Merloni Elettrodomestici SpA: The Transit Point Experiment SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Merloni Elettrodomestici SpA: The Transit Point Experiment
Merloni Elettrodomestici is a leading Italian manufacturer of domestic appliances. In 1986, an exposition for Merloni customers is scheduled at its Milano regional warehouse. During the two-month period preceding the event, when the warehouse must be free of inventory, the company conducts a "transit point" experiment. Each day, a truckload of products from the company's central warehouse is sent to Milano, where it is immediately transferred to small trucks for local delivery. At the conclusion of the experiment, the company is considering the replacement of its 17 regional warehouses with transit points. Students are asked to evaluate this proposal and recommend a configuration for Merloni's distribution network. Issues to be considered in the analysis of the case include the impact of different network configurations on customer service and on inventory, labor, operating, and transport costs.
Swot Analysis of "Merloni Elettrodomestici SpA: The Transit Point Experiment" written by Janice H. Hammond, Maura Kelly includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merloni Milano facing as an external strategic factors. Some of the topics covered in Merloni Elettrodomestici SpA: The Transit Point Experiment case study are - Strategic Management Strategies, Customer service, Customers, IT, Operations management, Time management and Technology & Operations.
Some of the macro environment factors that can be used to understand the Merloni Elettrodomestici SpA: The Transit Point Experiment casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, increasing transportation and logistics costs, supply chains are disrupted by pandemic , 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%,
central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Merloni Elettrodomestici SpA: The Transit Point Experiment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merloni Elettrodomestici SpA: The Transit Point Experiment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merloni Milano, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merloni Milano 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 Merloni Elettrodomestici SpA: The Transit Point Experiment can be done for the following purposes –
1. Strategic planning using facts provided in Merloni Elettrodomestici SpA: The Transit Point Experiment case study
2. Improving business portfolio management of Merloni Milano
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 Merloni Milano
Strengths Merloni Elettrodomestici SpA: The Transit Point Experiment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merloni Milano in Merloni Elettrodomestici SpA: The Transit Point Experiment Harvard Business Review case study are -
Diverse revenue streams
– Merloni Milano is present in almost all the verticals within the industry. This has provided firm in Merloni Elettrodomestici SpA: The Transit Point Experiment 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.
Effective Research and Development (R&D)
– Merloni Milano 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 Merloni Elettrodomestici SpA: The Transit Point Experiment - 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
– Merloni Milano has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merloni Elettrodomestici SpA: The Transit Point Experiment 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.
Innovation driven organization
– Merloni Milano is one of the most innovative firm in sector. Manager in Merloni Elettrodomestici SpA: The Transit Point Experiment Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Merloni Milano 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 Janice H. Hammond, Maura Kelly 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.
Operational resilience
– The operational resilience strategy in the Merloni Elettrodomestici SpA: The Transit Point Experiment 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.
Cross disciplinary teams
– Horizontal connected teams at the Merloni Milano 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.
Successful track record of launching new products
– Merloni Milano has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merloni Milano 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.
Learning organization
- Merloni Milano 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 Merloni Milano is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merloni Elettrodomestici SpA: The Transit Point Experiment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Technology & Operations field
– Merloni Milano 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 Merloni Milano 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
– Merloni Elettrodomestici SpA: The Transit Point Experiment firm has clearly differentiated products in the market place. This has enabled Merloni Milano to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Merloni Milano to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Merloni Milano is one of the leading recruiters in the industry. Managers in the Merloni Elettrodomestici SpA: The Transit Point Experiment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Merloni Elettrodomestici SpA: The Transit Point Experiment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merloni Elettrodomestici SpA: The Transit Point Experiment are -
Aligning sales with marketing
– It come across in the case study Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Elettrodomestici SpA: The Transit Point Experiment can leverage the sales team experience to cultivate customer relationships as Merloni Milano is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Merloni Elettrodomestici SpA: The Transit Point Experiment, in the dynamic environment Merloni Milano has struggled to respond to the nimble upstart competition. Merloni Milano has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Janice H. Hammond, Maura Kelly suggests that, Merloni Milano 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.
Slow to strategic competitive environment developments
– As Merloni Elettrodomestici SpA: The Transit Point Experiment HBR case study mentions - Merloni Milano 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 star products
– The top 2 products and services of the firm as mentioned in the Merloni Elettrodomestici SpA: The Transit Point Experiment HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Merloni Milano has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merloni Elettrodomestici SpA: The Transit Point Experiment, it seems that the employees of Merloni Milano 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merloni Elettrodomestici SpA: The Transit Point Experiment, is just above the industry average. Merloni Milano 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 operating costs
– Compare to the competitors, firm in the HBR case study Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Milano 's lucrative customers.
Need for greater diversity
– Merloni Milano 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.
Increasing silos among functional specialists
– The organizational structure of Merloni Milano is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Merloni Milano needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merloni Milano to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Merloni Elettrodomestici SpA: The Transit Point Experiment, 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 Merloni Elettrodomestici SpA: The Transit Point Experiment | 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 Merloni Elettrodomestici SpA: The Transit Point Experiment are -
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. Merloni Milano can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Merloni Milano can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Merloni Milano can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merloni Milano 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, Merloni Elettrodomestici SpA: The Transit Point Experiment, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Merloni Milano is facing challenges because of the dominance of functional experts in the organization. Merloni Elettrodomestici SpA: The Transit Point Experiment 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merloni Milano can use these opportunities to build new business models that can help the communities that Merloni Milano operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Creating value in data economy
– The success of analytics program of Merloni Milano has opened avenues for new revenue streams for the organization in the industry. This can help Merloni Milano to build a more holistic ecosystem as suggested in the Merloni Elettrodomestici SpA: The Transit Point Experiment case study. Merloni Milano can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Merloni Milano in the consumer business. Now Merloni Milano can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Merloni Milano to increase its market reach. Merloni Milano 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.
Buying journey improvements
– Merloni Milano can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Merloni Elettrodomestici SpA: The Transit Point Experiment suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Merloni Milano 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Merloni Milano can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Merloni Milano 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 Merloni Elettrodomestici SpA: The Transit Point Experiment - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merloni Milano to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Merloni Elettrodomestici SpA: The Transit Point Experiment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merloni Elettrodomestici SpA: The Transit Point Experiment are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Merloni Milano 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 Merloni Elettrodomestici SpA: The Transit Point Experiment .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Merloni Milano 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.
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 Merloni Milano in the Technology & Operations sector and impact the bottomline of the organization.
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 Merloni Milano.
Consumer confidence and its impact on Merloni Milano 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.
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. Merloni Milano 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Merloni Elettrodomestici SpA: The Transit Point Experiment, Merloni Milano 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 .
Technology acceleration in Forth Industrial Revolution
– Merloni Milano has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Merloni Milano 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.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Merloni Milano can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merloni Milano with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Merloni Milano business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Merloni Milano 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.
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.
Weighted SWOT Analysis of Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Elettrodomestici SpA: The Transit Point Experiment 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 Merloni Milano needs to make to build a sustainable competitive advantage.
