Zappos.com (B): Strategy Powered by Culture and People SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zappos.com (B): Strategy Powered by Culture and People
The cases examine how the strategy of Zappos as an innovative online shoe retailer has been conceived and executed. Two cases, (A) and (B), and a teaching note are provided. Each paper case is accompanied by a video case to be shown in the classroom. Video cases and lecture presentation slides are available to instructors at www.blueoceanstrategy.com.
Authors :: W. Chan Kim, Oh Young Koo, Renee A. Mauborgne
Swot Analysis of "Zappos.com (B): Strategy Powered by Culture and People" written by W. Chan Kim, Oh Young Koo, Renee A. Mauborgne includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Www.blueoceanstrategy.com Zappos.com facing as an external strategic factors. Some of the topics covered in Zappos.com (B): Strategy Powered by Culture and People case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Zappos.com (B): Strategy Powered by Culture and People casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings,
cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Zappos.com (B): Strategy Powered by Culture and People
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zappos.com (B): Strategy Powered by Culture and People case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Www.blueoceanstrategy.com Zappos.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Www.blueoceanstrategy.com Zappos.com 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 Zappos.com (B): Strategy Powered by Culture and People can be done for the following purposes –
1. Strategic planning using facts provided in Zappos.com (B): Strategy Powered by Culture and People case study
2. Improving business portfolio management of Www.blueoceanstrategy.com Zappos.com
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 Www.blueoceanstrategy.com Zappos.com
Strengths Zappos.com (B): Strategy Powered by Culture and People | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Www.blueoceanstrategy.com Zappos.com in Zappos.com (B): Strategy Powered by Culture and People Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Www.blueoceanstrategy.com Zappos.com digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Www.blueoceanstrategy.com Zappos.com 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.
Diverse revenue streams
– Www.blueoceanstrategy.com Zappos.com is present in almost all the verticals within the industry. This has provided firm in Zappos.com (B): Strategy Powered by Culture and People 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.
Innovation driven organization
– Www.blueoceanstrategy.com Zappos.com is one of the most innovative firm in sector. Manager in Zappos.com (B): Strategy Powered by Culture and People Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Strategy & Execution industry
– Zappos.com (B): Strategy Powered by Culture and People firm has clearly differentiated products in the market place. This has enabled Www.blueoceanstrategy.com Zappos.com to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Www.blueoceanstrategy.com Zappos.com to invest into research and development (R&D) and innovation.
Analytics focus
– Www.blueoceanstrategy.com Zappos.com 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 W. Chan Kim, Oh Young Koo, Renee A. Mauborgne 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.
Successful track record of launching new products
– Www.blueoceanstrategy.com Zappos.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Www.blueoceanstrategy.com Zappos.com 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.
Superior customer experience
– The customer experience strategy of Www.blueoceanstrategy.com Zappos.com in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Www.blueoceanstrategy.com Zappos.com 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 Www.blueoceanstrategy.com Zappos.com is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zappos.com (B): Strategy Powered by Culture and People Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Www.blueoceanstrategy.com Zappos.com in the sector have low bargaining power. Zappos.com (B): Strategy Powered by Culture and People has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Www.blueoceanstrategy.com Zappos.com to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Www.blueoceanstrategy.com Zappos.com is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Www.blueoceanstrategy.com Zappos.com 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 Www.blueoceanstrategy.com Zappos.com in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Www.blueoceanstrategy.com Zappos.com 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 Zappos.com (B): Strategy Powered by Culture and People HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Zappos.com (B): Strategy Powered by Culture and People | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zappos.com (B): Strategy Powered by Culture and People are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Zappos.com (B): Strategy Powered by Culture and People 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 Www.blueoceanstrategy.com Zappos.com has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zappos.com (B): Strategy Powered by Culture and People, is just above the industry average. Www.blueoceanstrategy.com Zappos.com 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.
Need for greater diversity
– Www.blueoceanstrategy.com Zappos.com 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zappos.com (B): Strategy Powered by Culture and People, in the dynamic environment Www.blueoceanstrategy.com Zappos.com has struggled to respond to the nimble upstart competition. Www.blueoceanstrategy.com Zappos.com has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Www.blueoceanstrategy.com Zappos.com 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.
