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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, 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 energy prices, technology disruption,
supply chains are disrupted by pandemic , wage bills are increasing, 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 -
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.
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.
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.
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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Merloni Elettrodomestici SpA: Building for Profit firm has clearly differentiated products in the market place. This has enabled Elettrodomestici Merloni to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Elettrodomestici Merloni to invest into research and development (R&D) and innovation.
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.
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.
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.
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.
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.
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.
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 -
Workers concerns about automation
– As automation is fast increasing in the segment, Elettrodomestici Merloni 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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Elettrodomestici Merloni is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Merloni Elettrodomestici SpA: Building for Profit can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merloni Elettrodomestici SpA: Building for Profit, it seems that the employees of Elettrodomestici Merloni don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merloni Elettrodomestici SpA: Building for Profit, is just above the industry average. Elettrodomestici Merloni 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 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.
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.
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.
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.
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 -
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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Elettrodomestici Merloni 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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Elettrodomestici Merloni has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Elettrodomestici Merloni 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.
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.
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.
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.
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.
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 Elettrodomestici Merloni in the Strategy & Execution sector and impact the bottomline of the organization.
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.
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.
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.