Flipkart's App-only Strategy: A Game Changer? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study Description of Flipkart's App-only Strategy: A Game Changer?
By the summer of 2015, Flipkart Online Services Pvt. Ltd. of Bangalore, India, had become a significant player in the Indian e-commerce industry. The company started its online operations with an inventory model, focusing on books, but expanded to a marketplace model with music, movies and mobile phones. Its fashion retail portal Myntra, acquired in 2014, closed its website operations on May 1, 2015, and moved to an app-only platform to take advantage of the increasing use of smartphones by the Indian population for Internet searches and purchases. Although it experienced some initial losses, the parent company announced in July that it would also be moving to an app-only platform in September, becoming the first e-commerce company in the world to adopt this strategy on such a scale. Will this innovative move lead to further success and become a game changer for the industry or is it a step taken too soon into a future trend? Susmi Routray is affiliated with Institute of Management Techology - Ghaziabad. Reema Khurana is affiliated with Institute of Management Technology.
Swot Analysis of "Flipkart's App-only Strategy: A Game Changer?" written by Susmi Routray, Reema Khurana includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that App Changer facing as an external strategic factors. Some of the topics covered in Flipkart's App-only Strategy: A Game Changer? case study are - Strategic Management Strategies, Mobile and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Flipkart's App-only Strategy: A Game Changer? casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, wage bills are increasing, increasing energy prices, there is increasing trade war between United States & China, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Flipkart's App-only Strategy: A Game Changer?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Flipkart's App-only Strategy: A Game Changer? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the App Changer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which App Changer 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 Flipkart's App-only Strategy: A Game Changer? can be done for the following purposes –
1. Strategic planning using facts provided in Flipkart's App-only Strategy: A Game Changer? case study
2. Improving business portfolio management of App Changer
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 App Changer
Strengths Flipkart's App-only Strategy: A Game Changer? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of App Changer in Flipkart's App-only Strategy: A Game Changer? Harvard Business Review case study are -
Organizational Resilience of App Changer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that App Changer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Flipkart's App-only Strategy: A Game Changer? 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.
High switching costs
– The high switching costs that App Changer 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.
Training and development
– App Changer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Flipkart's App-only Strategy: A Game Changer? 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.
Ability to recruit top talent
– App Changer is one of the leading recruiters in the industry. Managers in the Flipkart's App-only Strategy: A Game Changer? 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
– App Changer is one of the most innovative firm in sector. Manager in Flipkart's App-only Strategy: A Game Changer? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– App Changer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. App Changer 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.
Ability to lead change in Strategy & Execution field
– App Changer 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 App Changer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Flipkart's App-only Strategy: A Game Changer? firm has clearly differentiated products in the market place. This has enabled App Changer to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped App Changer to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of App Changer in the sector have low bargaining power. Flipkart's App-only Strategy: A Game Changer? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps App Changer to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– App Changer 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 Flipkart's App-only Strategy: A Game Changer? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– App Changer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled App Changer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Flipkart's App-only Strategy: A Game Changer? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Flipkart's App-only Strategy: A Game Changer? are -
Lack of clear differentiation of App Changer products
– To increase the profitability and margins on the products, App Changer needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Flipkart's App-only Strategy: A Game Changer? HBR case study mentions - App Changer 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.
Low market penetration in new markets
– Outside its home market of App Changer, firm in the HBR case study Flipkart's App-only Strategy: A Game Changer? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Susmi Routray, Reema Khurana suggests that, App Changer 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.
Capital Spending Reduction
– Even during the low interest decade, App Changer 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.
Workers concerns about automation
– As automation is fast increasing in the segment, App Changer 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.
High cash cycle compare to competitors
App Changer 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Flipkart's App-only Strategy: A Game Changer?, is just above the industry average. App Changer needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Flipkart's App-only Strategy: A Game Changer? 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 App Changer has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Flipkart's App-only Strategy: A Game Changer? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Flipkart's App-only Strategy: A Game Changer? can leverage the sales team experience to cultivate customer relationships as App Changer is planning to shift buying processes online.
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 App Changer supply chain. Even after few cautionary changes mentioned in the HBR case study - Flipkart's App-only Strategy: A Game Changer?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left App Changer vulnerable to further global disruptions in South East Asia.
Opportunities Flipkart's App-only Strategy: A Game Changer? | 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 Flipkart's App-only Strategy: A Game Changer? are -
Loyalty marketing
– App Changer 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.
Building a culture of innovation
– managers at App Changer 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for App Changer 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 App Changer to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for App Changer 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.
Using analytics as competitive advantage
– App Changer 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 Flipkart's App-only Strategy: A Game Changer? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help App Changer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of App Changer has opened avenues for new revenue streams for the organization in the industry. This can help App Changer to build a more holistic ecosystem as suggested in the Flipkart's App-only Strategy: A Game Changer? case study. App Changer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– App Changer can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Flipkart's App-only Strategy: A Game Changer? 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.
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. App Changer 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. App Changer 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, App Changer 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.
Developing new processes and practices
– App Changer 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.
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 App Changer 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, App Changer is facing challenges because of the dominance of functional experts in the organization. Flipkart's App-only Strategy: A Game Changer? 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects App Changer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Flipkart's App-only Strategy: A Game Changer? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Flipkart's App-only Strategy: A Game Changer? 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 App Changer business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, App Changer 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 Flipkart's App-only Strategy: A Game Changer? .
Increasing wage structure of App Changer
– 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 App Changer.
Consumer confidence and its impact on App Changer 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.
Stagnating economy with rate increase
– App Changer 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.
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 App Changer.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for App Changer in the Strategy & Execution industry. The Strategy & Execution 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.
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.
Regulatory challenges
– App Changer 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.
Shortening product life cycle
– it is one of the major threat that App Changer is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents App Changer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– App Changer 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. App Changer can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– App Changer 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 Flipkart's App-only Strategy: A Game Changer? 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 Flipkart's App-only Strategy: A Game Changer? 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 Flipkart's App-only Strategy: A Game Changer? 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 Flipkart's App-only Strategy: A Game Changer? 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 Flipkart's App-only Strategy: A Game Changer? 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 App Changer needs to make to build a sustainable competitive advantage.
