Case Study Description of E-Retail: Gold Rush or Fool's Gold?
This article examines the current and medium-term future impact of Internet-based sales on the physical retail store format. The web-based retail sector currently has a minimal financial effect on physical-based retail. The evolution of e-retail sales will likely mimic that of the catalogue industry in terms of ultimate market share potential. Certain categories of goods (travel, computers, electronic services, books, toys, and sporting goods) lend themselves more readily to shopping by computer and, therefore, are more susceptible to e-based competition. However, with Internet commerce firm profit forecasts still in the distant future, cutthroat price competition, and distribution and tactility constraints, e-retail will continue to present a relatively minor risk to experience-oriented and non-commodity physical retailers.
Swot Analysis of "E-Retail: Gold Rush or Fool's Gold?" written by Kenneth T. Rosen, Amanda L. Howard includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Retail Physical facing as an external strategic factors. Some of the topics covered in E-Retail: Gold Rush or Fool's Gold? case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the E-Retail: Gold Rush or Fool's Gold? casestudy better are - – digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, there is backlash against globalization, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, wage bills are increasing,
challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of E-Retail: Gold Rush or Fool's Gold?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in E-Retail: Gold Rush or Fool's Gold? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Retail Physical, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Retail Physical 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 E-Retail: Gold Rush or Fool's Gold? can be done for the following purposes –
1. Strategic planning using facts provided in E-Retail: Gold Rush or Fool's Gold? case study
2. Improving business portfolio management of Retail Physical
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 Retail Physical
Strengths E-Retail: Gold Rush or Fool's Gold? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Retail Physical in E-Retail: Gold Rush or Fool's Gold? Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– E-Retail: Gold Rush or Fool's Gold? firm has clearly differentiated products in the market place. This has enabled Retail Physical to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Retail Physical to invest into research and development (R&D) and innovation.
Learning organization
- Retail Physical 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 Retail Physical is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in E-Retail: Gold Rush or Fool's Gold? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Retail Physical is one of the most innovative firm in sector. Manager in E-Retail: Gold Rush or Fool's Gold? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Retail Physical has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in E-Retail: Gold Rush or Fool's Gold? 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.
Analytics focus
– Retail Physical is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kenneth T. Rosen, Amanda L. Howard can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Retail Physical 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 E-Retail: Gold Rush or Fool's Gold? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the E-Retail: Gold Rush or Fool's Gold? 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.
Strong track record of project management
– Retail Physical is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Retail Physical
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Retail Physical does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Retail Physical has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Retail Physical 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.
Diverse revenue streams
– Retail Physical is present in almost all the verticals within the industry. This has provided firm in E-Retail: Gold Rush or Fool's Gold? 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.
Cross disciplinary teams
– Horizontal connected teams at the Retail Physical 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 E-Retail: Gold Rush or Fool's Gold? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of E-Retail: Gold Rush or Fool's Gold? are -
Products dominated business model
– Even though Retail Physical 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 - E-Retail: Gold Rush or Fool's Gold? should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Retail Physical 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Retail Physical is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study E-Retail: Gold Rush or Fool's Gold? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Retail Physical has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study E-Retail: Gold Rush or Fool's Gold?, is just above the industry average. Retail Physical 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.
Slow to strategic competitive environment developments
– As E-Retail: Gold Rush or Fool's Gold? HBR case study mentions - Retail Physical 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.
Slow decision making process
– As mentioned earlier in the report, Retail Physical has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Retail Physical even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 Retail Physical supply chain. Even after few cautionary changes mentioned in the HBR case study - E-Retail: Gold Rush or Fool's Gold?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Retail Physical vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Retail Physical 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.
High cash cycle compare to competitors
Retail Physical 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study E-Retail: Gold Rush or Fool's Gold?, in the dynamic environment Retail Physical has struggled to respond to the nimble upstart competition. Retail Physical has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities E-Retail: Gold Rush or Fool's Gold? | 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 E-Retail: Gold Rush or Fool's Gold? are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Retail Physical 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, E-Retail: Gold Rush or Fool's Gold?, 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, Retail Physical is facing challenges because of the dominance of functional experts in the organization. E-Retail: Gold Rush or Fool's Gold? 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Retail Physical can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Retail Physical 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 E-Retail: Gold Rush or Fool's Gold? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Retail Physical to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Retail Physical can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Retail Physical can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. E-Retail: Gold Rush or Fool's Gold? 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.
Learning at scale
– Online learning technologies has now opened space for Retail Physical 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Retail Physical 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Retail Physical can use these opportunities to build new business models that can help the communities that Retail Physical 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 Retail Physical 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.
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. Retail Physical 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. Retail Physical 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.
Developing new processes and practices
– Retail Physical 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.
Better consumer reach
– The expansion of the 5G network will help Retail Physical to increase its market reach. Retail Physical 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.
Threats E-Retail: Gold Rush or Fool's Gold? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study E-Retail: Gold Rush or Fool's Gold? are -
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. Retail Physical can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Retail Physical with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Retail Physical 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.
Consumer confidence and its impact on Retail Physical 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.
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. Retail Physical 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.
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 Retail Physical in the Strategy & Execution sector and impact the bottomline of the organization.
Environmental challenges
– Retail Physical 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. Retail Physical can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Retail Physical
– 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 Retail Physical.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Retail Physical 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 E-Retail: Gold Rush or Fool's Gold? .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study E-Retail: Gold Rush or Fool's Gold?, Retail Physical 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 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.
Shortening product life cycle
– it is one of the major threat that Retail Physical is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Retail Physical business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of E-Retail: Gold Rush or Fool's Gold? 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 E-Retail: Gold Rush or Fool's Gold? 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 E-Retail: Gold Rush or Fool's Gold? 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 E-Retail: Gold Rush or Fool's Gold? 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 E-Retail: Gold Rush or Fool's Gold? 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 Retail Physical needs to make to build a sustainable competitive advantage.
