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 - – talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, there is backlash against globalization, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings,
technology disruption, there is increasing trade war between United States & China, 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 -
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.
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.
High switching costs
– The high switching costs that Sothebys.com Sotheby's 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Sothebys.com Sotheby's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sothebys.com Sotheby'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.
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.
Effective Research and Development (R&D)
– Sothebys.com Sotheby's 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 Art Online - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
Innovation driven organization
– Sothebys.com Sotheby's is one of the most innovative firm in sector. Manager in Art Online Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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 -
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.
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.
Lack of clear differentiation of Sothebys.com Sotheby's products
– To increase the profitability and margins on the products, Sothebys.com Sotheby's needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Sothebys.com Sotheby's supply chain. Even after few cautionary changes mentioned in the HBR case study - Art Online, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sothebys.com Sotheby's vulnerable to further global disruptions in South East Asia.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Art Online, it seems that the employees of Sothebys.com Sotheby'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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Art Online 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 Sothebys.com Sotheby's has relatively successful track record of launching new products.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, John McMillan, Eiichiro Kasumori suggests that, Sothebys.com Sotheby's 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.
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.
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 -
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sothebys.com Sotheby's 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 Sothebys.com Sotheby's to hire the very best people irrespective of their geographical location.
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 Sothebys.com Sotheby'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.
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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Sothebys.com Sotheby's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sothebys.com Sotheby's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sothebys.com Sotheby's can use these opportunities to build new business models that can help the communities that Sothebys.com Sotheby's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sothebys.com Sotheby'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, Art Online, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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 -
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. Sothebys.com Sotheby's needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
Shortening product life cycle
– it is one of the major threat that Sothebys.com Sotheby's is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sothebys.com Sotheby's 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.
Environmental challenges
– Sothebys.com Sotheby'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. Sothebys.com Sotheby's can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Technology acceleration in Forth Industrial Revolution
– Sothebys.com Sotheby's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Sothebys.com Sotheby's 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.
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. Sothebys.com Sotheby's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– 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.
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.
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 .
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 .
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.