Etsy: A "B Corp" Start-Up Takes on Amazon SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study Description of Etsy: A "B Corp" Start-Up Takes on Amazon
When Etsy proceeded with an initial public offering on the New York Stock Exchange in April 2015, it was the second U.S. company to go public as a certified B Corporation. Etsy's status as a B Corporation meant that social responsibility was ingrained in its mission. However, as an online marketplace for artisanal goods, Etsy faced a number of challenges. Principal among them was the launch of the new online store "Handmade" at Amazon, a direct attack on Etsy. Etsy had a core base of merchants and buyers, but Amazon had significantly more as well as a greater level of financial security than Etsy. Etsy's fast growth had also put pressure on its merchants' ability to offer larger quantities of handmade goods. Many merchants were pressing the company to allow sales from large-scale manufacturing, a path the company had eschewed since its start. Could Etsy find a way to successfully confront these challenges while maintaining its B Corporation ethos? Ram Subramanian is affiliated with Stetson University.
Swot Analysis of "Etsy: A "B Corp" Start-Up Takes on Amazon" written by Ram Subramanian includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Etsy Etsy's facing as an external strategic factors. Some of the topics covered in Etsy: A "B Corp" Start-Up Takes on Amazon case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Etsy: A "B Corp" Start-Up Takes on Amazon casestudy better are - – talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, increasing transportation and logistics costs,
central banks are concerned over increasing inflation, geopolitical disruptions, etc
Introduction to SWOT Analysis of Etsy: A "B Corp" Start-Up Takes on Amazon
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Etsy: A "B Corp" Start-Up Takes on Amazon case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Etsy Etsy's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Etsy Etsy's 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 Etsy: A "B Corp" Start-Up Takes on Amazon can be done for the following purposes –
1. Strategic planning using facts provided in Etsy: A "B Corp" Start-Up Takes on Amazon case study
2. Improving business portfolio management of Etsy Etsy's
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 Etsy Etsy's
Strengths Etsy: A "B Corp" Start-Up Takes on Amazon | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Etsy Etsy's in Etsy: A "B Corp" Start-Up Takes on Amazon Harvard Business Review case study are -
Organizational Resilience of Etsy Etsy's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Etsy Etsy's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Etsy Etsy's 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.
Diverse revenue streams
– Etsy Etsy's is present in almost all the verticals within the industry. This has provided firm in Etsy: A "B Corp" Start-Up Takes on Amazon 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.
Low bargaining power of suppliers
– Suppliers of Etsy Etsy's in the sector have low bargaining power. Etsy: A "B Corp" Start-Up Takes on Amazon has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Etsy Etsy's to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Etsy Etsy's is one of the most innovative firm in sector. Manager in Etsy: A "B Corp" Start-Up Takes on Amazon Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Etsy Etsy's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Etsy Etsy's 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.
Successful track record of launching new products
– Etsy Etsy's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Etsy Etsy's 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.
High brand equity
– Etsy Etsy's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Etsy Etsy's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Etsy: A "B Corp" Start-Up Takes on Amazon 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.
Ability to lead change in Strategy & Execution field
– Etsy Etsy's 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 Etsy Etsy's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Etsy Etsy's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Etsy Etsy's 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.
Weaknesses Etsy: A "B Corp" Start-Up Takes on Amazon | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Etsy: A "B Corp" Start-Up Takes on Amazon are -
Capital Spending Reduction
– Even during the low interest decade, Etsy Etsy's 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.
Products dominated business model
– Even though Etsy Etsy's 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 - Etsy: A "B Corp" Start-Up Takes on Amazon should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Etsy Etsy's 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. Etsy Etsy's 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Etsy: A "B Corp" Start-Up Takes on Amazon, in the dynamic environment Etsy Etsy's has struggled to respond to the nimble upstart competition. Etsy Etsy's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Etsy Etsy's, firm in the HBR case study Etsy: A "B Corp" Start-Up Takes on Amazon needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Etsy Etsy's supply chain. Even after few cautionary changes mentioned in the HBR case study - Etsy: A "B Corp" Start-Up Takes on Amazon, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Etsy Etsy's vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Etsy Etsy's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Etsy: A "B Corp" Start-Up Takes on Amazon can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Etsy: A "B Corp" Start-Up Takes on Amazon HBR case study mentions - Etsy Etsy's 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.
Lack of clear differentiation of Etsy Etsy's products
– To increase the profitability and margins on the products, Etsy Etsy's needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Etsy Etsy's 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 bargaining power of channel partners
– Because of the regulatory requirements, Ram Subramanian suggests that, Etsy Etsy's 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.
Opportunities Etsy: A "B Corp" Start-Up Takes on Amazon | 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 Etsy: A "B Corp" Start-Up Takes on Amazon are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Etsy Etsy's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Etsy Etsy's 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. Etsy Etsy's 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.
Better consumer reach
– The expansion of the 5G network will help Etsy Etsy's to increase its market reach. Etsy Etsy's 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. Etsy Etsy's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Etsy Etsy's 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 Etsy Etsy's to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Etsy Etsy's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Etsy Etsy's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Etsy Etsy's 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 Etsy: A "B Corp" Start-Up Takes on Amazon - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Etsy Etsy's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Etsy Etsy's 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, Etsy: A "B Corp" Start-Up Takes on Amazon, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Etsy Etsy's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Etsy Etsy's is facing challenges because of the dominance of functional experts in the organization. Etsy: A "B Corp" Start-Up Takes on Amazon 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 Etsy Etsy's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Etsy Etsy's can use these opportunities to build new business models that can help the communities that Etsy Etsy's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Etsy: A "B Corp" Start-Up Takes on Amazon External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Etsy: A "B Corp" Start-Up Takes on Amazon are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Etsy: A "B Corp" Start-Up Takes on Amazon, Etsy Etsy's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing wage structure of Etsy Etsy's
– 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 Etsy Etsy's.
Environmental challenges
– Etsy Etsy's 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. Etsy Etsy's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Etsy Etsy's in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Etsy Etsy's 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.
Technology acceleration in Forth Industrial Revolution
– Etsy Etsy's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Etsy Etsy's needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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 Etsy Etsy's.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Etsy Etsy's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Etsy Etsy's business can come under increasing regulations regarding data privacy, data security, etc.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Etsy Etsy's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Etsy Etsy's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Etsy Etsy's 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.
Weighted SWOT Analysis of Etsy: A "B Corp" Start-Up Takes on Amazon 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 Etsy: A "B Corp" Start-Up Takes on Amazon 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 Etsy: A "B Corp" Start-Up Takes on Amazon 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 Etsy: A "B Corp" Start-Up Takes on Amazon 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 Etsy: A "B Corp" Start-Up Takes on Amazon 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 Etsy Etsy's needs to make to build a sustainable competitive advantage.
