Open Market, Inc.: The E-Commerce Wars SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Open Market, Inc.: The E-Commerce Wars
Continues the story of Open Market, Inc., a company founded in 1994 to support electronic commerce on the Internet. Despite a very successful initial public offering, the firm had reached a growth plateau, and the management team was considering several strategic options. Should it focus on building market share of its simple "storefront" product shop site (which was targeted at small e-merchants) or develop new channels for their high-end order-processing software, Transact? The 1999 holiday season was rapidly approaching, and Open Market's management team hoped to benefit from a predicted surge in online sales.
Authors :: James I. Cash Jr., Janis L. Gogan, Michael Haselkorn, Mani Subramani
Swot Analysis of "Open Market, Inc.: The E-Commerce Wars" written by James I. Cash Jr., Janis L. Gogan, Michael Haselkorn, Mani Subramani includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Transact Commerce facing as an external strategic factors. Some of the topics covered in Open Market, Inc.: The E-Commerce Wars case study are - Strategic Management Strategies, Internet and Technology & Operations.
Some of the macro environment factors that can be used to understand the Open Market, Inc.: The E-Commerce Wars casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, wage bills are increasing,
there is backlash against globalization, increasing commodity prices, etc
Introduction to SWOT Analysis of Open Market, Inc.: The E-Commerce Wars
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Open Market, Inc.: The E-Commerce Wars case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Transact Commerce, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Transact Commerce 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 Open Market, Inc.: The E-Commerce Wars can be done for the following purposes –
1. Strategic planning using facts provided in Open Market, Inc.: The E-Commerce Wars case study
2. Improving business portfolio management of Transact Commerce
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 Transact Commerce
Strengths Open Market, Inc.: The E-Commerce Wars | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Transact Commerce in Open Market, Inc.: The E-Commerce Wars Harvard Business Review case study are -
Analytics focus
– Transact Commerce 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 James I. Cash Jr., Janis L. Gogan, Michael Haselkorn, Mani Subramani 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.
Superior customer experience
– The customer experience strategy of Transact Commerce in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Transact Commerce 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.
Low bargaining power of suppliers
– Suppliers of Transact Commerce in the sector have low bargaining power. Open Market, Inc.: The E-Commerce Wars has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Transact Commerce to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Transact Commerce 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 Open Market, Inc.: The E-Commerce Wars HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Transact Commerce 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
- Transact Commerce 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 Transact Commerce is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Open Market, Inc.: The E-Commerce Wars Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Technology & Operations industry
– Open Market, Inc.: The E-Commerce Wars firm has clearly differentiated products in the market place. This has enabled Transact Commerce to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Transact Commerce to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Transact Commerce 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 Open Market, Inc.: The E-Commerce Wars - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Transact Commerce is one of the leading recruiters in the industry. Managers in the Open Market, Inc.: The E-Commerce Wars are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Transact Commerce has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Open Market, Inc.: The E-Commerce Wars 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 Transact Commerce
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Transact Commerce does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Open Market, Inc.: The E-Commerce Wars | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Open Market, Inc.: The E-Commerce Wars are -
Lack of clear differentiation of Transact Commerce products
– To increase the profitability and margins on the products, Transact Commerce needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Transact Commerce is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Open Market, Inc.: The E-Commerce Wars can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Open Market, Inc.: The E-Commerce Wars, in the dynamic environment Transact Commerce has struggled to respond to the nimble upstart competition. Transact Commerce has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Transact Commerce supply chain. Even after few cautionary changes mentioned in the HBR case study - Open Market, Inc.: The E-Commerce Wars, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Transact Commerce vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Open Market, Inc.: The E-Commerce Wars 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 Transact Commerce 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Open Market, Inc.: The E-Commerce Wars 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 Open Market, Inc.: The E-Commerce Wars can leverage the sales team experience to cultivate customer relationships as Transact Commerce is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Open Market, Inc.: The E-Commerce Wars HBR case study mentions - Transact Commerce 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.
Skills based hiring
– The stress on hiring functional specialists at Transact Commerce has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Transact Commerce, firm in the HBR case study Open Market, Inc.: The E-Commerce Wars needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Transact Commerce 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.
Increasing silos among functional specialists
– The organizational structure of Transact Commerce is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Transact Commerce needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Transact Commerce to focus more on services rather than just following the product oriented approach.
Opportunities Open Market, Inc.: The E-Commerce Wars | 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 Open Market, Inc.: The E-Commerce Wars are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Transact Commerce is facing challenges because of the dominance of functional experts in the organization. Open Market, Inc.: The E-Commerce Wars 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Transact Commerce 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, Open Market, Inc.: The E-Commerce Wars, 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 Transact Commerce in the consumer business. Now Transact Commerce can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Transact Commerce can use these opportunities to build new business models that can help the communities that Transact Commerce operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Transact Commerce 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.
Creating value in data economy
– The success of analytics program of Transact Commerce has opened avenues for new revenue streams for the organization in the industry. This can help Transact Commerce to build a more holistic ecosystem as suggested in the Open Market, Inc.: The E-Commerce Wars case study. Transact Commerce can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Transact Commerce can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Transact Commerce can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Transact Commerce 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 Transact Commerce to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Transact Commerce 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.
Better consumer reach
– The expansion of the 5G network will help Transact Commerce to increase its market reach. Transact Commerce 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.
Building a culture of innovation
– managers at Transact Commerce can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Buying journey improvements
– Transact Commerce can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Open Market, Inc.: The E-Commerce Wars 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.
Threats Open Market, Inc.: The E-Commerce Wars External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Open Market, Inc.: The E-Commerce Wars are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Transact Commerce 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 Open Market, Inc.: The E-Commerce Wars .
Technology acceleration in Forth Industrial Revolution
– Transact Commerce has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Transact Commerce 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.
Regulatory challenges
– Transact Commerce 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
– Transact Commerce 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Transact Commerce 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.
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. Transact Commerce needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Transact Commerce 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.
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. Transact Commerce 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Transact Commerce 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 Transact Commerce in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Transact Commerce
– 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 Transact Commerce.
Environmental challenges
– Transact Commerce 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. Transact Commerce can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 Open Market, Inc.: The E-Commerce Wars 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 Open Market, Inc.: The E-Commerce Wars 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 Open Market, Inc.: The E-Commerce Wars 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 Open Market, Inc.: The E-Commerce Wars 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 Open Market, Inc.: The E-Commerce Wars 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 Transact Commerce needs to make to build a sustainable competitive advantage.
