Fnac-Darty Merger: From Bidding Wars to Entity Integration SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Fnac-Darty Merger: From Bidding Wars to Entity Integration
In September 2015, Groupe Fnac (Fnac), a large French retail chain, announced it had acquired long-time competitor Darty Limited (Darty) in an effort to counter competition from online retailers, particularly American e-commerce giant Amazon.com, Inc. Fnac's first offer had been declined, but Fnac and Darty negotiated and agreed on a new offer in November 2015. Unexpectedly, in March 2016, a South African-based retail holding company, Steinhoff International Holdings N.V., made a bigger offer. After an intense bidding war, Fnac successfully acquired Darty in April 2016 for 60 per cent over its first offer. The new company, Groupe Fnac Darty, faced several challenges. It needed to convince its stakeholders that the two emblematic competitors could create better value for them, despite their different identities and corporate cultures. How should the combined entity achieve the announced ?130 million in annual synergies by 2019? And would the new entity survive the aggressive competition of e-commerce? Wiboon Kittilaksanawong is affiliated with Saitama University. Hanna Tayeb is affiliated with Nagoya University of Commerce & Business.
Swot Analysis of "Fnac-Darty Merger: From Bidding Wars to Entity Integration" written by Wiboon Kittilaksanawong, Hanna Tayeb includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Darty Fnac facing as an external strategic factors. Some of the topics covered in Fnac-Darty Merger: From Bidding Wars to Entity Integration case study are - Strategic Management Strategies, Financial management, Mergers & acquisitions, Negotiations, Organizational structure and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Fnac-Darty Merger: From Bidding Wars to Entity Integration casestudy better are - – talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , increasing transportation and logistics costs, there is backlash against globalization, increasing energy prices, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels,
digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, etc
Introduction to SWOT Analysis of Fnac-Darty Merger: From Bidding Wars to Entity Integration
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fnac-Darty Merger: From Bidding Wars to Entity Integration case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Darty Fnac, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Darty Fnac 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration can be done for the following purposes –
1. Strategic planning using facts provided in Fnac-Darty Merger: From Bidding Wars to Entity Integration case study
2. Improving business portfolio management of Darty Fnac
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Darty Fnac
Strengths Fnac-Darty Merger: From Bidding Wars to Entity Integration | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Darty Fnac in Fnac-Darty Merger: From Bidding Wars to Entity Integration Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Fnac-Darty Merger: From Bidding Wars to Entity Integration firm has clearly differentiated products in the market place. This has enabled Darty Fnac to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Darty Fnac to invest into research and development (R&D) and innovation.
Learning organization
- Darty Fnac 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 Darty Fnac is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Fnac-Darty Merger: From Bidding Wars to Entity Integration Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Darty Fnac
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Darty Fnac does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Darty Fnac 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 Wiboon Kittilaksanawong, Hanna Tayeb 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.
Ability to recruit top talent
– Darty Fnac is one of the leading recruiters in the industry. Managers in the Fnac-Darty Merger: From Bidding Wars to Entity Integration are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Darty Fnac has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fnac-Darty Merger: From Bidding Wars to Entity Integration 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.
High brand equity
– Darty Fnac has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Darty Fnac to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Darty Fnac 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.
Highly skilled collaborators
– Darty Fnac 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Darty Fnac in the sector have low bargaining power. Fnac-Darty Merger: From Bidding Wars to Entity Integration has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Darty Fnac to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Darty Fnac is present in almost all the verticals within the industry. This has provided firm in Fnac-Darty Merger: From Bidding Wars to Entity Integration 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.
Weaknesses Fnac-Darty Merger: From Bidding Wars to Entity Integration | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fnac-Darty Merger: From Bidding Wars to Entity Integration are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fnac-Darty Merger: From Bidding Wars to Entity Integration, in the dynamic environment Darty Fnac has struggled to respond to the nimble upstart competition. Darty Fnac has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Darty Fnac is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Darty Fnac needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Darty Fnac to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Fnac-Darty Merger: From Bidding Wars to Entity Integration HBR case study mentions - Darty Fnac 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fnac-Darty Merger: From Bidding Wars to Entity Integration, it seems that the employees of Darty Fnac 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.
Lack of clear differentiation of Darty Fnac products
– To increase the profitability and margins on the products, Darty Fnac needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration can leverage the sales team experience to cultivate customer relationships as Darty Fnac is planning to shift buying processes online.
Need for greater diversity
– Darty Fnac 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.
No frontier risks strategy
– After analyzing the HBR case study Fnac-Darty Merger: From Bidding Wars to Entity Integration, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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, Darty Fnac 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 operating costs
– Compare to the competitors, firm in the HBR case study Fnac-Darty Merger: From Bidding Wars to Entity Integration has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Darty Fnac 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Darty Fnac 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.
Opportunities Fnac-Darty Merger: From Bidding Wars to Entity Integration | 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Darty Fnac 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Darty Fnac 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, Fnac-Darty Merger: From Bidding Wars to Entity Integration, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Darty Fnac is facing challenges because of the dominance of functional experts in the organization. Fnac-Darty Merger: From Bidding Wars to Entity Integration 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Darty Fnac can use these opportunities to build new business models that can help the communities that Darty Fnac operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Darty Fnac can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fnac-Darty Merger: From Bidding Wars to Entity Integration suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Darty Fnac 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Darty Fnac 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. Darty Fnac 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Darty Fnac 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 Darty Fnac to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Darty Fnac 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 Darty Fnac 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 Strategy & Execution segment.
Better consumer reach
– The expansion of the 5G network will help Darty Fnac to increase its market reach. Darty Fnac 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Darty Fnac can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Darty Fnac can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Fnac-Darty Merger: From Bidding Wars to Entity Integration External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Darty Fnac.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Darty Fnac 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
– Darty Fnac 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. Darty Fnac can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Consumer confidence and its impact on Darty Fnac 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.
Shortening product life cycle
– it is one of the major threat that Darty Fnac is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Darty Fnac 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.
Technology acceleration in Forth Industrial Revolution
– Darty Fnac has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Darty Fnac needs to keep up with the evolution of technology in the Strategy & Execution 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Darty Fnac in the Strategy & Execution industry. The Strategy & Execution 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
– Darty Fnac 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.
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 Darty Fnac in the Strategy & Execution sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fnac-Darty Merger: From Bidding Wars to Entity Integration, Darty Fnac may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Darty Fnac business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Fnac-Darty Merger: From Bidding Wars to Entity Integration 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 Darty Fnac needs to make to build a sustainable competitive advantage.