Case Study Description of Droga5: Launching Jay-Z's Decoded
In 2010, David Droga and Andrew Essex, co-founders of advertising agency Droga5, hope to convince both John Meneilly, manager of hip-hop star Shawn Carter (better known as Jay-Z) and a partner in Carter's company Roc Nation and Yusuf Mehdi, senior vice president of Microsoft's Online Services division, to enter into an unprecedented, high-stakes partnership to benefit the launch of Carter's new lyrical memoir, Decoded. Droga5 wrestles with two disparate challenges: developing a campaign for the book's launch and finding a way to drive trial for Bing, Microsoft's new search engine. Droga5's innovative solution is to kill two birds with one stone: a massive, interactive scavenger hunt involving outdoor, bespoke, and digital media. Because Spiegel & Grau, a Random House imprint that holds the rights to the book, lacks the funds to market Carter's memoir at a scale deserving of a superstar, Droga5 is asking Microsoft to shoulder most of the campaign's costs. How can Droga5 broker a deal between Roc Nation, Random House, and Microsoft, and ensure success for each of the parties? And is pursuing this campaign idea a smart investment for the young agency? The case describes a set of decisions that paved the way for a groundbreaking advertising campaign that would win major advertising-industry awards, including the Grand Prix at the 2011 Cannes Lions International Festival of Creativity and a 2012 Gold Effie.
Swot Analysis of "Droga5: Launching Jay-Z's Decoded" written by Anita Elberse, Kwame Owusu-Kesse includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Droga5 Carter's facing as an external strategic factors. Some of the topics covered in Droga5: Launching Jay-Z's Decoded case study are - Strategic Management Strategies, Strategy and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Droga5: Launching Jay-Z's Decoded casestudy better are - – increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, wage bills are increasing, talent flight as more people leaving formal jobs,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Droga5: Launching Jay-Z's Decoded
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Droga5: Launching Jay-Z's Decoded case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Droga5 Carter's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Droga5 Carter's 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 Droga5: Launching Jay-Z's Decoded can be done for the following purposes –
1. Strategic planning using facts provided in Droga5: Launching Jay-Z's Decoded case study
2. Improving business portfolio management of Droga5 Carter's
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 Droga5 Carter's
Strengths Droga5: Launching Jay-Z's Decoded | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Droga5 Carter's in Droga5: Launching Jay-Z's Decoded Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Droga5: Launching Jay-Z's Decoded 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.
Organizational Resilience of Droga5 Carter's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Droga5 Carter's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Droga5 Carter's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Droga5 Carter's 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.
High brand equity
– Droga5 Carter's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Droga5 Carter's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Droga5 Carter's is present in almost all the verticals within the industry. This has provided firm in Droga5: Launching Jay-Z's Decoded 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.
Highly skilled collaborators
– Droga5 Carter's 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 Droga5: Launching Jay-Z's Decoded HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Droga5 Carter's is one of the leading recruiters in the industry. Managers in the Droga5: Launching Jay-Z's Decoded are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Droga5 Carter's 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.
Training and development
– Droga5 Carter's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Droga5: Launching Jay-Z's Decoded 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.
Ability to lead change in Sales & Marketing field
– Droga5 Carter's 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 Droga5 Carter's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Droga5 Carter's 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 Anita Elberse, Kwame Owusu-Kesse can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Droga5 Carter's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Droga5 Carter's 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.
Weaknesses Droga5: Launching Jay-Z's Decoded | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Droga5: Launching Jay-Z's Decoded are -
Lack of clear differentiation of Droga5 Carter's products
– To increase the profitability and margins on the products, Droga5 Carter's needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Droga5: Launching Jay-Z's Decoded that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Droga5: Launching Jay-Z's Decoded can leverage the sales team experience to cultivate customer relationships as Droga5 Carter's is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Droga5: Launching Jay-Z's Decoded, it seems that the employees of Droga5 Carter's 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Droga5: Launching Jay-Z's Decoded 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 Droga5 Carter's 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Droga5: Launching Jay-Z's Decoded 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 Droga5 Carter's has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Droga5: Launching Jay-Z's Decoded HBR case study mentions - Droga5 Carter's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Droga5: Launching Jay-Z's Decoded, is just above the industry average. Droga5 Carter's 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.
High cash cycle compare to competitors
Droga5 Carter's 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.
Capital Spending Reduction
– Even during the low interest decade, Droga5 Carter's 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.
Increasing silos among functional specialists
– The organizational structure of Droga5 Carter's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Droga5 Carter's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Droga5 Carter's to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Droga5 Carter's 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.
Opportunities Droga5: Launching Jay-Z's Decoded | 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 Droga5: Launching Jay-Z's Decoded are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Droga5 Carter's 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, Droga5: Launching Jay-Z's Decoded, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Droga5 Carter's can use these opportunities to build new business models that can help the communities that Droga5 Carter's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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 Droga5 Carter's 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.
Learning at scale
– Online learning technologies has now opened space for Droga5 Carter's 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.
Leveraging digital technologies
– Droga5 Carter's 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.
Manufacturing automation
– Droga5 Carter's 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.
Better consumer reach
– The expansion of the 5G network will help Droga5 Carter's to increase its market reach. Droga5 Carter's 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.
Creating value in data economy
– The success of analytics program of Droga5 Carter's has opened avenues for new revenue streams for the organization in the industry. This can help Droga5 Carter's to build a more holistic ecosystem as suggested in the Droga5: Launching Jay-Z's Decoded case study. Droga5 Carter's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Droga5 Carter's 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 Droga5: Launching Jay-Z's Decoded - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Droga5 Carter's 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, Droga5 Carter's is facing challenges because of the dominance of functional experts in the organization. Droga5: Launching Jay-Z's Decoded 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Droga5 Carter's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Droga5 Carter's 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 Droga5 Carter's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Threats Droga5: Launching Jay-Z's Decoded External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Droga5: Launching Jay-Z's Decoded are -
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. Droga5 Carter's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Droga5 Carter's 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.
Consumer confidence and its impact on Droga5 Carter's 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.
Stagnating economy with rate increase
– Droga5 Carter's 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
– Droga5 Carter's 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. Droga5 Carter's can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Droga5 Carter's
– 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 Droga5 Carter's.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Droga5 Carter's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Droga5 Carter's 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, Droga5 Carter's 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 Droga5: Launching Jay-Z's Decoded .
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 Droga5 Carter's.
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. Droga5 Carter's 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
– Droga5 Carter's 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 Droga5: Launching Jay-Z's Decoded 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 Droga5: Launching Jay-Z's Decoded 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 Droga5: Launching Jay-Z's Decoded 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 Droga5: Launching Jay-Z's Decoded 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 Droga5: Launching Jay-Z's Decoded 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 Droga5 Carter's needs to make to build a sustainable competitive advantage.
