Zappos.com (A): Bring the Shoe Store to Your Home SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zappos.com (A): Bring the Shoe Store to Your Home
The cases examine how the strategy of Zappos as an innovative online shoe retailer has been conceived and executed. Two cases, (A) and (B), and a teaching note are provided. Each paper case is accompanied by a video case to be shown in the classroom. Video cases and lecture presentation slides are available to instructors at www.blueoceanstrategy.com.
Authors :: W. Chan Kim, Oh Young Koo, Renee A. Mauborgne
Swot Analysis of "Zappos.com (A): Bring the Shoe Store to Your Home" written by W. Chan Kim, Oh Young Koo, Renee A. Mauborgne includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shoe Www.blueoceanstrategy.com facing as an external strategic factors. Some of the topics covered in Zappos.com (A): Bring the Shoe Store to Your Home case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Zappos.com (A): Bring the Shoe Store to Your Home casestudy better are - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing energy prices, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Zappos.com (A): Bring the Shoe Store to Your Home
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zappos.com (A): Bring the Shoe Store to Your Home case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shoe Www.blueoceanstrategy.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shoe Www.blueoceanstrategy.com 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 Zappos.com (A): Bring the Shoe Store to Your Home can be done for the following purposes –
1. Strategic planning using facts provided in Zappos.com (A): Bring the Shoe Store to Your Home case study
2. Improving business portfolio management of Shoe Www.blueoceanstrategy.com
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 Shoe Www.blueoceanstrategy.com
Strengths Zappos.com (A): Bring the Shoe Store to Your Home | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shoe Www.blueoceanstrategy.com in Zappos.com (A): Bring the Shoe Store to Your Home Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Zappos.com (A): Bring the Shoe Store to Your Home firm has clearly differentiated products in the market place. This has enabled Shoe Www.blueoceanstrategy.com to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Shoe Www.blueoceanstrategy.com to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Shoe Www.blueoceanstrategy.com 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.
Analytics focus
– Shoe Www.blueoceanstrategy.com 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 W. Chan Kim, Oh Young Koo, Renee A. Mauborgne 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.
Training and development
– Shoe Www.blueoceanstrategy.com has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zappos.com (A): Bring the Shoe Store to Your Home 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.
Learning organization
- Shoe Www.blueoceanstrategy.com 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 Shoe Www.blueoceanstrategy.com is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zappos.com (A): Bring the Shoe Store to Your Home Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Shoe Www.blueoceanstrategy.com is present in almost all the verticals within the industry. This has provided firm in Zappos.com (A): Bring the Shoe Store to Your Home 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.
Successful track record of launching new products
– Shoe Www.blueoceanstrategy.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shoe Www.blueoceanstrategy.com 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Shoe Www.blueoceanstrategy.com digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shoe Www.blueoceanstrategy.com 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.
Superior customer experience
– The customer experience strategy of Shoe Www.blueoceanstrategy.com in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Shoe Www.blueoceanstrategy.com is one of the leading recruiters in the industry. Managers in the Zappos.com (A): Bring the Shoe Store to Your Home are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Shoe Www.blueoceanstrategy.com in the sector have low bargaining power. Zappos.com (A): Bring the Shoe Store to Your Home has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shoe Www.blueoceanstrategy.com to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Shoe Www.blueoceanstrategy.com 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 Zappos.com (A): Bring the Shoe Store to Your Home HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Zappos.com (A): Bring the Shoe Store to Your Home | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zappos.com (A): Bring the Shoe Store to Your Home are -
High operating costs
– Compare to the competitors, firm in the HBR case study Zappos.com (A): Bring the Shoe Store to Your Home 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 Shoe Www.blueoceanstrategy.com 's lucrative customers.
Products dominated business model
– Even though Shoe Www.blueoceanstrategy.com 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 - Zappos.com (A): Bring the Shoe Store to Your Home should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Shoe Www.blueoceanstrategy.com 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.
Need for greater diversity
– Shoe Www.blueoceanstrategy.com 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.
