Case Study Description of Transforming Tommy Hilfiger (A)
To maximize their effectiveness, color cases should be printed in color.At the end of 2005, Tommy Hilfiger is taken private by Apax Partners after years of disappointing performance and strategic impasse. Students are asked to evaluate alternative strategic options for the company, and to propose a concrete turnaround plan for the first 100 days after the acquisition.
Swot Analysis of "Transforming Tommy Hilfiger (A)" written by Raffaella Sadun, Hanoch Feit, Vaibhav Gujral, Gerard Zouein includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hilfiger Tommy facing as an external strategic factors. Some of the topics covered in Transforming Tommy Hilfiger (A) case study are - Strategic Management Strategies, Entrepreneurial finance, Marketing, Mergers & acquisitions, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Transforming Tommy Hilfiger (A) casestudy better are - – supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%,
there is backlash against globalization, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Transforming Tommy Hilfiger (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Transforming Tommy Hilfiger (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hilfiger Tommy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hilfiger Tommy 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 Transforming Tommy Hilfiger (A) can be done for the following purposes –
1. Strategic planning using facts provided in Transforming Tommy Hilfiger (A) case study
2. Improving business portfolio management of Hilfiger Tommy
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 Hilfiger Tommy
Strengths Transforming Tommy Hilfiger (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hilfiger Tommy in Transforming Tommy Hilfiger (A) Harvard Business Review case study are -
Training and development
– Hilfiger Tommy has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Transforming Tommy Hilfiger (A) 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.
High switching costs
– The high switching costs that Hilfiger Tommy 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.
Low bargaining power of suppliers
– Suppliers of Hilfiger Tommy in the sector have low bargaining power. Transforming Tommy Hilfiger (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hilfiger Tommy to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Transforming Tommy Hilfiger (A) 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
– Transforming Tommy Hilfiger (A) firm has clearly differentiated products in the market place. This has enabled Hilfiger Tommy to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Hilfiger Tommy to invest into research and development (R&D) and innovation.
High brand equity
– Hilfiger Tommy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hilfiger Tommy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Hilfiger Tommy 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 Raffaella Sadun, Hanoch Feit, Vaibhav Gujral, Gerard Zouein 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.
Successful track record of launching new products
– Hilfiger Tommy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hilfiger Tommy 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
– Hilfiger Tommy is present in almost all the verticals within the industry. This has provided firm in Transforming Tommy Hilfiger (A) 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 Hilfiger Tommy
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hilfiger Tommy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Hilfiger Tommy is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Hilfiger Tommy in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Transforming Tommy Hilfiger (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Transforming Tommy Hilfiger (A) are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Transforming Tommy Hilfiger (A), it seems that the employees of Hilfiger Tommy 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.
Increasing silos among functional specialists
– The organizational structure of Hilfiger Tommy is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Hilfiger Tommy needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hilfiger Tommy to focus more on services rather than just following the product oriented approach.
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 Hilfiger Tommy supply chain. Even after few cautionary changes mentioned in the HBR case study - Transforming Tommy Hilfiger (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hilfiger Tommy vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Transforming Tommy Hilfiger (A) 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 Hilfiger Tommy 's lucrative customers.
Interest costs
– Compare to the competition, Hilfiger Tommy 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.
Aligning sales with marketing
– It come across in the case study Transforming Tommy Hilfiger (A) 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 Transforming Tommy Hilfiger (A) can leverage the sales team experience to cultivate customer relationships as Hilfiger Tommy is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Raffaella Sadun, Hanoch Feit, Vaibhav Gujral, Gerard Zouein suggests that, Hilfiger Tommy 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
– Hilfiger Tommy 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Hilfiger Tommy 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.
Capital Spending Reduction
– Even during the low interest decade, Hilfiger Tommy 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Transforming Tommy Hilfiger (A), in the dynamic environment Hilfiger Tommy has struggled to respond to the nimble upstart competition. Hilfiger Tommy has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Transforming Tommy Hilfiger (A) | 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 Transforming Tommy Hilfiger (A) are -
Building a culture of innovation
– managers at Hilfiger Tommy 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.
Loyalty marketing
– Hilfiger Tommy 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hilfiger Tommy can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hilfiger Tommy can use these opportunities to build new business models that can help the communities that Hilfiger Tommy operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Hilfiger Tommy can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Transforming Tommy Hilfiger (A) 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hilfiger Tommy 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.
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. Hilfiger Tommy 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. Hilfiger Tommy 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.
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 Hilfiger Tommy 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.
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. Hilfiger Tommy can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Hilfiger Tommy 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 Transforming Tommy Hilfiger (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hilfiger Tommy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Hilfiger Tommy 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.
Developing new processes and practices
– Hilfiger Tommy can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Hilfiger Tommy has opened avenues for new revenue streams for the organization in the industry. This can help Hilfiger Tommy to build a more holistic ecosystem as suggested in the Transforming Tommy Hilfiger (A) case study. Hilfiger Tommy can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Transforming Tommy Hilfiger (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Transforming Tommy Hilfiger (A) are -
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. Hilfiger Tommy needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Hilfiger Tommy 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.
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 Hilfiger Tommy in the Strategy & Execution sector and impact the bottomline 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 Transforming Tommy Hilfiger (A), Hilfiger Tommy 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 .
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. Hilfiger Tommy 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hilfiger Tommy 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 Transforming Tommy Hilfiger (A) .
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. Hilfiger Tommy 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 Hilfiger Tommy
– 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 Hilfiger Tommy.
Stagnating economy with rate increase
– Hilfiger Tommy 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.
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.
Shortening product life cycle
– it is one of the major threat that Hilfiger Tommy is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Hilfiger Tommy has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Hilfiger Tommy 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.
Environmental challenges
– Hilfiger Tommy 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. Hilfiger Tommy can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Transforming Tommy Hilfiger (A) 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 Transforming Tommy Hilfiger (A) 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 Transforming Tommy Hilfiger (A) 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 Transforming Tommy Hilfiger (A) 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 Transforming Tommy Hilfiger (A) 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 Hilfiger Tommy needs to make to build a sustainable competitive advantage.