The entrepreneurs had offered to purchase one Fabric Super-Store franchise; management had countered with vendor take-back (VTB) financing toward the purchase of two stores if the entrepreneurs would agree to buy and operate both locations. The VTB debt would be in second position to the bank in the event of a bankruptcy. The couple was convinced they could be successful franchisees with both stores, but were concerned with the high proposed interest rate on the VTB offer. While there was no penalty for early repayment (as in their secured bank loan), the bank had offered very competitive rates. After evaluating the financial implications of Fabric Super-Store's counter offer, it was clear that without an immediate and substantial increase in sales at both stores, the entrepreneurs would find themselves unable to operate the business due to the high financing costs. Although both parties were motivated to make a deal happen, some important roadblocks would need to be navigated in order to actually get it done.
Swot Analysis of "Fabric Super-Store (C)" written by David Simpson, Colin McDougall includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vtb Fabric facing as an external strategic factors. Some of the topics covered in Fabric Super-Store (C) 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 (C) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
supply chains are disrupted by pandemic , increasing energy prices, etc
Introduction to SWOT Analysis of Fabric Super-Store (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fabric Super-Store (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vtb Fabric, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vtb 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 (C) can be done for the following purposes –
1. Strategic planning using facts provided in Fabric Super-Store (C) case study
2. Improving business portfolio management of Vtb 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 Vtb Fabric
Strengths Fabric Super-Store (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vtb Fabric in Fabric Super-Store (C) Harvard Business Review case study are -
Innovation driven organization
– Vtb Fabric is one of the most innovative firm in sector. Manager in Fabric Super-Store (C) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Vtb Fabric in the sector have low bargaining power. Fabric Super-Store (C) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vtb Fabric to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Vtb Fabric has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vtb 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.
Operational resilience
– The operational resilience strategy in the Fabric Super-Store (C) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Vtb Fabric digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vtb Fabric has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Vtb Fabric
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vtb Fabric does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Vtb Fabric has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fabric Super-Store (C) 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.
Analytics focus
– Vtb Fabric 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 David Simpson, Colin McDougall 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.
Learning organization
- Vtb Fabric 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 Vtb Fabric is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Fabric Super-Store (C) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Vtb Fabric in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Vtb Fabric has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vtb Fabric to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Strategy & Execution industry
– Fabric Super-Store (C) firm has clearly differentiated products in the market place. This has enabled Vtb Fabric to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Vtb Fabric to invest into research and development (R&D) and innovation.
Weaknesses Fabric Super-Store (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fabric Super-Store (C) are -
High cash cycle compare to competitors
Vtb Fabric 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Fabric Super-Store (C) 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 Vtb Fabric 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Vtb Fabric is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Vtb Fabric needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vtb Fabric to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Vtb Fabric 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 bargaining power of channel partners
– Because of the regulatory requirements, David Simpson, Colin McDougall suggests that, Vtb Fabric is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fabric Super-Store (C), it seems that the employees of Vtb Fabric 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.
Skills based hiring
– The stress on hiring functional specialists at Vtb 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Fabric Super-Store (C) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Vtb Fabric has relatively successful track record of launching new products.
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 Vtb Fabric supply chain. Even after few cautionary changes mentioned in the HBR case study - Fabric Super-Store (C), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vtb Fabric vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Fabric Super-Store (C), 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fabric Super-Store (C), in the dynamic environment Vtb Fabric has struggled to respond to the nimble upstart competition. Vtb Fabric has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Fabric Super-Store (C) | 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 (C) are -
Manufacturing automation
– Vtb 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vtb Fabric is facing challenges because of the dominance of functional experts in the organization. Fabric Super-Store (C) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Vtb Fabric can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Vtb 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.
Loyalty marketing
– Vtb 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.
Developing new processes and practices
– Vtb Fabric 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vtb 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 Vtb Fabric to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vtb Fabric 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vtb 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.
Using analytics as competitive advantage
– Vtb 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 (C) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Vtb Fabric to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Vtb 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 (C), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Vtb Fabric has opened avenues for new revenue streams for the organization in the industry. This can help Vtb Fabric to build a more holistic ecosystem as suggested in the Fabric Super-Store (C) case study. Vtb Fabric 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 Vtb Fabric in the consumer business. Now Vtb Fabric can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Fabric Super-Store (C) 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 (C) are -
Technology acceleration in Forth Industrial Revolution
– Vtb Fabric has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Vtb 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
– Vtb 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. Vtb Fabric can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Vtb Fabric needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Vtb 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.
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 Vtb Fabric business can come under increasing regulations regarding data privacy, data security, etc.
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 Vtb Fabric in the Strategy & Execution sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Vtb Fabric is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Vtb 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.
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 Vtb Fabric.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vtb Fabric 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vtb Fabric 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.
Weighted SWOT Analysis of Fabric Super-Store (C) 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 (C) 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 (C) 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 (C) 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 (C) 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 Vtb Fabric needs to make to build a sustainable competitive advantage.
