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 - – digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, there is backlash against globalization,
there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, 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 -
Operational resilience
– The operational resilience strategy in the Finland's S Group: Competing with a Cooperative Approach to Retail 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.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Kesko Cooperatives digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kesko Cooperatives 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
– 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.
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.
Training and development
– Kesko Cooperatives has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Finland's S Group: Competing with a Cooperative Approach to Retail 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.
Learning organization
- Kesko Cooperatives 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 Kesko Cooperatives is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Finland's S Group: Competing with a Cooperative Approach to Retail Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Kesko Cooperatives in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
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.
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 -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kesko Cooperatives is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Finland's S Group: Competing with a Cooperative Approach to Retail can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Kesko Cooperatives 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 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.
Interest costs
– Compare to the competition, Kesko Cooperatives has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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.
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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Kesko Cooperatives supply chain. Even after few cautionary changes mentioned in the HBR case study - Finland's S Group: Competing with a Cooperative Approach to Retail, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kesko Cooperatives vulnerable to further global disruptions in South East Asia.
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 -
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.
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.
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.
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.
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.
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.
Leveraging digital technologies
– Kesko Cooperatives 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.
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.
Better consumer reach
– The expansion of the 5G network will help Kesko Cooperatives to increase its market reach. Kesko Cooperatives 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.
Building a culture of innovation
– managers at Kesko Cooperatives 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kesko Cooperatives can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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 -
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kesko Cooperatives 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.
Increasing wage structure of Kesko Cooperatives
– 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 Kesko Cooperatives.
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.
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.
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.
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.
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 .
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 .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Kesko Cooperatives.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kesko Cooperatives with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
