Home Plus: Riding the Korean Retailing Rollercoaster SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Home Plus: Riding the Korean Retailing Rollercoaster
In the late 1990s, multinational retailing giant Tesco selected a joint venture with the Samsung Group as its market entry strategy into South Korea and created a new brand, Homeplus. Subsequently, the management of Homeplus implemented various policies aimed at localizing the business while also introducing business practices from Tesco's british headquarters. It invested in growth and diversification through large discount stores offering an "all in one spot" shopping experience, small-sized super-supermarkets, private brands and online shopping. At the same time, the Korean retailing industry had become much more dynamic as competition intensified between various types of market players, including strong competitors affiliated with local business groups. Homeplus needs to rethink its position in a highly challenging market environment. Authors Youngwoo Lee and Martin Hemmert are affiliated with Korea University.
Swot Analysis of "Home Plus: Riding the Korean Retailing Rollercoaster" written by Youngwoo Lee, Martin Hemmert includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Homeplus Retailing facing as an external strategic factors. Some of the topics covered in Home Plus: Riding the Korean Retailing Rollercoaster case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Home Plus: Riding the Korean Retailing Rollercoaster casestudy better are - – cloud computing is disrupting traditional business models, increasing commodity prices, increasing transportation and logistics costs, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation,
challanges to central banks by blockchain based private currencies, geopolitical disruptions, etc
Introduction to SWOT Analysis of Home Plus: Riding the Korean Retailing Rollercoaster
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Home Plus: Riding the Korean Retailing Rollercoaster case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Homeplus Retailing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Homeplus Retailing 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 Home Plus: Riding the Korean Retailing Rollercoaster can be done for the following purposes –
1. Strategic planning using facts provided in Home Plus: Riding the Korean Retailing Rollercoaster case study
2. Improving business portfolio management of Homeplus Retailing
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 Homeplus Retailing
Strengths Home Plus: Riding the Korean Retailing Rollercoaster | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Homeplus Retailing in Home Plus: Riding the Korean Retailing Rollercoaster Harvard Business Review case study are -
Innovation driven organization
– Homeplus Retailing is one of the most innovative firm in sector. Manager in Home Plus: Riding the Korean Retailing Rollercoaster Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Homeplus Retailing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Homeplus Retailing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Homeplus Retailing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Homeplus Retailing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Home Plus: Riding the Korean Retailing Rollercoaster 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.
Strong track record of project management
– Homeplus Retailing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Home Plus: Riding the Korean Retailing Rollercoaster 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.
Organizational Resilience of Homeplus Retailing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Homeplus Retailing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Homeplus Retailing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Homeplus Retailing 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Home Plus: Riding the Korean Retailing Rollercoaster firm has clearly differentiated products in the market place. This has enabled Homeplus Retailing to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Homeplus Retailing to invest into research and development (R&D) and innovation.
Learning organization
- Homeplus Retailing 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 Homeplus Retailing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Home Plus: Riding the Korean Retailing Rollercoaster Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Homeplus Retailing has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Homeplus Retailing 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.
Ability to recruit top talent
– Homeplus Retailing is one of the leading recruiters in the industry. Managers in the Home Plus: Riding the Korean Retailing Rollercoaster are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Home Plus: Riding the Korean Retailing Rollercoaster | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Home Plus: Riding the Korean Retailing Rollercoaster are -
Slow decision making process
– As mentioned earlier in the report, Homeplus Retailing 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. Homeplus Retailing 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Homeplus Retailing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Home Plus: Riding the Korean Retailing Rollercoaster can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Homeplus Retailing, firm in the HBR case study Home Plus: Riding the Korean Retailing Rollercoaster needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Home Plus: Riding the Korean Retailing Rollercoaster HBR case study mentions - Homeplus Retailing 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.
No frontier risks strategy
– After analyzing the HBR case study Home Plus: Riding the Korean Retailing Rollercoaster, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Home Plus: Riding the Korean Retailing Rollercoaster, is just above the industry average. Homeplus Retailing 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.
Increasing silos among functional specialists
– The organizational structure of Homeplus Retailing is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Homeplus Retailing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Homeplus Retailing to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Home Plus: Riding the Korean Retailing Rollercoaster 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 Homeplus Retailing 's lucrative customers.
High cash cycle compare to competitors
Homeplus Retailing 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.
Capital Spending Reduction
– Even during the low interest decade, Homeplus Retailing 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.
Lack of clear differentiation of Homeplus Retailing products
– To increase the profitability and margins on the products, Homeplus Retailing needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Home Plus: Riding the Korean Retailing Rollercoaster | 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 Home Plus: Riding the Korean Retailing Rollercoaster are -
Leveraging digital technologies
– Homeplus Retailing 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Homeplus Retailing is facing challenges because of the dominance of functional experts in the organization. Home Plus: Riding the Korean Retailing Rollercoaster 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Homeplus Retailing 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.
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 Homeplus Retailing 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.
Developing new processes and practices
– Homeplus Retailing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Homeplus Retailing 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.
Manufacturing automation
– Homeplus Retailing 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.
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 Homeplus Retailing in the consumer business. Now Homeplus Retailing can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Homeplus Retailing can use these opportunities to build new business models that can help the communities that Homeplus Retailing operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Homeplus Retailing 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.
Buying journey improvements
– Homeplus Retailing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Home Plus: Riding the Korean Retailing Rollercoaster 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.
Loyalty marketing
– Homeplus Retailing has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Homeplus Retailing 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 Home Plus: Riding the Korean Retailing Rollercoaster - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Homeplus Retailing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Home Plus: Riding the Korean Retailing Rollercoaster External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Home Plus: Riding the Korean Retailing Rollercoaster are -
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
– Homeplus Retailing 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.
Environmental challenges
– Homeplus Retailing 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. Homeplus Retailing can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Homeplus Retailing.
Increasing wage structure of Homeplus Retailing
– 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 Homeplus Retailing.
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 Homeplus Retailing in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Homeplus Retailing 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.
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. Homeplus Retailing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Homeplus Retailing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Homeplus Retailing business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Homeplus Retailing is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Homeplus Retailing 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Homeplus Retailing 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 Home Plus: Riding the Korean Retailing Rollercoaster .
Weighted SWOT Analysis of Home Plus: Riding the Korean Retailing Rollercoaster 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 Home Plus: Riding the Korean Retailing Rollercoaster 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 Home Plus: Riding the Korean Retailing Rollercoaster 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 Home Plus: Riding the Korean Retailing Rollercoaster 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 Home Plus: Riding the Korean Retailing Rollercoaster 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 Homeplus Retailing needs to make to build a sustainable competitive advantage.
