The entrepreneurs had offered to purchase one Fabric Super-Store franchise; management had countered with vendor take-back (VTB) financing toward the purchase of two stores if the entrepreneurs would agree to buy and operate both locations. The VTB debt would be in second position to the bank in the event of a bankruptcy. The couple was convinced they could be successful franchisees with both stores, but were concerned with the high proposed interest rate on the VTB offer. While there was no penalty for early repayment (as in their secured bank loan), the bank had offered very competitive rates. After evaluating the financial implications of Fabric Super-Store's counter offer, it was clear that without an immediate and substantial increase in sales at both stores, the entrepreneurs would find themselves unable to operate the business due to the high financing costs. Although both parties were motivated to make a deal happen, some important roadblocks would need to be navigated in order to actually get it done.
Swot Analysis of "Fabric Super-Store (C)" written by David Simpson, Colin McDougall includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vtb Fabric facing as an external strategic factors. Some of the topics covered in Fabric Super-Store (C) case study are - Strategic Management Strategies, Financial management, Negotiations, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Fabric Super-Store (C) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, geopolitical disruptions, increasing energy prices, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, technology disruption,
increasing transportation and logistics costs, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Fabric Super-Store (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fabric Super-Store (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vtb Fabric, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vtb Fabric 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 Fabric Super-Store (C) can be done for the following purposes –
1. Strategic planning using facts provided in Fabric Super-Store (C) case study
2. Improving business portfolio management of Vtb Fabric
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 Vtb Fabric
Strengths Fabric Super-Store (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vtb Fabric in Fabric Super-Store (C) Harvard Business Review case study are -
Innovation driven organization
– Vtb Fabric is one of the most innovative firm in sector. Manager in Fabric Super-Store (C) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Vtb Fabric in the sector have low bargaining power. Fabric Super-Store (C) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vtb Fabric to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Strategy & Execution field
– Vtb Fabric 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 Vtb Fabric in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Vtb Fabric 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 David Simpson, Colin McDougall 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Vtb Fabric digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vtb Fabric 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.
High switching costs
– The high switching costs that Vtb Fabric 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.
Learning organization
- Vtb Fabric 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 Vtb Fabric is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Fabric Super-Store (C) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Vtb Fabric 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
– Vtb Fabric 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 Fabric Super-Store (C) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Vtb Fabric has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vtb Fabric to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Vtb Fabric 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.
Effective Research and Development (R&D)
– Vtb Fabric has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Fabric Super-Store (C) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Fabric Super-Store (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fabric Super-Store (C) are -
Slow decision making process
– As mentioned earlier in the report, Vtb Fabric 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. Vtb Fabric 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fabric Super-Store (C), it seems that the employees of Vtb Fabric 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.
Aligning sales with marketing
– It come across in the case study Fabric Super-Store (C) 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 Fabric Super-Store (C) can leverage the sales team experience to cultivate customer relationships as Vtb Fabric is planning to shift buying processes online.
Interest costs
– Compare to the competition, Vtb Fabric 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.
Slow to strategic competitive environment developments
– As Fabric Super-Store (C) HBR case study mentions - Vtb Fabric 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.
Lack of clear differentiation of Vtb Fabric products
– To increase the profitability and margins on the products, Vtb Fabric needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Vtb Fabric supply chain. Even after few cautionary changes mentioned in the HBR case study - Fabric Super-Store (C), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vtb Fabric vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Fabric Super-Store (C) 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 Vtb Fabric 's lucrative customers.
Need for greater diversity
– Vtb Fabric 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.
Low market penetration in new markets
– Outside its home market of Vtb Fabric, firm in the HBR case study Fabric Super-Store (C) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Fabric Super-Store (C), 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.
Opportunities Fabric Super-Store (C) | 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 Fabric Super-Store (C) are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Vtb Fabric can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Vtb Fabric 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vtb Fabric can use these opportunities to build new business models that can help the communities that Vtb Fabric operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vtb Fabric 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vtb Fabric 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. Vtb Fabric 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. Vtb Fabric 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.
Loyalty marketing
– Vtb Fabric 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.
Buying journey improvements
– Vtb Fabric can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fabric Super-Store (C) 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.
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 Vtb Fabric 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.
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 Vtb Fabric in the consumer business. Now Vtb Fabric can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Vtb Fabric 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 Vtb Fabric 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 Vtb Fabric to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Vtb Fabric has opened avenues for new revenue streams for the organization in the industry. This can help Vtb Fabric to build a more holistic ecosystem as suggested in the Fabric Super-Store (C) case study. Vtb Fabric can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Fabric Super-Store (C) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fabric Super-Store (C) are -
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 Vtb Fabric business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Vtb Fabric 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.
Consumer confidence and its impact on Vtb Fabric 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.
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 Vtb Fabric.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fabric Super-Store (C), Vtb Fabric 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 .
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.
Environmental challenges
– Vtb Fabric 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. Vtb Fabric can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Vtb Fabric can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Vtb Fabric in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vtb Fabric 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 Fabric Super-Store (C) .
Increasing wage structure of Vtb Fabric
– 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 Vtb Fabric.
Stagnating economy with rate increase
– Vtb Fabric 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 Fabric Super-Store (C) 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 Fabric Super-Store (C) 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 Fabric Super-Store (C) 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 Fabric Super-Store (C) 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 Fabric Super-Store (C) 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 Vtb Fabric needs to make to build a sustainable competitive advantage.
