Case Study Description of Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations
Michaels Craft Stores is the largest arts and crafts retailer in the United States and in the world. Its CEO, Michael Rouleau, wants to expand the chain to 1,000 stores by 2006. The key constraint is the lack of sophistication among Michaels' supplier base, which is made up of over 1,000 suppliers, many of which are small, creative companies with little computer or logistics knowledge. As a result, the cost of running Michaels' supply chain is high. Describes the company's efforts to build the sophistication of its suppliers through educational Vendor Flow Training courses that teach suppliers how to adopt state-of-the-art practices for improved efficiency in supplying their channel.
Swot Analysis of "Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations" written by Anne Coughlan, Lindsey M. Piegza includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Michaels Sophistication facing as an external strategic factors. Some of the topics covered in Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations case study are - Strategic Management Strategies, Marketing, Operations management and Technology & Operations.
Some of the macro environment factors that can be used to understand the Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations casestudy better are - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing energy prices, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , wage bills are increasing,
increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Michaels Sophistication, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Michaels Sophistication 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations can be done for the following purposes –
1. Strategic planning using facts provided in Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations case study
2. Improving business portfolio management of Michaels Sophistication
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 Michaels Sophistication
Strengths Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Michaels Sophistication in Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Michaels Sophistication 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.
Diverse revenue streams
– Michaels Sophistication is present in almost all the verticals within the industry. This has provided firm in Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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.
High switching costs
– The high switching costs that Michaels Sophistication 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.
Operational resilience
– The operational resilience strategy in the Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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.
Organizational Resilience of Michaels Sophistication
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Michaels Sophistication does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Technology & Operations field
– Michaels Sophistication 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 Michaels Sophistication in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Michaels Sophistication 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Michaels Sophistication 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Michaels Sophistication is one of the most innovative firm in sector. Manager in Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Michaels Sophistication in the sector have low bargaining power. Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Michaels Sophistication to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Michaels Sophistication is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Michaels Sophistication in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations are -
Products dominated business model
– Even though Michaels Sophistication 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 - Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Michaels Sophistication 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 Michaels Sophistication is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Michaels Sophistication needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Michaels Sophistication to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations, 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Michaels Sophistication 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.
Skills based hiring
– The stress on hiring functional specialists at Michaels Sophistication 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Michaels Sophistication is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Michaels Sophistication 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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 Michaels Sophistication has relatively successful track record of launching new products.
Lack of clear differentiation of Michaels Sophistication products
– To increase the profitability and margins on the products, Michaels Sophistication needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Michaels Sophistication 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.
Opportunities Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations | 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations are -
Building a culture of innovation
– managers at Michaels Sophistication 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.
Creating value in data economy
– The success of analytics program of Michaels Sophistication has opened avenues for new revenue streams for the organization in the industry. This can help Michaels Sophistication to build a more holistic ecosystem as suggested in the Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations case study. Michaels Sophistication can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Michaels Sophistication 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 Michaels Sophistication to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Michaels Sophistication to increase its market reach. Michaels Sophistication 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. Michaels Sophistication can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Michaels Sophistication 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Michaels Sophistication can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Michaels Sophistication 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.
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. Michaels Sophistication can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Michaels Sophistication 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Michaels Sophistication to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Michaels Sophistication 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, Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Michaels Sophistication 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Michaels Sophistication 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.
Threats Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations are -
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 Michaels Sophistication.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Michaels Sophistication with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Michaels Sophistication 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Michaels Sophistication 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations .
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 Michaels Sophistication in the Technology & Operations sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Michaels Sophistication 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Michaels Sophistication 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.
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.
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. Michaels Sophistication 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.
Environmental challenges
– Michaels Sophistication 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. Michaels Sophistication can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 Michaels Sophistication business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Michaels Sophistication
– 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 Michaels Sophistication.
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. Michaels Sophistication can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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 Michaels Craft Stores: Integrated Channel Management and Vendor-Retailer Relations 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 Michaels Sophistication needs to make to build a sustainable competitive advantage.
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