FairMarket, Inc.: Where Buyers and Sellers Connect SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of FairMarket, Inc.: Where Buyers and Sellers Connect
On February 20, 1997, FairMarket, an Internet-based business-to-business auction site, was launched. CEO, founder Scott Randall, drew on his experience building Internet businesses at NECX Direct, Yahoo, and Internet Shopping Network to build his business. This case, set in June 1998, describes the challenges he faced in launching the company and enables students to debate the best approach to penetrating the market and growing the organization.
Authors :: Lynda M. Applegate, Jack Wieland, Chad Raube
Swot Analysis of "FairMarket, Inc.: Where Buyers and Sellers Connect" written by Lynda M. Applegate, Jack Wieland, Chad Raube includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fairmarket Necx facing as an external strategic factors. Some of the topics covered in FairMarket, Inc.: Where Buyers and Sellers Connect case study are - Strategic Management Strategies, Growth strategy, Internet, IT, Managing people, Negotiations and Strategy & Execution.
Some of the macro environment factors that can be used to understand the FairMarket, Inc.: Where Buyers and Sellers Connect casestudy better are - – cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of FairMarket, Inc.: Where Buyers and Sellers Connect
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FairMarket, Inc.: Where Buyers and Sellers Connect case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fairmarket Necx, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fairmarket Necx 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 FairMarket, Inc.: Where Buyers and Sellers Connect can be done for the following purposes –
1. Strategic planning using facts provided in FairMarket, Inc.: Where Buyers and Sellers Connect case study
2. Improving business portfolio management of Fairmarket Necx
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 Fairmarket Necx
Strengths FairMarket, Inc.: Where Buyers and Sellers Connect | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fairmarket Necx in FairMarket, Inc.: Where Buyers and Sellers Connect Harvard Business Review case study are -
Effective Research and Development (R&D)
– Fairmarket Necx 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 FairMarket, Inc.: Where Buyers and Sellers Connect - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Fairmarket Necx has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fairmarket Necx 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.
Sustainable margins compare to other players in Strategy & Execution industry
– FairMarket, Inc.: Where Buyers and Sellers Connect firm has clearly differentiated products in the market place. This has enabled Fairmarket Necx to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Fairmarket Necx to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Fairmarket Necx 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 FairMarket, Inc.: Where Buyers and Sellers Connect HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Fairmarket Necx 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 Fairmarket Necx in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Fairmarket Necx is present in almost all the verticals within the industry. This has provided firm in FairMarket, Inc.: Where Buyers and Sellers Connect 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.
Ability to recruit top talent
– Fairmarket Necx is one of the leading recruiters in the industry. Managers in the FairMarket, Inc.: Where Buyers and Sellers Connect are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Fairmarket Necx has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fairmarket Necx to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Fairmarket Necx 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 Fairmarket Necx is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FairMarket, Inc.: Where Buyers and Sellers Connect Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Fairmarket Necx 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.
Superior customer experience
– The customer experience strategy of Fairmarket Necx in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Fairmarket Necx digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fairmarket Necx 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 FairMarket, Inc.: Where Buyers and Sellers Connect | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FairMarket, Inc.: Where Buyers and Sellers Connect are -
Slow decision making process
– As mentioned earlier in the report, Fairmarket Necx 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. Fairmarket Necx 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.
No frontier risks strategy
– After analyzing the HBR case study FairMarket, Inc.: Where Buyers and Sellers Connect, 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.
Products dominated business model
– Even though Fairmarket Necx has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - FairMarket, Inc.: Where Buyers and Sellers Connect should strive to include more intangible value offerings along with its core products and services.
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 Fairmarket Necx supply chain. Even after few cautionary changes mentioned in the HBR case study - FairMarket, Inc.: Where Buyers and Sellers Connect, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fairmarket Necx vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Fairmarket Necx products
– To increase the profitability and margins on the products, Fairmarket Necx needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Fairmarket Necx 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.
Skills based hiring
– The stress on hiring functional specialists at Fairmarket Necx 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, Fairmarket Necx 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study FairMarket, Inc.: Where Buyers and Sellers Connect, in the dynamic environment Fairmarket Necx has struggled to respond to the nimble upstart competition. Fairmarket Necx has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FairMarket, Inc.: Where Buyers and Sellers Connect, is just above the industry average. Fairmarket Necx needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High cash cycle compare to competitors
Fairmarket Necx 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 FairMarket, Inc.: Where Buyers and Sellers Connect | 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 FairMarket, Inc.: Where Buyers and Sellers Connect are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fairmarket Necx is facing challenges because of the dominance of functional experts in the organization. FairMarket, Inc.: Where Buyers and Sellers Connect 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.
Creating value in data economy
– The success of analytics program of Fairmarket Necx has opened avenues for new revenue streams for the organization in the industry. This can help Fairmarket Necx to build a more holistic ecosystem as suggested in the FairMarket, Inc.: Where Buyers and Sellers Connect case study. Fairmarket Necx can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fairmarket Necx in the consumer business. Now Fairmarket Necx can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fairmarket Necx 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, FairMarket, Inc.: Where Buyers and Sellers Connect, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Fairmarket Necx 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 FairMarket, Inc.: Where Buyers and Sellers Connect - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fairmarket Necx to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Fairmarket Necx 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
– Fairmarket Necx can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. FairMarket, Inc.: Where Buyers and Sellers Connect 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fairmarket Necx in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fairmarket Necx 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 Fairmarket Necx to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Fairmarket Necx can develop new processes and procedures in Strategy & Execution 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 Fairmarket Necx to increase its market reach. Fairmarket Necx 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.
Leveraging digital technologies
– Fairmarket Necx can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Fairmarket Necx can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Threats FairMarket, Inc.: Where Buyers and Sellers Connect External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FairMarket, Inc.: Where Buyers and Sellers Connect are -
Stagnating economy with rate increase
– Fairmarket Necx can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Fairmarket Necx 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. Fairmarket Necx can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Fairmarket Necx 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.
Increasing wage structure of Fairmarket Necx
– 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 Fairmarket Necx.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fairmarket Necx can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Fairmarket Necx is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fairmarket Necx with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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. Fairmarket Necx 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fairmarket Necx 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.
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 Fairmarket Necx in the Strategy & Execution sector and impact the bottomline of the organization.
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 Fairmarket Necx business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of FairMarket, Inc.: Where Buyers and Sellers Connect 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 FairMarket, Inc.: Where Buyers and Sellers Connect 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 FairMarket, Inc.: Where Buyers and Sellers Connect 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 FairMarket, Inc.: Where Buyers and Sellers Connect 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 FairMarket, Inc.: Where Buyers and Sellers Connect 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 Fairmarket Necx needs to make to build a sustainable competitive advantage.
