From PPG to Vancl: Business Model Evolution of Online Apparel Retailing SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of From PPG to Vancl: Business Model Evolution of Online Apparel Retailing
"In October 2005, PPG pioneered a new model for online apparel retailing in China. Targeting low-end men's apparel, PPG's new business model met with great initial success due to its responsive supply chain, lighter distribution channel, and the brand established by costly advertising. However, underlying limitations of PPG's business model led to its eventual failure. Followers learned from both PPG's success and failure. The best practices of VANCL provided a good example of the evolution of a business model, which made VANCL the new leader in the online retail industry. To show the evolving characteristics of the apparel retailing business model, this case describes a successive two-stage story, in which each company made improvements based on other forerunners."
Swot Analysis of "From PPG to Vancl: Business Model Evolution of Online Apparel Retailing" written by Xiaobo Wu, Xubo Bai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ppg's Vancl facing as an external strategic factors. Some of the topics covered in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing case study are - Strategic Management Strategies, Entrepreneurship, International business, Marketing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the From PPG to Vancl: Business Model Evolution of Online Apparel Retailing casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, wage bills are increasing, central banks are concerned over increasing inflation,
digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, etc
Introduction to SWOT Analysis of From PPG to Vancl: Business Model Evolution of Online Apparel Retailing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ppg's Vancl, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ppg's Vancl 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing can be done for the following purposes –
1. Strategic planning using facts provided in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing case study
2. Improving business portfolio management of Ppg's Vancl
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 Ppg's Vancl
Strengths From PPG to Vancl: Business Model Evolution of Online Apparel Retailing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ppg's Vancl in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing Harvard Business Review case study are -
Effective Research and Development (R&D)
– Ppg's Vancl 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Ppg's Vancl has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ppg's Vancl 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.
Superior customer experience
– The customer experience strategy of Ppg's Vancl in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Ppg's Vancl digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ppg's Vancl 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.
Innovation driven organization
– Ppg's Vancl is one of the most innovative firm in sector. Manager in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Ppg's Vancl
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ppg's Vancl does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Strategy & Execution field
– Ppg's Vancl 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 Ppg's Vancl in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Ppg's Vancl 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 Ppg's Vancl is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Ppg's Vancl has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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.
Strong track record of project management
– Ppg's Vancl is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Ppg's Vancl has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ppg's Vancl to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Ppg's Vancl is present in almost all the verticals within the industry. This has provided firm in From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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.
Weaknesses From PPG to Vancl: Business Model Evolution of Online Apparel Retailing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of From PPG to Vancl: Business Model Evolution of Online Apparel Retailing are -
Capital Spending Reduction
– Even during the low interest decade, Ppg's Vancl 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.
Need for greater diversity
– Ppg's Vancl 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.
Increasing silos among functional specialists
– The organizational structure of Ppg's Vancl is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Ppg's Vancl needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ppg's Vancl to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Ppg's Vancl 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.
Slow to strategic competitive environment developments
– As From PPG to Vancl: Business Model Evolution of Online Apparel Retailing HBR case study mentions - Ppg's Vancl 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.
Slow decision making process
– As mentioned earlier in the report, Ppg's Vancl has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ppg's Vancl even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Xiaobo Wu, Xubo Bai suggests that, Ppg's Vancl 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study From PPG to Vancl: Business Model Evolution of Online Apparel Retailing, in the dynamic environment Ppg's Vancl has struggled to respond to the nimble upstart competition. Ppg's Vancl has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Ppg's Vancl products
– To increase the profitability and margins on the products, Ppg's Vancl 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing, it seems that the employees of Ppg's Vancl 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ppg's Vancl is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study From PPG to Vancl: Business Model Evolution of Online Apparel Retailing can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities From PPG to Vancl: Business Model Evolution of Online Apparel Retailing | 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing are -
Loyalty marketing
– Ppg's Vancl 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ppg's Vancl can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ppg's Vancl can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Ppg's Vancl can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ppg's Vancl 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
– Ppg's Vancl 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.
Creating value in data economy
– The success of analytics program of Ppg's Vancl has opened avenues for new revenue streams for the organization in the industry. This can help Ppg's Vancl to build a more holistic ecosystem as suggested in the From PPG to Vancl: Business Model Evolution of Online Apparel Retailing case study. Ppg's Vancl can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Ppg's Vancl 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ppg's Vancl to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Ppg's Vancl 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.
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. Ppg's Vancl 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
– Ppg's Vancl 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.
Better consumer reach
– The expansion of the 5G network will help Ppg's Vancl to increase its market reach. Ppg's Vancl 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ppg's Vancl 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, From PPG to Vancl: Business Model Evolution of Online Apparel Retailing, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Ppg's Vancl 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.
Threats From PPG to Vancl: Business Model Evolution of Online Apparel Retailing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study From PPG to Vancl: Business Model Evolution of Online Apparel Retailing are -
Shortening product life cycle
– it is one of the major threat that Ppg's Vancl is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Ppg's Vancl has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Ppg's Vancl 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.
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. Ppg's Vancl 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.
Regulatory challenges
– Ppg's Vancl 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.
Stagnating economy with rate increase
– Ppg's Vancl 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.
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 Ppg's Vancl in the Strategy & Execution sector and impact the bottomline of the organization.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ppg's Vancl 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing .
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 Ppg's Vancl.
Consumer confidence and its impact on Ppg's Vancl 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.
Environmental challenges
– Ppg's Vancl 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. Ppg's Vancl can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Ppg's Vancl business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Ppg's Vancl
– 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 Ppg's Vancl.
Weighted SWOT Analysis of From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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 From PPG to Vancl: Business Model Evolution of Online Apparel Retailing 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 Ppg's Vancl needs to make to build a sustainable competitive advantage.