Merloni Elettrodomestici SpA: Building for Profit SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Merloni Elettrodomestici SpA: Building for Profit
This case is accompanied by a Video Short that can be shown in class or included in a digital coursepack. Instructors should consider the timing of making the video available to students, as it may reveal key case details.
Authors :: Joseph L. Bower, Bruce McKern, John Naman
Swot Analysis of "Merloni Elettrodomestici SpA: Building for Profit" written by Joseph L. Bower, Bruce McKern, John Naman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Elettrodomestici Merloni facing as an external strategic factors. Some of the topics covered in Merloni Elettrodomestici SpA: Building for Profit case study are - Strategic Management Strategies, Operations management, Organizational structure and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Merloni Elettrodomestici SpA: Building for Profit casestudy better are - – increasing energy prices, geopolitical disruptions, increasing transportation and logistics costs, technology disruption, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies,
there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Merloni Elettrodomestici SpA: Building for Profit
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merloni Elettrodomestici SpA: Building for Profit case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Elettrodomestici Merloni, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Elettrodomestici Merloni 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 Merloni Elettrodomestici SpA: Building for Profit can be done for the following purposes –
1. Strategic planning using facts provided in Merloni Elettrodomestici SpA: Building for Profit case study
2. Improving business portfolio management of Elettrodomestici Merloni
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 Elettrodomestici Merloni
Strengths Merloni Elettrodomestici SpA: Building for Profit | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Elettrodomestici Merloni in Merloni Elettrodomestici SpA: Building for Profit Harvard Business Review case study are -
Highly skilled collaborators
– Elettrodomestici Merloni 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 Merloni Elettrodomestici SpA: Building for Profit HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Elettrodomestici Merloni 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.
Organizational Resilience of Elettrodomestici Merloni
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Elettrodomestici Merloni does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Strategy & Execution field
– Elettrodomestici Merloni 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 Elettrodomestici Merloni in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Elettrodomestici Merloni in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Elettrodomestici Merloni 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 Joseph L. Bower, Bruce McKern, John Naman 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.
Low bargaining power of suppliers
– Suppliers of Elettrodomestici Merloni in the sector have low bargaining power. Merloni Elettrodomestici SpA: Building for Profit has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Elettrodomestici Merloni to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Elettrodomestici Merloni 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 Elettrodomestici Merloni is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merloni Elettrodomestici SpA: Building for Profit Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Elettrodomestici Merloni digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Elettrodomestici Merloni 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.
Cross disciplinary teams
– Horizontal connected teams at the Elettrodomestici Merloni 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.
Training and development
– Elettrodomestici Merloni has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merloni Elettrodomestici SpA: Building for Profit 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 brand equity
– Elettrodomestici Merloni has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Elettrodomestici Merloni to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Merloni Elettrodomestici SpA: Building for Profit | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merloni Elettrodomestici SpA: Building for Profit are -
Capital Spending Reduction
– Even during the low interest decade, Elettrodomestici Merloni 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.
Need for greater diversity
– Elettrodomestici Merloni has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Elettrodomestici Merloni 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 - Merloni Elettrodomestici SpA: Building for Profit should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Merloni Elettrodomestici SpA: Building for Profit, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Increasing silos among functional specialists
– The organizational structure of Elettrodomestici Merloni is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Elettrodomestici Merloni needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Elettrodomestici Merloni to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Merloni Elettrodomestici SpA: Building for Profit, in the dynamic environment Elettrodomestici Merloni has struggled to respond to the nimble upstart competition. Elettrodomestici Merloni has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Elettrodomestici Merloni supply chain. Even after few cautionary changes mentioned in the HBR case study - Merloni Elettrodomestici SpA: Building for Profit, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Elettrodomestici Merloni vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Joseph L. Bower, Bruce McKern, John Naman suggests that, Elettrodomestici Merloni 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.
Slow to strategic competitive environment developments
– As Merloni Elettrodomestici SpA: Building for Profit HBR case study mentions - Elettrodomestici Merloni 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Merloni Elettrodomestici SpA: Building for Profit 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 Elettrodomestici Merloni has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Elettrodomestici Merloni has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Merloni Elettrodomestici SpA: Building for Profit | 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 Merloni Elettrodomestici SpA: Building for Profit are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Elettrodomestici Merloni can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Elettrodomestici Merloni has opened avenues for new revenue streams for the organization in the industry. This can help Elettrodomestici Merloni to build a more holistic ecosystem as suggested in the Merloni Elettrodomestici SpA: Building for Profit case study. Elettrodomestici Merloni can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Elettrodomestici Merloni is facing challenges because of the dominance of functional experts in the organization. Merloni Elettrodomestici SpA: Building for Profit 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Elettrodomestici Merloni 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 Elettrodomestici Merloni to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Elettrodomestici Merloni 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Elettrodomestici Merloni in the consumer business. Now Elettrodomestici Merloni can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Elettrodomestici Merloni to increase its market reach. Elettrodomestici Merloni 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.
Learning at scale
– Online learning technologies has now opened space for Elettrodomestici Merloni 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Elettrodomestici Merloni 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, Merloni Elettrodomestici SpA: Building for Profit, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Elettrodomestici Merloni 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 Merloni Elettrodomestici SpA: Building for Profit - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Elettrodomestici Merloni to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Elettrodomestici Merloni 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
– Elettrodomestici Merloni can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Building a culture of innovation
– managers at Elettrodomestici Merloni 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.
Threats Merloni Elettrodomestici SpA: Building for Profit External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merloni Elettrodomestici SpA: Building for Profit are -
Consumer confidence and its impact on Elettrodomestici Merloni 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.
Increasing wage structure of Elettrodomestici Merloni
– 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 Elettrodomestici Merloni.
Regulatory challenges
– Elettrodomestici Merloni 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.
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 Elettrodomestici Merloni.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Elettrodomestici Merloni 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 Merloni Elettrodomestici SpA: Building for Profit .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Elettrodomestici Merloni with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Elettrodomestici Merloni is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Elettrodomestici Merloni 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.
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.
Environmental challenges
– Elettrodomestici Merloni 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. Elettrodomestici Merloni can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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. Elettrodomestici Merloni can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Elettrodomestici Merloni 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.
Weighted SWOT Analysis of Merloni Elettrodomestici SpA: Building for Profit 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 Merloni Elettrodomestici SpA: Building for Profit 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 Merloni Elettrodomestici SpA: Building for Profit 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 Merloni Elettrodomestici SpA: Building for Profit 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 Merloni Elettrodomestici SpA: Building for Profit 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 Elettrodomestici Merloni needs to make to build a sustainable competitive advantage.
