Sotheby's and Christie's Inc. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of Sotheby's and Christie's Inc.
To maximize their effectiveness, color cases should be printed in color.The fine art auction business has remained a duopoly over its 250 year history. The industry is dominated by Sotheby's and Christie's Inc. Curiously, neither competitor has been able to overtake the other by a notable margin despite the clear network effects of this platform business. As we enter unprecedented economic times, as technology pushes forward infiltrating almost all areas of business, and as new competitors fight to enter the fine art sales space, these two auction houses explore modifications to their business model. Some efforts by the two organizations have already begun but are in the infantile stage and thus the success of these initiatives is entirely unproven. Sotheby's and Christie's must decide how to respond to this economic and cultural turning point and whether to keep investing in these ancillary aspects of their operations.
Swot Analysis of "Sotheby's and Christie's Inc." written by Ramon Casadesus-Masanell, C. J. Wise includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Christie's Sotheby's facing as an external strategic factors. Some of the topics covered in Sotheby's and Christie's Inc. case study are - Strategic Management Strategies, Economics, International business, IT and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Sotheby's and Christie's Inc. casestudy better are - – increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels,
there is backlash against globalization, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Sotheby's and Christie's Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sotheby's and Christie's Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Christie's Sotheby's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Christie's Sotheby's 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 Sotheby's and Christie's Inc. can be done for the following purposes –
1. Strategic planning using facts provided in Sotheby's and Christie's Inc. case study
2. Improving business portfolio management of Christie's Sotheby's
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 Christie's Sotheby's
Strengths Sotheby's and Christie's Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Christie's Sotheby's in Sotheby's and Christie's Inc. Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Christie's Sotheby's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Christie's Sotheby's 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.
Effective Research and Development (R&D)
– Christie's Sotheby's 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 Sotheby's and Christie's Inc. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Christie's Sotheby's is one of the most innovative firm in sector. Manager in Sotheby's and Christie's Inc. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Christie's Sotheby's is one of the leading recruiters in the industry. Managers in the Sotheby's and Christie's Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Christie's Sotheby's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Christie's Sotheby's 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 Sotheby's and Christie's Inc. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Christie's Sotheby's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Christie's Sotheby's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Christie's Sotheby's in the sector have low bargaining power. Sotheby's and Christie's Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Christie's Sotheby's to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Christie's Sotheby's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sotheby's and Christie's Inc. 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.
Cross disciplinary teams
– Horizontal connected teams at the Christie's Sotheby's 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.
Learning organization
- Christie's Sotheby's 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 Christie's Sotheby's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sotheby's and Christie's Inc. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Christie's Sotheby's 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 Ramon Casadesus-Masanell, C. J. Wise 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.
Weaknesses Sotheby's and Christie's Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sotheby's and Christie's Inc. are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sotheby's and Christie's Inc., it seems that the employees of Christie's Sotheby's 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.
Products dominated business model
– Even though Christie's Sotheby's 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 - Sotheby's and Christie's Inc. should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Christie's Sotheby's, firm in the HBR case study Sotheby's and Christie's Inc. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Christie's Sotheby's 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.
Aligning sales with marketing
– It come across in the case study Sotheby's and Christie's Inc. 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 Sotheby's and Christie's Inc. can leverage the sales team experience to cultivate customer relationships as Christie's Sotheby's is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Ramon Casadesus-Masanell, C. J. Wise suggests that, Christie's Sotheby's 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.
Skills based hiring
– The stress on hiring functional specialists at Christie's Sotheby's 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 Sotheby's and Christie's Inc., is just above the industry average. Christie's Sotheby's 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
Christie's Sotheby's 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.
No frontier risks strategy
– After analyzing the HBR case study Sotheby's and Christie's Inc., 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Sotheby's and Christie's Inc. 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 Christie's Sotheby's 's lucrative customers.
Opportunities Sotheby's and Christie's Inc. | 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 Sotheby's and Christie's Inc. are -
Better consumer reach
– The expansion of the 5G network will help Christie's Sotheby's to increase its market reach. Christie's Sotheby's 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Christie's Sotheby's 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 Christie's Sotheby's to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Christie's Sotheby's 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.
Building a culture of innovation
– managers at Christie's Sotheby's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Christie's Sotheby's 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, Sotheby's and Christie's Inc., 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
– Christie's Sotheby's 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.
Creating value in data economy
– The success of analytics program of Christie's Sotheby's has opened avenues for new revenue streams for the organization in the industry. This can help Christie's Sotheby's to build a more holistic ecosystem as suggested in the Sotheby's and Christie's Inc. case study. Christie's Sotheby's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Christie's Sotheby's 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.
Buying journey improvements
– Christie's Sotheby's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sotheby's and Christie's Inc. 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.
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 Christie's Sotheby's 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Christie's Sotheby's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Christie's Sotheby's 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.
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. Christie's Sotheby's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Sotheby's and Christie's Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sotheby's and Christie's Inc. are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sotheby's and Christie's Inc., Christie's Sotheby's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing wage structure of Christie's Sotheby's
– 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 Christie's Sotheby's.
High dependence on third party suppliers
– Christie's Sotheby's 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.
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 Christie's Sotheby's business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Christie's Sotheby's 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Christie's Sotheby's 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 Sotheby's and Christie's Inc. .
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 Christie's Sotheby's in the Strategy & Execution sector and impact the bottomline 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. Christie's Sotheby's 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.
Environmental challenges
– Christie's Sotheby's 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. Christie's Sotheby's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Christie's Sotheby's 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 Christie's Sotheby's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Christie's Sotheby's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Christie's Sotheby's 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.
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.
Weighted SWOT Analysis of Sotheby's and Christie's Inc. 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 Sotheby's and Christie's Inc. 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 Sotheby's and Christie's Inc. 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 Sotheby's and Christie's Inc. 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 Sotheby's and Christie's Inc. 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 Christie's Sotheby's needs to make to build a sustainable competitive advantage.