Slow to strategic competitive environment developments
– As Zappos.com (A): Bring the Shoe Store to Your Home HBR case study mentions - Shoe Www.blueoceanstrategy.com 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zappos.com (A): Bring the Shoe Store to Your Home, in the dynamic environment Shoe Www.blueoceanstrategy.com has struggled to respond to the nimble upstart competition. Shoe Www.blueoceanstrategy.com has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Shoe Www.blueoceanstrategy.com 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.
Skills based hiring
– The stress on hiring functional specialists at Shoe Www.blueoceanstrategy.com 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zappos.com (A): Bring the Shoe Store to Your Home, is just above the industry average. Shoe Www.blueoceanstrategy.com 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.
Lack of clear differentiation of Shoe Www.blueoceanstrategy.com products
– To increase the profitability and margins on the products, Shoe Www.blueoceanstrategy.com needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Zappos.com (A): Bring the Shoe Store to Your Home, it seems that the employees of Shoe Www.blueoceanstrategy.com 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.
Opportunities Zappos.com (A): Bring the Shoe Store to Your Home | 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 Zappos.com (A): Bring the Shoe Store to Your Home are -
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. Shoe Www.blueoceanstrategy.com can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shoe Www.blueoceanstrategy.com 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, Zappos.com (A): Bring the Shoe Store to Your Home, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Shoe Www.blueoceanstrategy.com 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shoe Www.blueoceanstrategy.com can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Shoe Www.blueoceanstrategy.com 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, Shoe Www.blueoceanstrategy.com is facing challenges because of the dominance of functional experts in the organization. Zappos.com (A): Bring the Shoe Store to Your Home 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.
Learning at scale
– Online learning technologies has now opened space for Shoe Www.blueoceanstrategy.com 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.
Developing new processes and practices
– Shoe Www.blueoceanstrategy.com 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.
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 Shoe Www.blueoceanstrategy.com 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.
Creating value in data economy
– The success of analytics program of Shoe Www.blueoceanstrategy.com has opened avenues for new revenue streams for the organization in the industry. This can help Shoe Www.blueoceanstrategy.com to build a more holistic ecosystem as suggested in the Zappos.com (A): Bring the Shoe Store to Your Home case study. Shoe Www.blueoceanstrategy.com 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 Shoe Www.blueoceanstrategy.com in the consumer business. Now Shoe Www.blueoceanstrategy.com can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shoe Www.blueoceanstrategy.com 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
– Shoe Www.blueoceanstrategy.com 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 Zappos.com (A): Bring the Shoe Store to Your Home - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shoe Www.blueoceanstrategy.com to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Zappos.com (A): Bring the Shoe Store to Your Home External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zappos.com (A): Bring the Shoe Store to Your Home are -
Increasing wage structure of Shoe Www.blueoceanstrategy.com
– 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 Shoe Www.blueoceanstrategy.com.
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.
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 Shoe Www.blueoceanstrategy.com.
Regulatory challenges
– Shoe Www.blueoceanstrategy.com 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.
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 Shoe Www.blueoceanstrategy.com 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 Shoe Www.blueoceanstrategy.com business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shoe Www.blueoceanstrategy.com 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.
Technology acceleration in Forth Industrial Revolution
– Shoe Www.blueoceanstrategy.com has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Shoe Www.blueoceanstrategy.com 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.
High dependence on third party suppliers
– Shoe Www.blueoceanstrategy.com 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.
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.
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. Shoe Www.blueoceanstrategy.com can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shoe Www.blueoceanstrategy.com 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 Zappos.com (A): Bring the Shoe Store to Your Home .
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. Shoe Www.blueoceanstrategy.com 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.
Weighted SWOT Analysis of Zappos.com (A): Bring the Shoe Store to Your Home 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 Zappos.com (A): Bring the Shoe Store to Your Home 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 Zappos.com (A): Bring the Shoe Store to Your Home 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 Zappos.com (A): Bring the Shoe Store to Your Home 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 Zappos.com (A): Bring the Shoe Store to Your Home 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 Shoe Www.blueoceanstrategy.com needs to make to build a sustainable competitive advantage.