Swot Analysis of "H.E. Butt Grocery Co.: The New Digital Strategy (B)" written by F. Warren McFarlan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that H.e Butt facing as an external strategic factors. Some of the topics covered in H.E. Butt Grocery Co.: The New Digital Strategy (B) case study are - Strategic Management Strategies, Internet, IT, Organizational structure and Technology & Operations.
Some of the macro environment factors that can be used to understand the H.E. Butt Grocery Co.: The New Digital Strategy (B) casestudy better are - – increasing transportation and logistics costs, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, geopolitical disruptions, talent flight as more people leaving formal jobs, wage bills are increasing,
there is backlash against globalization, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of H.E. Butt Grocery Co.: The New Digital Strategy (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in H.E. Butt Grocery Co.: The New Digital Strategy (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the H.e Butt, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which H.e Butt 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) can be done for the following purposes –
1. Strategic planning using facts provided in H.E. Butt Grocery Co.: The New Digital Strategy (B) case study
2. Improving business portfolio management of H.e Butt
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 H.e Butt
Strengths H.E. Butt Grocery Co.: The New Digital Strategy (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of H.e Butt in H.E. Butt Grocery Co.: The New Digital Strategy (B) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the H.E. Butt Grocery Co.: The New Digital Strategy (B) 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.
Ability to recruit top talent
– H.e Butt is one of the leading recruiters in the industry. Managers in the H.E. Butt Grocery Co.: The New Digital Strategy (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the H.e Butt 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.
Organizational Resilience of H.e Butt
– The covid-19 pandemic has put organizational resilience at the centre of everthing that H.e Butt does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Technology & Operations industry
– H.E. Butt Grocery Co.: The New Digital Strategy (B) firm has clearly differentiated products in the market place. This has enabled H.e Butt to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped H.e Butt to invest into research and development (R&D) and innovation.
Strong track record of project management
– H.e Butt is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that H.e Butt 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.
Low bargaining power of suppliers
– Suppliers of H.e Butt in the sector have low bargaining power. H.E. Butt Grocery Co.: The New Digital Strategy (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps H.e Butt to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– H.e Butt 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– H.e Butt is present in almost all the verticals within the industry. This has provided firm in H.E. Butt Grocery Co.: The New Digital Strategy (B) 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
– H.e Butt is one of the most innovative firm in sector. Manager in H.E. Butt Grocery Co.: The New Digital Strategy (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– H.e Butt has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. H.e Butt 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.
Weaknesses H.E. Butt Grocery Co.: The New Digital Strategy (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of H.E. Butt Grocery Co.: The New Digital Strategy (B) are -
High cash cycle compare to competitors
H.e Butt 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.
Aligning sales with marketing
– It come across in the case study H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) can leverage the sales team experience to cultivate customer relationships as H.e Butt is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, H.e Butt is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study H.E. Butt Grocery Co.: The New Digital Strategy (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, H.e Butt 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.
Workers concerns about automation
– As automation is fast increasing in the segment, H.e Butt 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 H.e Butt supply chain. Even after few cautionary changes mentioned in the HBR case study - H.E. Butt Grocery Co.: The New Digital Strategy (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left H.e Butt 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.e Butt has relatively successful track record of launching new products.
Products dominated business model
– Even though H.e Butt 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 - H.E. Butt Grocery Co.: The New Digital Strategy (B) should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of H.e Butt products
– To increase the profitability and margins on the products, H.e Butt needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, F. Warren McFarlan suggests that, H.e Butt 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.
Slow decision making process
– As mentioned earlier in the report, H.e Butt 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. H.e Butt 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.
Opportunities H.E. Butt Grocery Co.: The New Digital Strategy (B) | 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) are -
Leveraging digital technologies
– H.e Butt 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.
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 H.e Butt in the consumer business. Now H.e Butt can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for H.e Butt 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 H.e Butt 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
– H.e Butt 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.
Creating value in data economy
– The success of analytics program of H.e Butt has opened avenues for new revenue streams for the organization in the industry. This can help H.e Butt to build a more holistic ecosystem as suggested in the H.E. Butt Grocery Co.: The New Digital Strategy (B) case study. H.e Butt can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help H.e Butt to increase its market reach. H.e Butt 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for H.e Butt 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 H.e Butt to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for H.e Butt in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– H.e Butt 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help H.e Butt to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, H.e Butt can use these opportunities to build new business models that can help the communities that H.e Butt operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Loyalty marketing
– H.e Butt 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.
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. H.e Butt can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats H.E. Butt Grocery Co.: The New Digital Strategy (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study H.E. Butt Grocery Co.: The New Digital Strategy (B) are -
Shortening product life cycle
– it is one of the major threat that H.e Butt is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– H.e Butt has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, H.e Butt 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.
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. H.e Butt 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 H.e Butt
– 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 H.e Butt.
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. H.e Butt 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 H.e Butt in the Technology & Operations sector and impact the bottomline of the organization.
Environmental challenges
– H.e Butt 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. H.e Butt can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Consumer confidence and its impact on H.e Butt 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, H.e Butt 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study H.E. Butt Grocery Co.: The New Digital Strategy (B), H.e Butt 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 .
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.
High dependence on third party suppliers
– H.e Butt 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.
Stagnating economy with rate increase
– H.e Butt 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.
Weighted SWOT Analysis of H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.E. Butt Grocery Co.: The New Digital Strategy (B) 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 H.e Butt needs to make to build a sustainable competitive advantage.