Gucci Group: Freedom within the Framework SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Gucci Group: Freedom within the Framework
Gucci Group's CEO had to decide if his decentralized management style was the most effective philosophy in an economic downturn. The sharing of customer information across units and its use in the creative process are key initiatives analyzed in the case. CEO Robert Polet joined the high-end fashion Gucci Group in 2004, after 26 years at one of the largest consumer goods companies. Since his arrival, the Group had grown both in revenues and profitability. Part of his secret was his decentralized and empowering management style. In 2008, in the midst of the economic downturn following the credit crunch crisis, Polet learned that after four years of growth the Gucci brand-the Group's largest business-would report a slowdown for the year's first semester. He knew that according to his management philosophy he should leave the primary decisions for the Gucci brand to Gucci's CEO. Yet, given the urgency of the situation, Polet wondered if it would be more effective to become directly involved in the brand's decision-making process. To anchor the discussion on Polet's management style, the case discusses how customer information is used in the creative process and whether it would be beneficial for the group to share customer information across stores, regions, and brands.
Authors :: F. Asis Martinez-Jerez, Elena Corsi, Vincent Dessain
Swot Analysis of "Gucci Group: Freedom within the Framework" written by F. Asis Martinez-Jerez, Elena Corsi, Vincent Dessain includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gucci Polet facing as an external strategic factors. Some of the topics covered in Gucci Group: Freedom within the Framework case study are - Strategic Management Strategies, Creativity, Customers, Decision making, International business, Leadership, Managing people and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Gucci Group: Freedom within the Framework casestudy better are - – increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing energy prices, central banks are concerned over increasing inflation, there is backlash against globalization,
there is increasing trade war between United States & China, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Gucci Group: Freedom within the Framework
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Gucci Group: Freedom within the Framework case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gucci Polet, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gucci Polet 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 Gucci Group: Freedom within the Framework can be done for the following purposes –
1. Strategic planning using facts provided in Gucci Group: Freedom within the Framework case study
2. Improving business portfolio management of Gucci Polet
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Gucci Polet
Strengths Gucci Group: Freedom within the Framework | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gucci Polet in Gucci Group: Freedom within the Framework Harvard Business Review case study are -
High brand equity
– Gucci Polet has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gucci Polet to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Gucci Polet 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 Gucci Polet is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Gucci Group: Freedom within the Framework Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Gucci Group: Freedom within the Framework 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.
Diverse revenue streams
– Gucci Polet is present in almost all the verticals within the industry. This has provided firm in Gucci Group: Freedom within the Framework 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.
Strong track record of project management
– Gucci Polet is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Finance & Accounting field
– Gucci Polet 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 Gucci Polet in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Gucci Polet
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Gucci Polet does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Gucci Polet is one of the leading recruiters in the industry. Managers in the Gucci Group: Freedom within the Framework are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Gucci Polet is one of the most innovative firm in sector. Manager in Gucci Group: Freedom within the Framework 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 Gucci Polet in the sector have low bargaining power. Gucci Group: Freedom within the Framework has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Gucci Polet to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Gucci Polet has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Gucci Group: Freedom within the Framework 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.
Highly skilled collaborators
– Gucci Polet 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 Gucci Group: Freedom within the Framework HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Gucci Group: Freedom within the Framework | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Gucci Group: Freedom within the Framework are -
High operating costs
– Compare to the competitors, firm in the HBR case study Gucci Group: Freedom within the Framework 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 Gucci Polet 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Gucci Polet 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. Gucci Polet 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.
Skills based hiring
– The stress on hiring functional specialists at Gucci Polet 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 bargaining power of channel partners
– Because of the regulatory requirements, F. Asis Martinez-Jerez, Elena Corsi, Vincent Dessain suggests that, Gucci Polet 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.
No frontier risks strategy
– After analyzing the HBR case study Gucci Group: Freedom within the Framework, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Interest costs
– Compare to the competition, Gucci Polet 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Gucci Polet is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Gucci Group: Freedom within the Framework can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Gucci Group: Freedom within the Framework, it seems that the employees of Gucci Polet 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.
High cash cycle compare to competitors
Gucci Polet 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Gucci Group: Freedom within the Framework 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 Gucci Polet has relatively successful track record of launching new products.
Products dominated business model
– Even though Gucci Polet 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 - Gucci Group: Freedom within the Framework should strive to include more intangible value offerings along with its core products and services.
Opportunities Gucci Group: Freedom within the Framework | 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 Gucci Group: Freedom within the Framework are -
Buying journey improvements
– Gucci Polet can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Gucci Group: Freedom within the Framework 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.
Using analytics as competitive advantage
– Gucci Polet 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 Gucci Group: Freedom within the Framework - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Gucci Polet to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gucci Polet 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 Gucci Polet to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Gucci Polet can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Gucci Polet has opened avenues for new revenue streams for the organization in the industry. This can help Gucci Polet to build a more holistic ecosystem as suggested in the Gucci Group: Freedom within the Framework case study. Gucci Polet can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Gucci Polet 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, Gucci Group: Freedom within the Framework, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Gucci Polet 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. Gucci Polet 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.
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 Gucci Polet in the consumer business. Now Gucci Polet can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Gucci Polet is facing challenges because of the dominance of functional experts in the organization. Gucci Group: Freedom within the Framework 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 Gucci Polet 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
– Gucci Polet can develop new processes and procedures in Finance & Accounting 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Gucci Polet in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Manufacturing automation
– Gucci Polet can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Threats Gucci Group: Freedom within the Framework External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Gucci Group: Freedom within the Framework are -
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Gucci Polet 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, Gucci Polet 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 Gucci Group: Freedom within the Framework .
Technology acceleration in Forth Industrial Revolution
– Gucci Polet has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Gucci Polet needs to keep up with the evolution of technology in the Finance & Accounting 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. Gucci Polet 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.
Stagnating economy with rate increase
– Gucci Polet 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.
Consumer confidence and its impact on Gucci Polet 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.
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 Gucci Polet in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Gucci Polet is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Gucci Polet business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Gucci Polet 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 Gucci Polet in the Finance & Accounting industry. The Finance & Accounting 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.
High dependence on third party suppliers
– Gucci Polet 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.
Weighted SWOT Analysis of Gucci Group: Freedom within the Framework 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 Gucci Group: Freedom within the Framework 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 Gucci Group: Freedom within the Framework 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 Gucci Group: Freedom within the Framework 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 Gucci Group: Freedom within the Framework 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 Gucci Polet needs to make to build a sustainable competitive advantage.
