Bed Bath & Beyond: The Capital Structure Decision SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bed Bath & Beyond: The Capital Structure Decision
Bed Bath & Beyond (BBBY) had no long-term debt on its balance sheet. Although many analysts considered BBBY's balance sheet a strength that permitted greater flexibility, some commented on the risks of its growing cash balance. These concerns raised questions about BBBY's capital structure. In early 2004, interest rates were at an all-time low, making it an attractive time to consider issuing debt and executing either a share repurchase or a one-time special dividend. Provides a few capital structure proposals for students to analyze.
Authors :: Artur Raviv, Timothy Thompson, Phillip Gresh, Shannon Hennessy
Swot Analysis of "Bed Bath & Beyond: The Capital Structure Decision" written by Artur Raviv, Timothy Thompson, Phillip Gresh, Shannon Hennessy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bbby's Bath facing as an external strategic factors. Some of the topics covered in Bed Bath & Beyond: The Capital Structure Decision case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Bed Bath & Beyond: The Capital Structure Decision casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs,
cloud computing is disrupting traditional business models, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Bed Bath & Beyond: The Capital Structure Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bed Bath & Beyond: The Capital Structure Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bbby's Bath, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bbby's Bath 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 Bed Bath & Beyond: The Capital Structure Decision can be done for the following purposes –
1. Strategic planning using facts provided in Bed Bath & Beyond: The Capital Structure Decision case study
2. Improving business portfolio management of Bbby's Bath
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 Bbby's Bath
Strengths Bed Bath & Beyond: The Capital Structure Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bbby's Bath in Bed Bath & Beyond: The Capital Structure Decision Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Bed Bath & Beyond: The Capital Structure Decision 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.
Analytics focus
– Bbby's Bath 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 Artur Raviv, Timothy Thompson, Phillip Gresh, Shannon Hennessy 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Bbby's Bath digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bbby's Bath 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Bed Bath & Beyond: The Capital Structure Decision firm has clearly differentiated products in the market place. This has enabled Bbby's Bath to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Bbby's Bath to invest into research and development (R&D) and innovation.
Training and development
– Bbby's Bath has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bed Bath & Beyond: The Capital Structure Decision 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.
High switching costs
– The high switching costs that Bbby's Bath has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Superior customer experience
– The customer experience strategy of Bbby's Bath in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Bbby's Bath in the sector have low bargaining power. Bed Bath & Beyond: The Capital Structure Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bbby's Bath to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Bbby's Bath is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Bbby's Bath is one of the most innovative firm in sector. Manager in Bed Bath & Beyond: The Capital Structure Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Bbby's Bath 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 Bed Bath & Beyond: The Capital Structure Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Finance & Accounting field
– Bbby's Bath 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 Bbby's Bath in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Bed Bath & Beyond: The Capital Structure Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bed Bath & Beyond: The Capital Structure Decision are -
Slow to strategic competitive environment developments
– As Bed Bath & Beyond: The Capital Structure Decision HBR case study mentions - Bbby's Bath 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, Bbby's Bath 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. Bbby's Bath 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 cash cycle compare to competitors
Bbby's Bath 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Bbby's Bath 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.
No frontier risks strategy
– After analyzing the HBR case study Bed Bath & Beyond: The Capital Structure Decision, 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Bbby's Bath supply chain. Even after few cautionary changes mentioned in the HBR case study - Bed Bath & Beyond: The Capital Structure Decision, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bbby's Bath vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Bbby's Bath is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Bbby's Bath needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bbby's Bath to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Artur Raviv, Timothy Thompson, Phillip Gresh, Shannon Hennessy suggests that, Bbby's Bath 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bed Bath & Beyond: The Capital Structure Decision 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 Bbby's Bath has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Bed Bath & Beyond: The Capital Structure Decision, in the dynamic environment Bbby's Bath has struggled to respond to the nimble upstart competition. Bbby's Bath has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bbby's Bath is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bed Bath & Beyond: The Capital Structure Decision 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 Bed Bath & Beyond: The Capital Structure Decision | 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 Bed Bath & Beyond: The Capital Structure Decision are -
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 Bbby's Bath 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.
Leveraging digital technologies
– Bbby's Bath 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bbby's Bath 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bbby's Bath 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.
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. Bbby's Bath 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. Bbby's Bath 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.
Creating value in data economy
– The success of analytics program of Bbby's Bath has opened avenues for new revenue streams for the organization in the industry. This can help Bbby's Bath to build a more holistic ecosystem as suggested in the Bed Bath & Beyond: The Capital Structure Decision case study. Bbby's Bath 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
– Bbby's Bath 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 Bed Bath & Beyond: The Capital Structure Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bbby's Bath to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Bbby's Bath to increase its market reach. Bbby's Bath 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Bbby's Bath can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bbby's Bath 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 Bbby's Bath to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Bbby's Bath 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.
Buying journey improvements
– Bbby's Bath can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bed Bath & Beyond: The Capital Structure Decision 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bbby's Bath is facing challenges because of the dominance of functional experts in the organization. Bed Bath & Beyond: The Capital Structure Decision 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.
Threats Bed Bath & Beyond: The Capital Structure Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bed Bath & Beyond: The Capital Structure Decision are -
Stagnating economy with rate increase
– Bbby's Bath 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.
Increasing wage structure of Bbby's Bath
– 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 Bbby's Bath.
Shortening product life cycle
– it is one of the major threat that Bbby's Bath is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Bbby's Bath.
High dependence on third party suppliers
– Bbby's Bath 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bbby's Bath 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
– Bbby's Bath has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Bbby's Bath 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bbby's Bath 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.
Regulatory challenges
– Bbby's Bath 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 Finance & Accounting industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Bbby's Bath needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Consumer confidence and its impact on Bbby's Bath 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.
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. Bbby's Bath 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.
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 Bbby's Bath in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Bed Bath & Beyond: The Capital Structure Decision 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 Bed Bath & Beyond: The Capital Structure Decision 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 Bed Bath & Beyond: The Capital Structure Decision 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 Bed Bath & Beyond: The Capital Structure Decision 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 Bed Bath & Beyond: The Capital Structure Decision 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 Bbby's Bath needs to make to build a sustainable competitive advantage.