Case Study Description of Dairy Farm Group: Electronic Commerce Advantage
The Dairy Farm Group of Companies (DFG) was a major food retailer based in Hong Kong with operations in a large number of major cities in Asia Pacific. Sales volume fell with the start of economic uncertainty in Asia around June 1997. Additionally, DFG faced competitive pressures from European and U.S. retail chains. DFG realized that in order to remain competitive, it had to reevaluate its business strategy. The case looks at DFG's initiative toward adopting electronic retailing as a subset of electronic commerce. It also looks at the development of a technology architecture to facilitate the deployment of a consistent, enterprisewide IT that would support DFG's business strategy into the next millenium.
Authors :: Ali F. Farhoomand, Pauline Ng, Eugenia Ng, Probir Banerjee
Swot Analysis of "Dairy Farm Group: Electronic Commerce Advantage" written by Ali F. Farhoomand, Pauline Ng, Eugenia Ng, Probir Banerjee includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dfg Dfg's facing as an external strategic factors. Some of the topics covered in Dairy Farm Group: Electronic Commerce Advantage case study are - Strategic Management Strategies, IT and Technology & Operations.
Some of the macro environment factors that can be used to understand the Dairy Farm Group: Electronic Commerce Advantage casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing transportation and logistics costs,
geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Dairy Farm Group: Electronic Commerce Advantage
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dairy Farm Group: Electronic Commerce Advantage case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dfg Dfg's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dfg Dfg's 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 Dairy Farm Group: Electronic Commerce Advantage can be done for the following purposes –
1. Strategic planning using facts provided in Dairy Farm Group: Electronic Commerce Advantage case study
2. Improving business portfolio management of Dfg Dfg's
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 Dfg Dfg's
Strengths Dairy Farm Group: Electronic Commerce Advantage | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dfg Dfg's in Dairy Farm Group: Electronic Commerce Advantage Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Dfg Dfg's 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.
Analytics focus
– Dfg Dfg's 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 Ali F. Farhoomand, Pauline Ng, Eugenia Ng, Probir Banerjee 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 Dfg Dfg's in the sector have low bargaining power. Dairy Farm Group: Electronic Commerce Advantage has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dfg Dfg's to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Dfg Dfg's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dfg Dfg's 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.
Diverse revenue streams
– Dfg Dfg's is present in almost all the verticals within the industry. This has provided firm in Dairy Farm Group: Electronic Commerce Advantage 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
– Dfg Dfg's is one of the most innovative firm in sector. Manager in Dairy Farm Group: Electronic Commerce Advantage Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Technology & Operations industry
– Dairy Farm Group: Electronic Commerce Advantage firm has clearly differentiated products in the market place. This has enabled Dfg Dfg's to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Dfg Dfg's to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Dfg Dfg's 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.
High brand equity
– Dfg Dfg's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dfg Dfg's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Dfg Dfg's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dfg Dfg's 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.
Highly skilled collaborators
– Dfg Dfg's 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 Dairy Farm Group: Electronic Commerce Advantage HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Dfg Dfg's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dfg Dfg's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Dairy Farm Group: Electronic Commerce Advantage | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dairy Farm Group: Electronic Commerce Advantage are -
Aligning sales with marketing
– It come across in the case study Dairy Farm Group: Electronic Commerce Advantage 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 Dairy Farm Group: Electronic Commerce Advantage can leverage the sales team experience to cultivate customer relationships as Dfg Dfg's is planning to shift buying processes online.
Products dominated business model
– Even though Dfg Dfg's 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 - Dairy Farm Group: Electronic Commerce Advantage should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Dfg Dfg's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Dairy Farm Group: Electronic Commerce Advantage, it seems that the employees of Dfg Dfg's 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.
Need for greater diversity
– Dfg Dfg's 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Dairy Farm Group: Electronic Commerce Advantage 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 Dfg Dfg's has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Dfg Dfg's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Dfg Dfg's 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.
Slow decision making process
– As mentioned earlier in the report, Dfg Dfg's 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. Dfg Dfg's 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.
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 Dfg Dfg's supply chain. Even after few cautionary changes mentioned in the HBR case study - Dairy Farm Group: Electronic Commerce Advantage, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dfg Dfg's vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Dairy Farm Group: Electronic Commerce Advantage, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Dairy Farm Group: Electronic Commerce Advantage | 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 Dairy Farm Group: Electronic Commerce Advantage are -
Using analytics as competitive advantage
– Dfg Dfg's 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 Dairy Farm Group: Electronic Commerce Advantage - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dfg Dfg's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Dfg Dfg's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dfg Dfg's 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 Dfg Dfg's has opened avenues for new revenue streams for the organization in the industry. This can help Dfg Dfg's to build a more holistic ecosystem as suggested in the Dairy Farm Group: Electronic Commerce Advantage case study. Dfg Dfg's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Dfg Dfg's 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.
Better consumer reach
– The expansion of the 5G network will help Dfg Dfg's to increase its market reach. Dfg Dfg's 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.
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. Dfg Dfg's 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. Dfg Dfg's 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.
Learning at scale
– Online learning technologies has now opened space for Dfg Dfg's 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.
Leveraging digital technologies
– Dfg Dfg's 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.
Loyalty marketing
– Dfg Dfg's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dfg Dfg's is facing challenges because of the dominance of functional experts in the organization. Dairy Farm Group: Electronic Commerce Advantage 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.
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. Dfg Dfg's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Dfg Dfg's 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 Dairy Farm Group: Electronic Commerce Advantage External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dairy Farm Group: Electronic Commerce Advantage are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dfg Dfg's 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 dependence on third party suppliers
– Dfg Dfg's 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.
Increasing wage structure of Dfg Dfg's
– 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 Dfg Dfg's.
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 Dfg Dfg's business can come under increasing regulations regarding data privacy, data security, etc.
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. Dfg Dfg's needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
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 Dfg Dfg's.
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. Dfg Dfg's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Dfg Dfg's 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. Dfg Dfg's can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dairy Farm Group: Electronic Commerce Advantage, Dfg Dfg's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Stagnating economy with rate increase
– Dfg Dfg's 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.
Regulatory challenges
– Dfg Dfg's 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.
Shortening product life cycle
– it is one of the major threat that Dfg Dfg's is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Dairy Farm Group: Electronic Commerce Advantage 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 Dairy Farm Group: Electronic Commerce Advantage 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 Dairy Farm Group: Electronic Commerce Advantage 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 Dairy Farm Group: Electronic Commerce Advantage 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 Dairy Farm Group: Electronic Commerce Advantage 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 Dfg Dfg's needs to make to build a sustainable competitive advantage.
