The two entrepreneurs met with Fabric Super-Store's executive management team to present an offer to purchase the Kitchener store and a right of first refusal (ROR) on a second, nearby location in Cambridge. Upon consideration and rejection of the ROR, management responded with an intriguing counter-offer in terms of a "vendor take-back" offer (VTB). Fabric Super-Store offered vendor financing terms over three years provided the entrepreneurs purchased both locations. Somewhat complicating their decision to buy was discovering that the Cambridge location had machinery much newer and larger than that in the Kitchener store. Should Cambridge be sold to another party, it could threaten the success of the Kitchener store. The entrepreneurs concluded that they would either need to buy both locations, or pass on the opportunity completely. What to do?
Swot Analysis of "Fabric Super-Store (B)" written by David Simpson, Colin McDougall includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kitchener Fabric facing as an external strategic factors. Some of the topics covered in Fabric Super-Store (B) case study are - Strategic Management Strategies, Financial management, Negotiations, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Fabric Super-Store (B) casestudy better are - – central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs,
technology disruption, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Fabric Super-Store (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fabric Super-Store (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kitchener Fabric, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kitchener Fabric 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 Fabric Super-Store (B) can be done for the following purposes –
1. Strategic planning using facts provided in Fabric Super-Store (B) case study
2. Improving business portfolio management of Kitchener Fabric
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 Kitchener Fabric
Strengths Fabric Super-Store (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kitchener Fabric in Fabric Super-Store (B) Harvard Business Review case study are -
High switching costs
– The high switching costs that Kitchener Fabric 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)
– Kitchener Fabric 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 Fabric Super-Store (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– Fabric Super-Store (B) firm has clearly differentiated products in the market place. This has enabled Kitchener Fabric to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Kitchener Fabric to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Kitchener Fabric has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kitchener Fabric 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.
Low bargaining power of suppliers
– Suppliers of Kitchener Fabric in the sector have low bargaining power. Fabric Super-Store (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kitchener Fabric to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Kitchener Fabric is one of the leading recruiters in the industry. Managers in the Fabric Super-Store (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Kitchener Fabric
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kitchener Fabric does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Kitchener Fabric 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
– Kitchener Fabric is present in almost all the verticals within the industry. This has provided firm in Fabric Super-Store (B) 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.
Innovation driven organization
– Kitchener Fabric is one of the most innovative firm in sector. Manager in Fabric Super-Store (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Strategy & Execution field
– Kitchener Fabric 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 Kitchener Fabric in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Kitchener Fabric is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Fabric Super-Store (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fabric Super-Store (B) are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kitchener Fabric is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Fabric Super-Store (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Kitchener Fabric 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.
Skills based hiring
– The stress on hiring functional specialists at Kitchener Fabric 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.
Aligning sales with marketing
– It come across in the case study Fabric Super-Store (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Fabric Super-Store (B) can leverage the sales team experience to cultivate customer relationships as Kitchener Fabric is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Fabric Super-Store (B) 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 Kitchener Fabric 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Kitchener Fabric, firm in the HBR case study Fabric Super-Store (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Kitchener Fabric is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Kitchener Fabric needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kitchener Fabric to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fabric Super-Store (B), in the dynamic environment Kitchener Fabric has struggled to respond to the nimble upstart competition. Kitchener Fabric has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Fabric Super-Store (B) HBR case study mentions - Kitchener Fabric 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.
Interest costs
– Compare to the competition, Kitchener Fabric 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.
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 Kitchener Fabric supply chain. Even after few cautionary changes mentioned in the HBR case study - Fabric Super-Store (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kitchener Fabric vulnerable to further global disruptions in South East Asia.
Opportunities Fabric Super-Store (B) | 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 Fabric Super-Store (B) are -
Using analytics as competitive advantage
– Kitchener Fabric 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 Fabric Super-Store (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kitchener Fabric to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Kitchener Fabric in the consumer business. Now Kitchener Fabric can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kitchener Fabric is facing challenges because of the dominance of functional experts in the organization. Fabric Super-Store (B) 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.
Buying journey improvements
– Kitchener Fabric can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fabric Super-Store (B) 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.
Loyalty marketing
– Kitchener Fabric 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.
Learning at scale
– Online learning technologies has now opened space for Kitchener Fabric 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.
Better consumer reach
– The expansion of the 5G network will help Kitchener Fabric to increase its market reach. Kitchener Fabric 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.
Manufacturing automation
– Kitchener Fabric 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.
Leveraging digital technologies
– Kitchener Fabric 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kitchener Fabric 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 Kitchener Fabric to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kitchener Fabric 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, Fabric Super-Store (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Kitchener Fabric can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kitchener Fabric 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.
Threats Fabric Super-Store (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fabric Super-Store (B) are -
Stagnating economy with rate increase
– Kitchener Fabric 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.
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.
Technology acceleration in Forth Industrial Revolution
– Kitchener Fabric has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Kitchener Fabric 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.
Environmental challenges
– Kitchener Fabric 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. Kitchener Fabric can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Kitchener Fabric 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.
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 Kitchener Fabric business can come under increasing regulations regarding data privacy, data security, etc.
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. Kitchener Fabric needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Kitchener Fabric 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.
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 Kitchener Fabric in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Kitchener Fabric
– 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 Kitchener Fabric.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kitchener Fabric 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 Fabric Super-Store (B) .
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 Kitchener Fabric.
Consumer confidence and its impact on Kitchener Fabric 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.
Weighted SWOT Analysis of Fabric Super-Store (B) 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 Fabric Super-Store (B) 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 Fabric Super-Store (B) 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 Fabric Super-Store (B) 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 Fabric Super-Store (B) 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 Kitchener Fabric needs to make to build a sustainable competitive advantage.