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 - – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, geopolitical disruptions, increasing transportation and logistics costs,
increasing commodity prices, talent flight as more people leaving formal jobs, 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 -
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.
Organizational Resilience of Bbby's Bath
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bbby's Bath does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
Diverse revenue streams
– Bbby's Bath is present in almost all the verticals within the industry. This has provided firm in Bed Bath & Beyond: The Capital Structure Decision 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.
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.
Effective Research and Development (R&D)
– Bbby's Bath 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 Bed Bath & Beyond: The Capital Structure Decision - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Bbby's Bath 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 Bbby's Bath is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bed Bath & Beyond: The Capital Structure Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Cross disciplinary teams
– Horizontal connected teams at the Bbby's Bath 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.
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.
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.
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 -
Low market penetration in new markets
– Outside its home market of Bbby's Bath, firm in the HBR case study Bed Bath & Beyond: The Capital Structure Decision needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
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 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.
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.
Lack of clear differentiation of Bbby's Bath products
– To increase the profitability and margins on the products, Bbby's Bath needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Bbby's Bath 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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Bed Bath & Beyond: The Capital Structure Decision 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 Bbby's Bath 's lucrative customers.
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.
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 -
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.
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.
Building a culture of innovation
– managers at Bbby's Bath 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 Finance & Accounting segment.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bbby's Bath 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, Bed Bath & Beyond: The Capital Structure Decision, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Bbby's Bath 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.
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.
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. Bbby's Bath can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Loyalty marketing
– Bbby's Bath 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.
Manufacturing automation
– Bbby's Bath 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.
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.
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 -
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 Bbby's Bath business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Bed Bath & Beyond: The Capital Structure Decision, Bbby's Bath may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Environmental challenges
– Bbby's Bath 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. Bbby's Bath can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bbby's Bath 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 Bed Bath & Beyond: The Capital Structure Decision .
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. Bbby's Bath can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
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.
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.
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.