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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, 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%,
talent flight as more people leaving formal jobs, geopolitical disruptions, 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.
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.
High switching costs
– The high switching costs that Www.blueoceanstrategy.com Zappos.com has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Www.blueoceanstrategy.com Zappos.com digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Www.blueoceanstrategy.com Zappos.com has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Www.blueoceanstrategy.com Zappos.com is present in almost all the verticals within the industry. This has provided firm in Zappos.com (B): Strategy Powered by Culture and People case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
Successful track record of launching new products
– Www.blueoceanstrategy.com Zappos.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Www.blueoceanstrategy.com Zappos.com has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Www.blueoceanstrategy.com Zappos.com has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Www.blueoceanstrategy.com Zappos.com to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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 -
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Zappos.com (B): Strategy Powered by Culture and People HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Www.blueoceanstrategy.com Zappos.com has relatively successful track record of launching new products.
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.
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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Www.blueoceanstrategy.com Zappos.com 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 Www.blueoceanstrategy.com Zappos.com products
– To increase the profitability and margins on the products, Www.blueoceanstrategy.com Zappos.com needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Www.blueoceanstrategy.com Zappos.com has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Www.blueoceanstrategy.com Zappos.com has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Zappos.com (B): Strategy Powered by Culture and People should strive to include more intangible value offerings along with its core products and services.
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 -
Low interest rates
– Even though inflation is raising its head in most developed economies, Www.blueoceanstrategy.com Zappos.com can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Www.blueoceanstrategy.com Zappos.com can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Www.blueoceanstrategy.com Zappos.com in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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.
Developing new processes and practices
– Www.blueoceanstrategy.com Zappos.com 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.
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.
Loyalty marketing
– Www.blueoceanstrategy.com Zappos.com 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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Www.blueoceanstrategy.com Zappos.com can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Zappos.com (B): Strategy Powered by Culture and People, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Www.blueoceanstrategy.com Zappos.com is facing challenges because of the dominance of functional experts in the organization. Zappos.com (B): Strategy Powered by Culture and People case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
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.
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 -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Www.blueoceanstrategy.com Zappos.com with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Www.blueoceanstrategy.com Zappos.com can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Zappos.com (B): Strategy Powered by Culture and People .
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.
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.
Shortening product life cycle
– it is one of the major threat that Www.blueoceanstrategy.com Zappos.com is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Www.blueoceanstrategy.com Zappos.com needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Www.blueoceanstrategy.com Zappos.com high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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. Www.blueoceanstrategy.com Zappos.com 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Www.blueoceanstrategy.com Zappos.com business can come under increasing regulations regarding data privacy, data security, etc.
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.
