Sothebys.com operated from 2000 to 2003, during the tail end of the dot-com boom, in an economy threatened by recession and in a period when the art market overall was depressed. Historically, luxury goods have not sold well during recessions, and Sotheby's traditional auction business also did badly at this time. Sotheby's Holdings had a net loss of $42 million in 2001 and a net loss of $55 million in 2002. To make matter's worse, Sotheby's management was distracted by the lengthy and well publicized price-fixing trial, which led to the firm's chairman being sent to jail, Sotheby's paying a settlement of over a quarter of a billion dollars, and the firm's reputation being left in tatters. As Sothebys.com was shutting down, the Wall Street Journal proclaimed that "a chapter of art-market history" was coming to a close. Sothebys.com failed, the Journal argued, because the "owners of the money-generating lots--the Monets, Warhols, and Chippendale chairs--had no interest in selling them on the Net, nor did the buyers wish to purchase them there." Expensive artworks sell best, the Journal said, "in real-time sales with glossy printed catalogs and elegant auctioneers wielding polished wooden gavels." People could easily log on to the Sothebys.com Web site, but they did not want to bid "without looking, touching, and feeling that unique thrill one gets in the presence of something ineffably beautiful and satisfying." Selling art is "a job intrinsically unsuited to the Internet." Does the collapse of Southebys.com mean that the Internet is unsuitable for selling fine art?
Swot Analysis of "Art Online" written by John McMillan, Eiichiro Kasumori includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sothebys.com Sotheby's facing as an external strategic factors. Some of the topics covered in Art Online case study are - Strategic Management Strategies, Internet, Marketing, Negotiations, Strategy execution and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Art Online casestudy better are - – technology disruption, there is backlash against globalization, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, wage bills are increasing,
cloud computing is disrupting traditional business models, increasing commodity prices, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Art Online case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sothebys.com Sotheby's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sothebys.com Sotheby'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 Art Online can be done for the following purposes –
1. Strategic planning using facts provided in Art Online case study
2. Improving business portfolio management of Sothebys.com Sotheby'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 Sothebys.com Sotheby's
Strengths Art Online | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sothebys.com Sotheby's in Art Online Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Art Online 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 Sothebys.com Sotheby's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sothebys.com Sotheby's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Sothebys.com Sotheby's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Art Online 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
– Sothebys.com Sotheby's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Sothebys.com Sotheby'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 Art Online HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Sothebys.com Sotheby's is present in almost all the verticals within the industry. This has provided firm in Art Online case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Sales & Marketing industry
– Art Online firm has clearly differentiated products in the market place. This has enabled Sothebys.com Sotheby's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Sothebys.com Sotheby's to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Sothebys.com Sotheby'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.
Superior customer experience
– The customer experience strategy of Sothebys.com Sotheby's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Sothebys.com Sotheby's is one of the leading recruiters in the industry. Managers in the Art Online are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Sothebys.com Sotheby's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sothebys.com Sotheby'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.
Learning organization
- Sothebys.com Sotheby's 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 Sothebys.com Sotheby's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Art Online Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Art Online | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Art Online are -
Aligning sales with marketing
– It come across in the case study Art Online 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 Art Online can leverage the sales team experience to cultivate customer relationships as Sothebys.com Sotheby's is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Sothebys.com Sotheby's, firm in the HBR case study Art Online needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Sothebys.com Sotheby's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Sothebys.com Sotheby's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sothebys.com Sotheby's to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Art Online HBR case study mentions - Sothebys.com Sotheby'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.
High cash cycle compare to competitors
Sothebys.com Sotheby'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.
Skills based hiring
– The stress on hiring functional specialists at Sothebys.com Sotheby's 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.
Capital Spending Reduction
– Even during the low interest decade, Sothebys.com Sotheby'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.
No frontier risks strategy
– After analyzing the HBR case study Art Online, 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.
Slow decision making process
– As mentioned earlier in the report, Sothebys.com Sotheby's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Sothebys.com Sotheby's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sothebys.com Sotheby's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Art Online can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Art Online, is just above the industry average. Sothebys.com Sotheby'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.
Opportunities Art Online | 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 Art Online are -
Building a culture of innovation
– managers at Sothebys.com Sotheby'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.
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. Sothebys.com Sotheby's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Sothebys.com Sotheby'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 Art Online - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sothebys.com Sotheby's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Sothebys.com Sotheby'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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sothebys.com Sotheby's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Sothebys.com Sotheby's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Art Online 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.
Leveraging digital technologies
– Sothebys.com Sotheby'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.
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. Sothebys.com Sotheby's 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. Sothebys.com Sotheby's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sothebys.com Sotheby's 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.
Learning at scale
– Online learning technologies has now opened space for Sothebys.com Sotheby'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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sothebys.com Sotheby's is facing challenges because of the dominance of functional experts in the organization. Art Online 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.
Developing new processes and practices
– Sothebys.com Sotheby's 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.
Better consumer reach
– The expansion of the 5G network will help Sothebys.com Sotheby's to increase its market reach. Sothebys.com Sotheby'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.
Threats Art Online External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Art Online are -
Stagnating economy with rate increase
– Sothebys.com Sotheby'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.
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.
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 Sothebys.com Sotheby's.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Art Online, Sothebys.com Sotheby's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Consumer confidence and its impact on Sothebys.com Sotheby'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.
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 Sothebys.com Sotheby's business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Sothebys.com Sotheby'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.
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. Sothebys.com Sotheby'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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sothebys.com Sotheby'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 Art Online .
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 Sothebys.com Sotheby's in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing wage structure of Sothebys.com Sotheby'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 Sothebys.com Sotheby'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.
High dependence on third party suppliers
– Sothebys.com Sotheby'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.
Weighted SWOT Analysis of Art Online 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 Art Online 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 Art Online 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 Art Online 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 Art Online 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 Sothebys.com Sotheby's needs to make to build a sustainable competitive advantage.