Examines Webvan's operations and the processes by which it delivers groceries that were ordered from the Internet to customers' homes. Recounts Webvan's history from founding through early 2001 and concentrates on the unique approaches to warehousing, delivery, scheduling, and to a lesser extent, marketing and information technology. Also examines the rest of the Webvan business model and how it was formulated. At the time of the case, there is great pessimism, reflected in the press and the company's share price, that Webvan will be able to execute its business model profitably or even stay in business. Webvan's business model relied heavily on properly designed and executed operations, and it appears clear that the company's operations were neither. In addition, the mismatch between visiting operational capabilities and the operational requirements imposed by the rest of the business model appear to be severe.
Swot Analysis of "Webvan" written by Andrew McAfee, Mona Ashiya includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Webvan's Webvan facing as an external strategic factors. Some of the topics covered in Webvan case study are - Strategic Management Strategies, Internet, IT, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Webvan casestudy better are - – increasing household debt because of falling income levels, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, wage bills are increasing, talent flight as more people leaving formal jobs, technology disruption,
cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Webvan case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Webvan's Webvan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Webvan's Webvan 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 Webvan can be done for the following purposes –
1. Strategic planning using facts provided in Webvan case study
2. Improving business portfolio management of Webvan's Webvan
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 Webvan's Webvan
Strengths Webvan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Webvan's Webvan in Webvan Harvard Business Review case study are -
Organizational Resilience of Webvan's Webvan
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Webvan's Webvan does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Webvan's Webvan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Webvan's Webvan 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.
Ability to lead change in Technology & Operations field
– Webvan's Webvan 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 Webvan's Webvan in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Technology & Operations industry
– Webvan firm has clearly differentiated products in the market place. This has enabled Webvan's Webvan to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Webvan's Webvan to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Webvan's Webvan 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 Webvan - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Webvan's Webvan has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Webvan 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.
Highly skilled collaborators
– Webvan's Webvan 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 Webvan HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Webvan's Webvan in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Webvan's Webvan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Webvan's Webvan 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
– Webvan's Webvan is one of the leading recruiters in the industry. Managers in the Webvan are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Webvan's Webvan are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Webvan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Webvan are -
Low market penetration in new markets
– Outside its home market of Webvan's Webvan, firm in the HBR case study Webvan needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Webvan 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 Webvan can leverage the sales team experience to cultivate customer relationships as Webvan's Webvan is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Webvan's Webvan 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. Webvan's Webvan 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.
No frontier risks strategy
– After analyzing the HBR case study Webvan, 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.
Slow to strategic competitive environment developments
– As Webvan HBR case study mentions - Webvan's Webvan 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.
Increasing silos among functional specialists
– The organizational structure of Webvan's Webvan is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Webvan's Webvan needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Webvan's Webvan to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Webvan, it seems that the employees of Webvan's Webvan 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.
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 Webvan's Webvan supply chain. Even after few cautionary changes mentioned in the HBR case study - Webvan, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Webvan's Webvan vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Webvan's Webvan 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.
Products dominated business model
– Even though Webvan's Webvan has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Webvan should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew McAfee, Mona Ashiya suggests that, Webvan's Webvan 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.
Opportunities Webvan | 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 Webvan are -
Developing new processes and practices
– Webvan's Webvan 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Webvan's Webvan 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.
Manufacturing automation
– Webvan's Webvan can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
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 Webvan's Webvan 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
– Webvan's Webvan 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 Webvan - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Webvan's Webvan to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Webvan's Webvan 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Webvan's Webvan can use these opportunities to build new business models that can help the communities that Webvan's Webvan operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Loyalty marketing
– Webvan's Webvan 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Webvan's Webvan 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 Webvan's Webvan to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Webvan's Webvan to increase its market reach. Webvan's Webvan will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 Webvan's Webvan in the consumer business. Now Webvan's Webvan can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Webvan's Webvan has opened avenues for new revenue streams for the organization in the industry. This can help Webvan's Webvan to build a more holistic ecosystem as suggested in the Webvan case study. Webvan's Webvan can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Webvan's Webvan 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, Webvan, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Webvan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Webvan are -
Increasing wage structure of Webvan's Webvan
– 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 Webvan's Webvan.
Shortening product life cycle
– it is one of the major threat that Webvan's Webvan is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Webvan's Webvan 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 Webvan .
Technology acceleration in Forth Industrial Revolution
– Webvan's Webvan has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Webvan's Webvan 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Webvan's Webvan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Webvan's Webvan in the Technology & Operations sector and impact the bottomline of the organization.
Environmental challenges
– Webvan's Webvan 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. Webvan's Webvan can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 Webvan's Webvan.
Regulatory challenges
– Webvan's Webvan 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.
Stagnating economy with rate increase
– Webvan's Webvan 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.
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. Webvan's Webvan 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.
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. Webvan's Webvan needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Webvan's Webvan business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Webvan 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 Webvan 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 Webvan 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 Webvan 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 Webvan 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 Webvan's Webvan needs to make to build a sustainable competitive advantage.