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 commodity prices, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, geopolitical disruptions,
talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , 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 -
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.
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.
Innovation driven organization
– Elettrodomestici Merloni is one of the most innovative firm in sector. Manager in Merloni Elettrodomestici SpA: Building for Profit Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Merloni Elettrodomestici SpA: Building for Profit 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.
Strong track record of project management
– Elettrodomestici Merloni is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
Diverse revenue streams
– Elettrodomestici Merloni is present in almost all the verticals within the industry. This has provided firm in Merloni Elettrodomestici SpA: Building for Profit 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.
Effective Research and Development (R&D)
– Elettrodomestici Merloni 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 Merloni Elettrodomestici SpA: Building for Profit - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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 -
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.
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 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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Merloni Elettrodomestici SpA: Building for Profit 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 Elettrodomestici Merloni 's lucrative customers.
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.
Low market penetration in new markets
– Outside its home market of Elettrodomestici Merloni, firm in the HBR case study Merloni Elettrodomestici SpA: Building for Profit needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Elettrodomestici Merloni 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. Elettrodomestici Merloni 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.
Lack of clear differentiation of Elettrodomestici Merloni products
– To increase the profitability and margins on the products, Elettrodomestici Merloni needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Elettrodomestici Merloni 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.
Aligning sales with marketing
– It come across in the case study Merloni Elettrodomestici SpA: Building for Profit 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 Merloni Elettrodomestici SpA: Building for Profit can leverage the sales team experience to cultivate customer relationships as Elettrodomestici Merloni is planning to shift buying processes online.
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 -
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. Elettrodomestici Merloni can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Elettrodomestici Merloni 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.
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.
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.
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. Elettrodomestici Merloni 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. Elettrodomestici Merloni 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.
Buying journey improvements
– Elettrodomestici Merloni can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Merloni Elettrodomestici SpA: Building for Profit 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.
Developing new processes and practices
– Elettrodomestici Merloni 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 Elettrodomestici Merloni 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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Elettrodomestici Merloni can use these opportunities to build new business models that can help the communities that Elettrodomestici Merloni operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
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.
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 -
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Merloni Elettrodomestici SpA: Building for Profit, Elettrodomestici Merloni 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 .
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. Elettrodomestici Merloni needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Elettrodomestici Merloni 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, 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 .
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.
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. Elettrodomestici Merloni 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.
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.
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.
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.
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.
High dependence on third party suppliers
– Elettrodomestici Merloni 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 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.
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.