Products dominated business model
– Even though Www.blueoceanstrategy.com Zappos.com 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 - Zappos.com (B): Strategy Powered by Culture and People 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, Www.blueoceanstrategy.com Zappos.com 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. Www.blueoceanstrategy.com Zappos.com 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.
Aligning sales with marketing
– It come across in the case study Zappos.com (B): Strategy Powered by Culture and People 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 Zappos.com (B): Strategy Powered by Culture and People can leverage the sales team experience to cultivate customer relationships as Www.blueoceanstrategy.com Zappos.com is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Zappos.com (B): Strategy Powered by Culture and People 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 Www.blueoceanstrategy.com Zappos.com 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, W. Chan Kim, Oh Young Koo, Renee A. Mauborgne suggests that, Www.blueoceanstrategy.com Zappos.com 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.
High cash cycle compare to competitors
Www.blueoceanstrategy.com Zappos.com 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.
Opportunities Zappos.com (B): Strategy Powered by Culture and People | 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 Zappos.com (B): Strategy Powered by Culture and People are -
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. Www.blueoceanstrategy.com Zappos.com can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Www.blueoceanstrategy.com Zappos.com 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Www.blueoceanstrategy.com Zappos.com is facing challenges because of the dominance of functional experts in the organization. Zappos.com (B): Strategy Powered by Culture and People 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. Www.blueoceanstrategy.com Zappos.com 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. Www.blueoceanstrategy.com Zappos.com 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Www.blueoceanstrategy.com Zappos.com 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 Www.blueoceanstrategy.com Zappos.com to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Www.blueoceanstrategy.com Zappos.com to increase its market reach. Www.blueoceanstrategy.com Zappos.com 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Www.blueoceanstrategy.com Zappos.com can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Www.blueoceanstrategy.com Zappos.com 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, Www.blueoceanstrategy.com Zappos.com can use these opportunities to build new business models that can help the communities that Www.blueoceanstrategy.com Zappos.com operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Www.blueoceanstrategy.com Zappos.com 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.
Learning at scale
– Online learning technologies has now opened space for Www.blueoceanstrategy.com Zappos.com 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.
Leveraging digital technologies
– Www.blueoceanstrategy.com Zappos.com 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.
Using analytics as competitive advantage
– Www.blueoceanstrategy.com Zappos.com 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 Zappos.com (B): Strategy Powered by Culture and People - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Www.blueoceanstrategy.com Zappos.com to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Zappos.com (B): Strategy Powered by Culture and People External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zappos.com (B): Strategy Powered by Culture and People are -
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. Www.blueoceanstrategy.com Zappos.com 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 Www.blueoceanstrategy.com Zappos.com business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Www.blueoceanstrategy.com Zappos.com 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zappos.com (B): Strategy Powered by Culture and People, Www.blueoceanstrategy.com Zappos.com 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Www.blueoceanstrategy.com Zappos.com 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.
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. Www.blueoceanstrategy.com Zappos.com needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Www.blueoceanstrategy.com Zappos.com 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 Zappos.com (B): Strategy Powered by Culture and People .
Shortening product life cycle
– it is one of the major threat that Www.blueoceanstrategy.com Zappos.com is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Www.blueoceanstrategy.com Zappos.com demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Stagnating economy with rate increase
– Www.blueoceanstrategy.com Zappos.com 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.
High dependence on third party suppliers
– Www.blueoceanstrategy.com Zappos.com 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.
Weighted SWOT Analysis of Zappos.com (B): Strategy Powered by Culture and People 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 Zappos.com (B): Strategy Powered by Culture and People 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 Zappos.com (B): Strategy Powered by Culture and People 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 Zappos.com (B): Strategy Powered by Culture and People 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 Zappos.com (B): Strategy Powered by Culture and People 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 Www.blueoceanstrategy.com Zappos.com needs to make to build a sustainable competitive advantage.
