Reaching the Bottom: UniGlobe's Small Local Stores Dilemma SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Reaching the Bottom: UniGlobe's Small Local Stores Dilemma
To distribute products to very small retailers in a very fragmented retail environment, the local subsidiary of a large consumer products company created an innovative distribution mechanism. The subsidiary's Small Local Stores division employed middlemen who distributed vans full of consumer products throughout the Philippines. The channel was growing rapidly, but it was the company's least profitable. Now the subsidiary had to decide what to do. Should it try to squeeze more margins out of the channel, even if that would lower the middlemen's incentives? Should it scrap the channel altogether? Or should it try to build an internal capability to reach the smallest stores, even if it involved significant capital expenditures? Regional management was due to arrive and the company had to come up with a plan.
Swot Analysis of "Reaching the Bottom: UniGlobe's Small Local Stores Dilemma" written by Clayton M. Christensen, Lana Newishy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Channel Stores facing as an external strategic factors. Some of the topics covered in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma case study are - Strategic Management Strategies, Disruptive innovation, Intellectual property, IT, Sales, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Reaching the Bottom: UniGlobe's Small Local Stores Dilemma casestudy better are - – increasing commodity prices, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, central banks are concerned over increasing inflation,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of Reaching the Bottom: UniGlobe's Small Local Stores Dilemma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Channel Stores, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Channel Stores 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma can be done for the following purposes –
1. Strategic planning using facts provided in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma case study
2. Improving business portfolio management of Channel Stores
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 Channel Stores
Strengths Reaching the Bottom: UniGlobe's Small Local Stores Dilemma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Channel Stores in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma Harvard Business Review case study are -
Successful track record of launching new products
– Channel Stores has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Channel Stores 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.
High switching costs
– The high switching costs that Channel Stores 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
– Channel Stores is one of the leading recruiters in the industry. Managers in the Reaching the Bottom: UniGlobe's Small Local Stores Dilemma are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Channel Stores has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Channel Stores to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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.
Analytics focus
– Channel Stores 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 Clayton M. Christensen, Lana Newishy 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.
Low bargaining power of suppliers
– Suppliers of Channel Stores in the sector have low bargaining power. Reaching the Bottom: UniGlobe's Small Local Stores Dilemma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Channel Stores to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Technology & Operations industry
– Reaching the Bottom: UniGlobe's Small Local Stores Dilemma firm has clearly differentiated products in the market place. This has enabled Channel Stores to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Channel Stores to invest into research and development (R&D) and innovation.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Channel Stores digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Channel Stores 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.
Effective Research and Development (R&D)
– Channel Stores 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Channel Stores in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Channel Stores is one of the most innovative firm in sector. Manager in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Reaching the Bottom: UniGlobe's Small Local Stores Dilemma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reaching the Bottom: UniGlobe's Small Local Stores Dilemma are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Reaching the Bottom: UniGlobe's Small Local Stores Dilemma, in the dynamic environment Channel Stores has struggled to respond to the nimble upstart competition. Channel Stores has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Channel Stores 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 Channel Stores products
– To increase the profitability and margins on the products, Channel Stores needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Reaching the Bottom: UniGlobe's Small Local Stores Dilemma, it seems that the employees of Channel Stores don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma can leverage the sales team experience to cultivate customer relationships as Channel Stores is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Channel Stores needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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 Channel Stores supply chain. Even after few cautionary changes mentioned in the HBR case study - Reaching the Bottom: UniGlobe's Small Local Stores Dilemma, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Channel Stores vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Channel Stores has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Low market penetration in new markets
– Outside its home market of Channel Stores, firm in the HBR case study Reaching the Bottom: UniGlobe's Small Local Stores Dilemma needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Channel Stores is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Channel Stores needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Channel Stores to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Channel Stores 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 - Reaching the Bottom: UniGlobe's Small Local Stores Dilemma should strive to include more intangible value offerings along with its core products and services.
Opportunities Reaching the Bottom: UniGlobe's Small Local Stores Dilemma | 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma are -
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 Channel Stores 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.
Learning at scale
– Online learning technologies has now opened space for Channel Stores 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.
Using analytics as competitive advantage
– Channel Stores 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Channel Stores to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Channel Stores can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Channel Stores 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Channel Stores 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, Reaching the Bottom: UniGlobe's Small Local Stores Dilemma, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Channel Stores 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Channel Stores 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.
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 Channel Stores in the consumer business. Now Channel Stores can target international markets with far fewer capital restrictions requirements than the existing system.
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. Channel Stores 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. Channel Stores 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
– Channel Stores 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.
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. Channel Stores can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Channel Stores 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.
Threats Reaching the Bottom: UniGlobe's Small Local Stores Dilemma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Reaching the Bottom: UniGlobe's Small Local Stores Dilemma are -
Technology acceleration in Forth Industrial Revolution
– Channel Stores has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Channel Stores 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.
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 Channel Stores business can come under increasing regulations regarding data privacy, data security, etc.
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 Channel Stores.
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 Channel Stores in the Technology & Operations sector and impact the bottomline of the organization.
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. Channel Stores 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.
Increasing wage structure of Channel Stores
– 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 Channel Stores.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Channel Stores 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Channel Stores with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Channel Stores can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Stagnating economy with rate increase
– Channel Stores 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.
Shortening product life cycle
– it is one of the major threat that Channel Stores is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Channel Stores 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.
Weighted SWOT Analysis of Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Channel Stores needs to make to build a sustainable competitive advantage.