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 - – there is backlash against globalization, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , technology disruption,
central banks are concerned over increasing inflation, wage bills are increasing, 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 -
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.
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.
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.
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.
High brand equity
– Sothebys.com Sotheby's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sothebys.com Sotheby's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
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.
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.
Ability to lead change in Sales & Marketing field
– Sothebys.com Sotheby'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 Sothebys.com Sotheby's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Weaknesses Art Online | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Art Online are -
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.
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.
Interest costs
– Compare to the competition, Sothebys.com Sotheby'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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Art Online 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 Sothebys.com Sotheby's 's lucrative customers.
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.
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.
Need for greater diversity
– Sothebys.com Sotheby's 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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Sothebys.com Sotheby's has opened avenues for new revenue streams for the organization in the industry. This can help Sothebys.com Sotheby's to build a more holistic ecosystem as suggested in the Art Online case study. Sothebys.com Sotheby's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
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 -
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sothebys.com Sotheby's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 .
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
