Finland's S Group: Competing with a Cooperative Approach to Retail SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Finland's S Group: Competing with a Cooperative Approach to Retail
To maximize their effectiveness, color cases should be printed in color.The case looks at the two dominant Finnish retailers: S Group and Kesko. S Group is a customer-owned cooperative, which has a unique holding structure whereby 1.7 million residents (or 70 percent of Finnish households) own 22 regional cooperatives. In turn, the regional cooperatives own SOK, a centralized company that provides services to the regional cooperatives. Throughout the 1980s and 1990s, S Group lagged far behind the market leader, Kesko. However, since 2005, S Group has held the leadership position; in 2007, it had captured 41 percent market while Kesko's was 33.9 percent. Kesko Plc is publicly traded and pursues a model whereby retailer entrepreneurs use their personal funds to invest in stores and operate them completely. The case requires that students consider sources of competitive advantage that arise from the companies' markedly different business models.
Authors :: Ramon Casadesus-Masanell, Tarun Khanna, Samuli Skurnik, Jordan Mitchell
Swot Analysis of "Finland's S Group: Competing with a Cooperative Approach to Retail" written by Ramon Casadesus-Masanell, Tarun Khanna, Samuli Skurnik, Jordan Mitchell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kesko Cooperatives facing as an external strategic factors. Some of the topics covered in Finland's S Group: Competing with a Cooperative Approach to Retail case study are - Strategic Management Strategies, Collaboration, Competition, Corporate governance, Marketing, Operations management, Organizational structure and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Finland's S Group: Competing with a Cooperative Approach to Retail casestudy better are - – supply chains are disrupted by pandemic , geopolitical disruptions, there is backlash against globalization, increasing energy prices, increasing government debt because of Covid-19 spendings, wage bills are increasing, increasing commodity prices,
there is increasing trade war between United States & China, technology disruption, etc
Introduction to SWOT Analysis of Finland's S Group: Competing with a Cooperative Approach to Retail
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Finland's S Group: Competing with a Cooperative Approach to Retail case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kesko Cooperatives, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kesko Cooperatives 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 Finland's S Group: Competing with a Cooperative Approach to Retail can be done for the following purposes –
1. Strategic planning using facts provided in Finland's S Group: Competing with a Cooperative Approach to Retail case study
2. Improving business portfolio management of Kesko Cooperatives
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 Kesko Cooperatives
Strengths Finland's S Group: Competing with a Cooperative Approach to Retail | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kesko Cooperatives in Finland's S Group: Competing with a Cooperative Approach to Retail Harvard Business Review case study are -
Strong track record of project management
– Kesko Cooperatives 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
– Kesko Cooperatives 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 Kesko Cooperatives in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Kesko Cooperatives is one of the leading recruiters in the industry. Managers in the Finland's S Group: Competing with a Cooperative Approach to Retail are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Kesko Cooperatives 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 Finland's S Group: Competing with a Cooperative Approach to Retail - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Kesko Cooperatives is present in almost all the verticals within the industry. This has provided firm in Finland's S Group: Competing with a Cooperative Approach to Retail 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
– Kesko Cooperatives is one of the most innovative firm in sector. Manager in Finland's S Group: Competing with a Cooperative Approach to Retail 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
– Finland's S Group: Competing with a Cooperative Approach to Retail firm has clearly differentiated products in the market place. This has enabled Kesko Cooperatives to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Kesko Cooperatives to invest into research and development (R&D) and innovation.
High brand equity
– Kesko Cooperatives has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kesko Cooperatives to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Kesko Cooperatives has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kesko Cooperatives 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.
Low bargaining power of suppliers
– Suppliers of Kesko Cooperatives in the sector have low bargaining power. Finland's S Group: Competing with a Cooperative Approach to Retail has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kesko Cooperatives to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Kesko Cooperatives
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kesko Cooperatives does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Kesko Cooperatives 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 Ramon Casadesus-Masanell, Tarun Khanna, Samuli Skurnik, Jordan Mitchell 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.
