Case Study Description of Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers
Andreas Stihl AG is the world's leading manufacturer of chain saws and other outdoor handheld power equipment. Based on marketing challenges in its high-volume retail channel-mass merchants such as The Home Depot and Lowe's-Stihl's U.S. unit has narrowed its distribution system to a single channel: independent retail dealers specializing in yard maintenance equipment. This risky and highly publicized decision has proved extremely successful, raising profits, attracting more dealers into exclusive relationships with Stihl, and strengthening the brand's top-quality positioning. But Stihl management are concerned that this channel system may not fit tomorrow's demographics, dominated by homeowners from the so-called Generation X and Generation Y. The case outlines Stihl's business and channel systems and customer needs, then poses a series of questions that management believes must be answered to determine whether to maintain or move away from reliance on its specialty retailers and how to adapt its system.
Swot Analysis of "Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers" written by Richard E. Wilson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Stihl Stihl's facing as an external strategic factors. Some of the topics covered in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers case study are - Strategic Management Strategies, International business, Manufacturing, Marketing, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers casestudy better are - – challanges to central banks by blockchain based private currencies, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Stihl Stihl's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Stihl Stihl's 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers can be done for the following purposes –
1. Strategic planning using facts provided in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers case study
2. Improving business portfolio management of Stihl Stihl's
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 Stihl Stihl's
Strengths Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Stihl Stihl's in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Stihl Stihl's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Stihl Stihl's 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.
Highly skilled collaborators
– Stihl Stihl's 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Stihl Stihl's in the sector have low bargaining power. Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Stihl Stihl's to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Stihl Stihl's is present in almost all the verticals within the industry. This has provided firm in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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.
Organizational Resilience of Stihl Stihl's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Stihl Stihl's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Stihl Stihl's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Strategy & Execution industry
– Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers firm has clearly differentiated products in the market place. This has enabled Stihl Stihl's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Stihl Stihl's to invest into research and development (R&D) and innovation.
Innovation driven organization
– Stihl Stihl's is one of the most innovative firm in sector. Manager in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Stihl Stihl's 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.
Learning organization
- Stihl Stihl's 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 Stihl Stihl's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Stihl Stihl's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Stihl Stihl's 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.
Weaknesses Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers are -
High bargaining power of channel partners
– Because of the regulatory requirements, Richard E. Wilson suggests that, Stihl Stihl's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers, is just above the industry average. Stihl Stihl's 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.
Capital Spending Reduction
– Even during the low interest decade, Stihl Stihl's 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.
No frontier risks strategy
– After analyzing the HBR case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers, 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.
Lack of clear differentiation of Stihl Stihl's products
– To increase the profitability and margins on the products, Stihl Stihl's needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Stihl Stihl's supply chain. Even after few cautionary changes mentioned in the HBR case study - Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Stihl Stihl's vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers, it seems that the employees of Stihl Stihl's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Stihl's 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Stihl's has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Stihl Stihl's 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.
Low market penetration in new markets
– Outside its home market of Stihl Stihl's, firm in the HBR case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers | 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers are -
Developing new processes and practices
– Stihl Stihl's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Stihl Stihl's can use these opportunities to build new business models that can help the communities that Stihl Stihl's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Stihl Stihl's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Stihl Stihl's 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.
Using analytics as competitive advantage
– Stihl Stihl's 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Stihl Stihl's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Stihl Stihl's 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 Stihl Stihl's in the consumer business. Now Stihl Stihl's can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Stihl Stihl's to increase its market reach. Stihl Stihl's 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.
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 Stihl Stihl's 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Stihl Stihl's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Stihl Stihl's 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.
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. Stihl Stihl's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Stihl Stihl's 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.
Threats Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers are -
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. Stihl Stihl's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Stihl Stihl's 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. Stihl Stihl's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers, Stihl Stihl's 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 .
Technology acceleration in Forth Industrial Revolution
– Stihl Stihl's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Stihl Stihl's 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 wage structure of Stihl Stihl's
– 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 Stihl Stihl's.
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 Stihl Stihl's.
High dependence on third party suppliers
– Stihl Stihl's 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.
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.
Stagnating economy with rate increase
– Stihl Stihl's 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.
Shortening product life cycle
– it is one of the major threat that Stihl Stihl's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Stihl Stihl's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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. Stihl Stihl's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Incorporated: Go-to-Market Strategy for Next-Generation Consumers 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 Stihl Stihl's needs to make to build a sustainable competitive advantage.