– Bulbs Cfl 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.
Increasing wage structure of Bulbs Cfl
– 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 Bulbs Cfl.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bulbs Cfl with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Bulbs Cfl 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.
Regulatory challenges
– Bulbs Cfl 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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. Bulbs Cfl can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Selling CFLs at Wal-Mart 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 Selling CFLs at Wal-Mart 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 Selling CFLs at Wal-Mart 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 Selling CFLs at Wal-Mart 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 Selling CFLs at Wal-Mart 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 Bulbs Cfl needs to make to build a sustainable competitive advantage.