Weaknesses Finland's S Group: Competing with a Cooperative Approach to Retail | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Finland's S Group: Competing with a Cooperative Approach to Retail are -
High operating costs
– Compare to the competitors, firm in the HBR case study Finland's S Group: Competing with a Cooperative Approach to Retail 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 Kesko Cooperatives 's lucrative customers.
Products dominated business model
– Even though Kesko Cooperatives 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 - Finland's S Group: Competing with a Cooperative Approach to Retail should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Finland's S Group: Competing with a Cooperative Approach to Retail, is just above the industry average. Kesko Cooperatives 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Finland's S Group: Competing with a Cooperative Approach to Retail, it seems that the employees of Kesko Cooperatives 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Kesko Cooperatives 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.
Aligning sales with marketing
– It come across in the case study Finland's S Group: Competing with a Cooperative Approach to Retail 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 Finland's S Group: Competing with a Cooperative Approach to Retail can leverage the sales team experience to cultivate customer relationships as Kesko Cooperatives is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Finland's S Group: Competing with a Cooperative Approach to Retail, in the dynamic environment Kesko Cooperatives has struggled to respond to the nimble upstart competition. Kesko Cooperatives 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 Finland's S Group: Competing with a Cooperative Approach to Retail 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 Kesko Cooperatives has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Finland's S Group: Competing with a Cooperative Approach to Retail, 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.
Slow to strategic competitive environment developments
– As Finland's S Group: Competing with a Cooperative Approach to Retail HBR case study mentions - Kesko Cooperatives 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 cash cycle compare to competitors
Kesko Cooperatives 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 Finland's S Group: Competing with a Cooperative Approach to Retail | 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 Finland's S Group: Competing with a Cooperative Approach to Retail are -
Manufacturing automation
– Kesko Cooperatives 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, Kesko Cooperatives can use these opportunities to build new business models that can help the communities that Kesko Cooperatives operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Kesko Cooperatives in the consumer business. Now Kesko Cooperatives can target international markets with far fewer capital restrictions requirements than the existing system.
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. Kesko Cooperatives can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kesko Cooperatives 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kesko Cooperatives is facing challenges because of the dominance of functional experts in the organization. Finland's S Group: Competing with a Cooperative Approach to Retail 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.
Using analytics as competitive advantage
– Kesko Cooperatives 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 Finland's S Group: Competing with a Cooperative Approach to Retail - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kesko Cooperatives to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kesko Cooperatives 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 Kesko Cooperatives to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kesko Cooperatives 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.
Developing new processes and practices
– Kesko Cooperatives 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.
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. Kesko Cooperatives can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kesko Cooperatives 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. Kesko Cooperatives 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.
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 Kesko Cooperatives 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.
Threats Finland's S Group: Competing with a Cooperative Approach to Retail External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Finland's S Group: Competing with a Cooperative Approach to Retail are -
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. Kesko Cooperatives needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Kesko Cooperatives in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Kesko Cooperatives 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.
Technology acceleration in Forth Industrial Revolution
– Kesko Cooperatives has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Kesko Cooperatives 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Finland's S Group: Competing with a Cooperative Approach to Retail, Kesko Cooperatives 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 .
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. Kesko Cooperatives 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.
Environmental challenges
– Kesko Cooperatives 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. Kesko Cooperatives can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kesko Cooperatives 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 Finland's S Group: Competing with a Cooperative Approach to Retail .
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 Kesko Cooperatives business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Kesko Cooperatives 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.
High dependence on third party suppliers
– Kesko Cooperatives 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.
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. Kesko Cooperatives can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Kesko Cooperatives is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Finland's S Group: Competing with a Cooperative Approach to Retail 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 Finland's S Group: Competing with a Cooperative Approach to Retail 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 Finland's S Group: Competing with a Cooperative Approach to Retail 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 Finland's S Group: Competing with a Cooperative Approach to Retail 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 Finland's S Group: Competing with a Cooperative Approach to Retail 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 Kesko Cooperatives needs to make to build a sustainable competitive advantage.