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 - – there is increasing trade war between United States & China, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing energy prices, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
increasing commodity prices, talent flight as more people leaving formal jobs, 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 -
Training and development
– Channel Stores has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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.
Diverse revenue streams
– Channel Stores is present in almost all the verticals within the industry. This has provided firm in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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.
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.
Highly skilled collaborators
– Channel Stores 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 Reaching the Bottom: UniGlobe's Small Local Stores Dilemma HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Channel Stores is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Ability to lead change in Technology & Operations field
– Channel Stores 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 Channel Stores in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Channel Stores 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 Channel Stores is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Reaching the Bottom: UniGlobe's Small Local Stores Dilemma Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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 -
High bargaining power of channel partners
– Because of the regulatory requirements, Clayton M. Christensen, Lana Newishy suggests that, Channel Stores is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Reaching the Bottom: UniGlobe's Small Local Stores Dilemma, 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.
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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 Channel Stores has relatively successful track record of launching new products.
High cash cycle compare to competitors
Channel Stores 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.
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.
Slow decision making process
– As mentioned earlier in the report, Channel Stores 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. Channel Stores 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.
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.
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.
Slow to strategic competitive environment developments
– As Reaching the Bottom: UniGlobe's Small Local Stores Dilemma HBR case study mentions - Channel Stores 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.
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 -
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Channel Stores to increase its market reach. Channel Stores 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.
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.
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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Channel Stores is facing challenges because of the dominance of functional experts in the organization. Reaching the Bottom: UniGlobe's Small Local Stores Dilemma 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.
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.
Building a culture of innovation
– managers at Channel Stores 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.
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 -
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.
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.
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.
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 .
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. Channel Stores needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
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.
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.
Regulatory challenges
– Channel Stores 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
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.