L.L. Bean: A Search for Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of L.L. Bean: A Search for Growth
In mid-2003, CEO Chris McCormick felt L.L. Bean was in a good position to begin to grow again. For nearly 90 years, the company sold clothing and gear for outdoor enthusiasts through its catalogs and a single retail store in Freeport, Maine. In the three decades prior to 1996, sales growth averaged nearly 20% per year. In 1995, sales hit $1 billion, but stagnated for the next six years--growing at less than 2% annually. The company responded with a structural reorganization and investment in its Internet sales channel. In 2002 and early 2003, McCormick led an effort to reduce overhead and improve its internal systems, including the elimination of 1,000 jobs--which reduced year-round headcount by nearly 15%. After these initiatives, the company remained profitable and enjoyed a strong balance sheet, but sales growth remained near zero. Most significantly, between 2000 and 2002, L.L. Bean opened three retail stores in shopping malls outside Maine. McCormick viewed these three stores as the first of a chain of stores that would form a new selling channel and enable L.L. Bean to grow. Early results from the three new stores were below expectations; L.L. Bean spent significant time examining its retail store activities in an attempt to learn where it could improve. As the company began to apply those lessons in the stores, performance picked up, fueling McCormick's optimism that L.L. Bean could grow with retail stores.
Authors :: Rajiv Lal, Walter J. Salmon, James Weber
Swot Analysis of "L.L. Bean: A Search for Growth" written by Rajiv Lal, Walter J. Salmon, James Weber includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that L.l Bean facing as an external strategic factors. Some of the topics covered in L.L. Bean: A Search for Growth case study are - Strategic Management Strategies, Developing employees, International business, Leadership, Marketing, Professional transitions, Risk management, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the L.L. Bean: A Search for Growth casestudy better are - – digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
increasing transportation and logistics costs, wage bills are increasing, etc
Introduction to SWOT Analysis of L.L. Bean: A Search for Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L.L. Bean: A Search for Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the L.l Bean, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which L.l Bean 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 L.L. Bean: A Search for Growth can be done for the following purposes –
1. Strategic planning using facts provided in L.L. Bean: A Search for Growth case study
2. Improving business portfolio management of L.l Bean
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 L.l Bean
Strengths L.L. Bean: A Search for Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of L.l Bean in L.L. Bean: A Search for Growth Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of L.l Bean in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– L.l Bean is one of the most innovative firm in sector. Manager in L.L. Bean: A Search for Growth 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
– L.l Bean 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 L.l Bean in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the L.L. Bean: A Search for Growth 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.
Sustainable margins compare to other players in Strategy & Execution industry
– L.L. Bean: A Search for Growth firm has clearly differentiated products in the market place. This has enabled L.l Bean to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped L.l Bean to invest into research and development (R&D) and innovation.
Training and development
– L.l Bean has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in L.L. Bean: A Search for Growth 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For L.l Bean digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. L.l Bean 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.
Successful track record of launching new products
– L.l Bean has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. L.l Bean 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.
Analytics focus
– L.l Bean 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 Rajiv Lal, Walter J. Salmon, James Weber 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.
High switching costs
– The high switching costs that L.l Bean 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.
Ability to recruit top talent
– L.l Bean is one of the leading recruiters in the industry. Managers in the L.L. Bean: A Search for Growth are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of L.l Bean
– The covid-19 pandemic has put organizational resilience at the centre of everthing that L.l Bean does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses L.L. Bean: A Search for Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L.L. Bean: A Search for Growth are -
Increasing silos among functional specialists
– The organizational structure of L.l Bean is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. L.l Bean needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help L.l Bean to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As L.L. Bean: A Search for Growth HBR case study mentions - L.l Bean 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.
Workers concerns about automation
– As automation is fast increasing in the segment, L.l Bean 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study L.L. Bean: A Search for Growth, in the dynamic environment L.l Bean has struggled to respond to the nimble upstart competition. L.l Bean has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study L.L. Bean: A Search for Growth, is just above the industry average. L.l Bean 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.
Interest costs
– Compare to the competition, L.l Bean 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.
High cash cycle compare to competitors
L.l Bean 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.
No frontier risks strategy
– After analyzing the HBR case study L.L. Bean: A Search for Growth, 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.
Slow decision making process
– As mentioned earlier in the report, L.l Bean 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. L.l Bean 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 bargaining power of channel partners
– Because of the regulatory requirements, Rajiv Lal, Walter J. Salmon, James Weber suggests that, L.l Bean 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.
Need for greater diversity
– L.l Bean 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.
Opportunities L.L. Bean: A Search for Growth | 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 L.L. Bean: A Search for Growth are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, L.l Bean can use these opportunities to build new business models that can help the communities that L.l Bean 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 L.l Bean 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.
Using analytics as competitive advantage
– L.l Bean 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 L.L. Bean: A Search for Growth - to build a competitive advantage using analytics. The analytics driven competitive advantage can help L.l Bean to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, L.l Bean 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.
Building a culture of innovation
– managers at L.l Bean 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.
Leveraging digital technologies
– L.l Bean 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, L.l Bean 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, L.L. Bean: A Search for Growth, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for L.l Bean 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.
Learning at scale
– Online learning technologies has now opened space for L.l Bean 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.
Loyalty marketing
– L.l Bean 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.
Creating value in data economy
– The success of analytics program of L.l Bean has opened avenues for new revenue streams for the organization in the industry. This can help L.l Bean to build a more holistic ecosystem as suggested in the L.L. Bean: A Search for Growth case study. L.l Bean can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– L.l Bean can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L.L. Bean: A Search for Growth 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.
Developing new processes and practices
– L.l Bean 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.
Threats L.L. Bean: A Search for Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L.L. Bean: A Search for Growth are -
Environmental challenges
– L.l Bean 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. L.l Bean can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, L.l Bean 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 L.L. Bean: A Search for Growth .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study L.L. Bean: A Search for Growth, L.l Bean 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents L.l Bean with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that L.l Bean is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 L.l Bean.
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.
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. L.l Bean can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– L.l Bean has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, L.l Bean 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.
Consumer confidence and its impact on L.l Bean 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
– L.l Bean 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.
Increasing wage structure of L.l Bean
– 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 L.l Bean.
Stagnating economy with rate increase
– L.l Bean 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.
Weighted SWOT Analysis of L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.L. Bean: A Search for Growth 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 L.l Bean needs to make to build a sustainable competitive advantage.