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 - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, talent flight as more people leaving formal jobs,
increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, 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 -
Operational resilience
– The operational resilience strategy in the Zappos.com (B): Strategy Powered by Culture and People 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.
Effective Research and Development (R&D)
– Www.blueoceanstrategy.com Zappos.com 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 Zappos.com (B): Strategy Powered by Culture and People - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
Training and development
– Www.blueoceanstrategy.com Zappos.com has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zappos.com (B): Strategy Powered by Culture and People 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.
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.
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.
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.
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.
Organizational Resilience of Www.blueoceanstrategy.com Zappos.com
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Www.blueoceanstrategy.com Zappos.com does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Cross disciplinary teams
– Horizontal connected teams at the Www.blueoceanstrategy.com Zappos.com are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in 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 -
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.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Www.blueoceanstrategy.com Zappos.com 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 Zappos.com (B): Strategy Powered by Culture and People, 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.
Increasing silos among functional specialists
– The organizational structure of Www.blueoceanstrategy.com Zappos.com is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Www.blueoceanstrategy.com Zappos.com needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Www.blueoceanstrategy.com Zappos.com 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 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.
Slow to strategic competitive environment developments
– As Zappos.com (B): Strategy Powered by Culture and People HBR case study mentions - Www.blueoceanstrategy.com Zappos.com 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.
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.
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 Www.blueoceanstrategy.com Zappos.com supply chain. Even after few cautionary changes mentioned in the HBR case study - Zappos.com (B): Strategy Powered by Culture and People, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Www.blueoceanstrategy.com Zappos.com vulnerable to further global disruptions in South East Asia.
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 -
Manufacturing automation
– Www.blueoceanstrategy.com Zappos.com 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.
Creating value in data economy
– The success of analytics program of Www.blueoceanstrategy.com Zappos.com has opened avenues for new revenue streams for the organization in the industry. This can help Www.blueoceanstrategy.com Zappos.com to build a more holistic ecosystem as suggested in the Zappos.com (B): Strategy Powered by Culture and People case study. Www.blueoceanstrategy.com Zappos.com can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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 Www.blueoceanstrategy.com Zappos.com in the consumer business. Now Www.blueoceanstrategy.com Zappos.com can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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.
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 Www.blueoceanstrategy.com Zappos.com 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.
Buying journey improvements
– Www.blueoceanstrategy.com Zappos.com can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zappos.com (B): Strategy Powered by Culture and People 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.
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.
Building a culture of innovation
– managers at Www.blueoceanstrategy.com Zappos.com 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.
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 -
Technology acceleration in Forth Industrial Revolution
– Www.blueoceanstrategy.com Zappos.com has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Www.blueoceanstrategy.com Zappos.com 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.
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 .
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.
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.
Increasing wage structure of Www.blueoceanstrategy.com Zappos.com
– 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 Www.blueoceanstrategy.com Zappos.com.
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 Www.blueoceanstrategy.com Zappos.com in the Strategy & Execution sector and impact the bottomline of the organization.
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 Www.blueoceanstrategy.com Zappos.com.
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.
Environmental challenges
– Www.blueoceanstrategy.com Zappos.com 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. Www.blueoceanstrategy.com Zappos.com can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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.
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.
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.
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.