Case Study Description of Mountain Equipment Co-op: The Private Label Strategy
Mountain Equipment Co-op (MEC) is a well-known Canadian retailer of outdoor clothing and equipment. While it stocks a range of branded products in its stores, a key source of profits is its private label line of products, which spans the entire range of products offered at MEC. The challenge MEC faces is how to continue to develop and launch innovative private labeled products while recognizing that these private labeled products may be direct competitors of MEC's assortment of global brands. MEC needs to be able to develop its line-up without being seen as infringing on intellectual property or being too much of a "follower." In assessing how MEC can develop its line-up, students can review MEC's philosophy as a co-operative (in which it positions itself as being different from corporations) and its design philosophy.
Swot Analysis of "Mountain Equipment Co-op: The Private Label Strategy" written by Matthew Thomson, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mec Mec's facing as an external strategic factors. Some of the topics covered in Mountain Equipment Co-op: The Private Label Strategy case study are - Strategic Management Strategies, Product development, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Mountain Equipment Co-op: The Private Label Strategy casestudy better are - – there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy,
there is increasing trade war between United States & China, increasing commodity prices, etc
Introduction to SWOT Analysis of Mountain Equipment Co-op: The Private Label Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Mountain Equipment Co-op: The Private Label Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mec Mec's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mec Mec'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 Mountain Equipment Co-op: The Private Label Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Mountain Equipment Co-op: The Private Label Strategy case study
2. Improving business portfolio management of Mec Mec'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 Mec Mec's
Strengths Mountain Equipment Co-op: The Private Label Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mec Mec's in Mountain Equipment Co-op: The Private Label Strategy Harvard Business Review case study are -
High switching costs
– The high switching costs that Mec Mec'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.
High brand equity
– Mec Mec's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mec Mec's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Mec Mec'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.
Highly skilled collaborators
– Mec Mec'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 Mountain Equipment Co-op: The Private Label Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Mec Mec's is one of the most innovative firm in sector. Manager in Mountain Equipment Co-op: The Private Label Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Strategy & Execution field
– Mec Mec's 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 Mec Mec's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Mec Mec's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mec Mec'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.
Diverse revenue streams
– Mec Mec's is present in almost all the verticals within the industry. This has provided firm in Mountain Equipment Co-op: The Private Label Strategy 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.
Operational resilience
– The operational resilience strategy in the Mountain Equipment Co-op: The Private Label Strategy 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.
Superior customer experience
– The customer experience strategy of Mec Mec's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Mec Mec's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Mountain Equipment Co-op: The Private Label Strategy Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Learning organization
- Mec Mec'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 Mec Mec's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Mountain Equipment Co-op: The Private Label Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Mountain Equipment Co-op: The Private Label Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mountain Equipment Co-op: The Private Label Strategy are -
Slow to strategic competitive environment developments
– As Mountain Equipment Co-op: The Private Label Strategy HBR case study mentions - Mec Mec's 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.
Increasing silos among functional specialists
– The organizational structure of Mec Mec's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Mec Mec's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Mec Mec's to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Mec Mec's 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.
Products dominated business model
– Even though Mec Mec's 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 - Mountain Equipment Co-op: The Private Label Strategy should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Mec Mec's, firm in the HBR case study Mountain Equipment Co-op: The Private Label Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Mec Mec's products
– To increase the profitability and margins on the products, Mec Mec's needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Mountain Equipment Co-op: The Private Label Strategy, it seems that the employees of Mec Mec'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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Mountain Equipment Co-op: The Private Label Strategy, is just above the industry average. Mec Mec'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.
Skills based hiring
– The stress on hiring functional specialists at Mec Mec's 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Mountain Equipment Co-op: The Private Label Strategy, in the dynamic environment Mec Mec's has struggled to respond to the nimble upstart competition. Mec Mec's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Mountain Equipment Co-op: The Private Label Strategy 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 Mountain Equipment Co-op: The Private Label Strategy can leverage the sales team experience to cultivate customer relationships as Mec Mec's is planning to shift buying processes online.
Opportunities Mountain Equipment Co-op: The Private Label Strategy | 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 Mountain Equipment Co-op: The Private Label Strategy are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mec Mec's is facing challenges because of the dominance of functional experts in the organization. Mountain Equipment Co-op: The Private Label Strategy 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.
Using analytics as competitive advantage
– Mec Mec'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 Mountain Equipment Co-op: The Private Label Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mec Mec's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mec Mec's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Mec Mec'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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mec Mec's can use these opportunities to build new business models that can help the communities that Mec Mec's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Mec Mec'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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Mec Mec's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Mec Mec's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Mec Mec's in the consumer business. Now Mec Mec's can target international markets with far fewer capital restrictions requirements than the existing system.
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. Mec Mec's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Mec Mec's 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mec Mec's 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 Mec Mec's to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Mec Mec's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Mountain Equipment Co-op: The Private Label Strategy 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
– Mec Mec'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.
Threats Mountain Equipment Co-op: The Private Label Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Mountain Equipment Co-op: The Private Label Strategy are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mec Mec's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mec Mec's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Mec Mec's.
Regulatory challenges
– Mec Mec's 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.
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 Mec Mec's business can come under increasing regulations regarding data privacy, data security, etc.
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. Mec Mec'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.
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.
High dependence on third party suppliers
– Mec Mec'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.
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 Mec Mec's in the Strategy & Execution sector and impact the bottomline of the organization.
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. Mec Mec's 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 Mec Mec'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 Mec Mec's.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mec Mec's 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 Mountain Equipment Co-op: The Private Label Strategy .
Weighted SWOT Analysis of Mountain Equipment Co-op: The Private Label Strategy 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 Mountain Equipment Co-op: The Private Label Strategy 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 Mountain Equipment Co-op: The Private Label Strategy 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 Mountain Equipment Co-op: The Private Label Strategy 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 Mountain Equipment Co-op: The Private Label Strategy 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 Mec Mec's needs to make to build a sustainable competitive advantage.
