L.L. Bean: A Search for Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of L.L. Bean: A Search for Growth
In mid-2003, CEO Chris McCormick felt L.L. Bean was in a good position to begin to grow again. For nearly 90 years, the company sold clothing and gear for outdoor enthusiasts through its catalogs and a single retail store in Freeport, Maine. In the three decades prior to 1996, sales growth averaged nearly 20% per year. In 1995, sales hit $1 billion, but stagnated for the next six years--growing at less than 2% annually. The company responded with a structural reorganization and investment in its Internet sales channel. In 2002 and early 2003, McCormick led an effort to reduce overhead and improve its internal systems, including the elimination of 1,000 jobs--which reduced year-round headcount by nearly 15%. After these initiatives, the company remained profitable and enjoyed a strong balance sheet, but sales growth remained near zero. Most significantly, between 2000 and 2002, L.L. Bean opened three retail stores in shopping malls outside Maine. McCormick viewed these three stores as the first of a chain of stores that would form a new selling channel and enable L.L. Bean to grow. Early results from the three new stores were below expectations; L.L. Bean spent significant time examining its retail store activities in an attempt to learn where it could improve. As the company began to apply those lessons in the stores, performance picked up, fueling McCormick's optimism that L.L. Bean could grow with retail stores.
Authors :: Rajiv Lal, Walter J. Salmon, James Weber
Swot Analysis of "L.L. Bean: A Search for Growth" written by Rajiv Lal, Walter J. Salmon, James Weber includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that L.l Bean facing as an external strategic factors. Some of the topics covered in L.L. Bean: A Search for Growth case study are - Strategic Management Strategies, Developing employees, International business, Leadership, Marketing, Professional transitions, Risk management, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the L.L. Bean: A Search for Growth casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, etc
Introduction to SWOT Analysis of L.L. Bean: A Search for Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L.L. Bean: A Search for Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the L.l Bean, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which L.l Bean 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 L.L. Bean: A Search for Growth can be done for the following purposes –
1. Strategic planning using facts provided in L.L. Bean: A Search for Growth case study
2. Improving business portfolio management of L.l Bean
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of L.l Bean
Strengths L.L. Bean: A Search for Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of L.l Bean in L.L. Bean: A Search for Growth Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of L.l Bean in the sector have low bargaining power. L.L. Bean: A Search for Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps L.l Bean to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– L.l Bean 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 L.L. Bean: A Search for Growth - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– L.l Bean 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 L.L. Bean: A Search for Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– L.l Bean is present in almost all the verticals within the industry. This has provided firm in L.L. Bean: A Search for Growth 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.
Organizational Resilience of L.l Bean
– The covid-19 pandemic has put organizational resilience at the centre of everthing that L.l Bean does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– L.l Bean is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– L.l Bean 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 L.l Bean in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– L.l Bean 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 Rajiv Lal, Walter J. Salmon, James Weber 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.
Ability to recruit top talent
– L.l Bean is one of the leading recruiters in the industry. Managers in the L.L. Bean: A Search for Growth 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 L.l Bean 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.
Sustainable margins compare to other players in Strategy & Execution industry
– L.L. Bean: A Search for Growth firm has clearly differentiated products in the market place. This has enabled L.l Bean to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped L.l Bean to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For L.l Bean digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. L.l Bean 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.
Weaknesses L.L. Bean: A Search for Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L.L. Bean: A Search for Growth are -
High operating costs
– Compare to the competitors, firm in the HBR case study L.L. Bean: A Search for Growth 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 L.l Bean 's lucrative customers.
Interest costs
– Compare to the competition, L.l Bean 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study L.L. Bean: A Search for Growth, is just above the industry average. L.l Bean 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.
Workers concerns about automation
– As automation is fast increasing in the segment, L.l Bean needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study L.L. Bean: A Search for Growth, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Increasing silos among functional specialists
– The organizational structure of L.l Bean is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. L.l Bean needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help L.l Bean to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at L.l Bean 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, L.l Bean 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.
Need for greater diversity
– L.l Bean has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of L.l Bean products
– To increase the profitability and margins on the products, L.l Bean 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 L.l Bean supply chain. Even after few cautionary changes mentioned in the HBR case study - L.L. Bean: A Search for Growth, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left L.l Bean vulnerable to further global disruptions in South East Asia.
Opportunities L.L. Bean: A Search for Growth | 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 L.L. Bean: A Search for Growth are -
Creating value in data economy
– The success of analytics program of L.l Bean has opened avenues for new revenue streams for the organization in the industry. This can help L.l Bean to build a more holistic ecosystem as suggested in the L.L. Bean: A Search for Growth case study. L.l Bean can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. L.l Bean 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. L.l Bean 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. L.l Bean can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– L.l Bean has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– L.l Bean can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L.L. Bean: A Search for Growth 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.
Using analytics as competitive advantage
– L.l Bean 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 L.L. Bean: A Search for Growth - to build a competitive advantage using analytics. The analytics driven competitive advantage can help L.l Bean to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, L.l Bean 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for L.l Bean 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 L.l Bean to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, L.l Bean can use these opportunities to build new business models that can help the communities that L.l Bean operates in. Secondly it can use opportunities from government spending in Strategy & Execution 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 L.l Bean 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.
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. L.l Bean can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects L.l Bean can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, L.l Bean is facing challenges because of the dominance of functional experts in the organization. L.L. Bean: A Search for Growth 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.
Threats L.L. Bean: A Search for Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L.L. Bean: A Search for Growth are -
Stagnating economy with rate increase
– L.l Bean can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, L.l Bean 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 L.L. Bean: A Search for Growth .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents L.l Bean with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– L.l Bean has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, L.l Bean needs to keep up with the evolution of technology in the Strategy & Execution 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.
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 L.l Bean in the Strategy & Execution sector and impact the bottomline of the organization.
Regulatory challenges
– L.l Bean 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 Strategy & Execution industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 L.l Bean business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study L.L. Bean: A Search for Growth, L.l Bean may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 L.l Bean.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for L.l Bean in the Strategy & Execution industry. The Strategy & Execution 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
– L.l Bean 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.l Bean needs to make to build a sustainable competitive advantage.