Velky Potraviny is a discount grocery store chain in the Czech Republic. The firm strives to be the market leader in providing a wide assortment of grocery products at the lowest possible price. The move toward a market economy has prompted rapid expansion, and the Velky distribution center is nearing capacity for the 37 outlets it presently serves in the greater Prague area. Velky has realized the need for efficiency in its warehouse operations. Velky further recognizes that the distribution center employees are an integral part of the company and critical for efficient warehouse operations, hence the need to address the performance measurement system of the workers. Velky cannot independently address the issue of worker performance measurement without addressing the inter-related issues of the warehouse, namely, the layout of the warehouse, flows within the warehouse, capacity expansion, managing deliveries to the outlets, and its overall link to the corporate goal.
Swot Analysis of "Velky Potraviny--Prague" written by William Coyle, Jay Rao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Velky Warehouse facing as an external strategic factors. Some of the topics covered in Velky Potraviny--Prague case study are - Strategic Management Strategies, Performance measurement, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Velky Potraviny--Prague casestudy better are - – increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, wage bills are increasing,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Velky Potraviny--Prague
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Velky Potraviny--Prague case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Velky Warehouse, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Velky Warehouse 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 Velky Potraviny--Prague can be done for the following purposes –
1. Strategic planning using facts provided in Velky Potraviny--Prague case study
2. Improving business portfolio management of Velky Warehouse
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Velky Warehouse
Strengths Velky Potraviny--Prague | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Velky Warehouse in Velky Potraviny--Prague Harvard Business Review case study are -
Strong track record of project management
– Velky Warehouse is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Velky Warehouse 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 William Coyle, Jay Rao 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
– Velky Warehouse 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 Velky Potraviny--Prague HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Velky Warehouse in the sector have low bargaining power. Velky Potraviny--Prague has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Velky Warehouse to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Velky Warehouse digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Velky Warehouse has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Velky Warehouse is present in almost all the verticals within the industry. This has provided firm in Velky Potraviny--Prague 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.
Learning organization
- Velky Warehouse 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 Velky Warehouse is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Velky Potraviny--Prague Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Velky Warehouse has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Velky Potraviny--Prague 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.
Organizational Resilience of Velky Warehouse
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Velky Warehouse does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Velky Warehouse 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
– Velky Warehouse is one of the leading recruiters in the industry. Managers in the Velky Potraviny--Prague are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Technology & Operations industry
– Velky Potraviny--Prague firm has clearly differentiated products in the market place. This has enabled Velky Warehouse to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Velky Warehouse to invest into research and development (R&D) and innovation.
Weaknesses Velky Potraviny--Prague | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Velky Potraviny--Prague are -
Low market penetration in new markets
– Outside its home market of Velky Warehouse, firm in the HBR case study Velky Potraviny--Prague needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Velky Warehouse 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 Velky Potraviny--Prague HBR case study mentions - Velky Warehouse 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.
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 Velky Warehouse supply chain. Even after few cautionary changes mentioned in the HBR case study - Velky Potraviny--Prague, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Velky Warehouse vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Velky Warehouse 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.
Lack of clear differentiation of Velky Warehouse products
– To increase the profitability and margins on the products, Velky Warehouse needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Velky Warehouse is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Velky Warehouse needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Velky Warehouse to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Velky Potraviny--Prague, in the dynamic environment Velky Warehouse has struggled to respond to the nimble upstart competition. Velky Warehouse 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 Velky Potraviny--Prague, is just above the industry average. Velky Warehouse 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.
High bargaining power of channel partners
– Because of the regulatory requirements, William Coyle, Jay Rao suggests that, Velky Warehouse 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.
No frontier risks strategy
– After analyzing the HBR case study Velky Potraviny--Prague, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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 Velky Potraviny--Prague | 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 Velky Potraviny--Prague are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Velky Warehouse is facing challenges because of the dominance of functional experts in the organization. Velky Potraviny--Prague 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Velky Warehouse 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. Velky Warehouse 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
– Velky Warehouse can develop new processes and procedures in Technology & Operations 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.
Using analytics as competitive advantage
– Velky Warehouse 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 Velky Potraviny--Prague - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Velky Warehouse to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Velky Warehouse in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Velky Warehouse 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.
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 Velky Warehouse 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Velky Warehouse 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, Velky Potraviny--Prague, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Velky Warehouse in the consumer business. Now Velky Warehouse can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Velky Warehouse 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Velky Warehouse can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Velky Warehouse 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 Velky Warehouse to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Velky Warehouse 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.
Threats Velky Potraviny--Prague External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Velky Potraviny--Prague are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Velky Potraviny--Prague, Velky Warehouse may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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. Velky Warehouse needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Regulatory challenges
– Velky Warehouse 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 Technology & Operations industry regulations.
Shortening product life cycle
– it is one of the major threat that Velky Warehouse is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Velky Warehouse 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.
Technology acceleration in Forth Industrial Revolution
– Velky Warehouse has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Velky Warehouse needs to keep up with the evolution of technology in the Technology & Operations 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
– Velky Warehouse 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. Velky Warehouse can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Velky Warehouse in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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 Velky Warehouse.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Velky Warehouse 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 Velky Potraviny--Prague .
Increasing wage structure of Velky Warehouse
– 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 Velky Warehouse.
Consumer confidence and its impact on Velky Warehouse 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.
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.
Weighted SWOT Analysis of Velky Potraviny--Prague 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 Velky Potraviny--Prague 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 Velky Potraviny--Prague 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 Velky Potraviny--Prague 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 Velky Potraviny--Prague 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 Velky Warehouse needs to make to build a sustainable competitive advantage.
