Fastenal: Losing Its Fast Growth to Amazon Business? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
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Case Study Description of Fastenal: Losing Its Fast Growth to Amazon Business?
Fastenal was one of the largest U.S. industrial supply companies, with the highest operating margin among its competitors. It was known and awarded for its innovative industrial vending solutions. With the launch of Amazon Business in the industrial distribution space in 2012, Fastenal's performance began to decline. In 2017, Amazon Business obtained patents for a drone-based delivery system. This, combined with Amazon's power of low cost, raised critical challenges for leading players like Fastenal. How should Fastenal respond to this competition: should it focus on low price or pursue a differentiation strategy? Arpita Agnihotri is affiliated with Pennsylvania State University - Harrisburg. Saurabh Bhattacharya is affiliated with Newcastle University.
Swot Analysis of "Fastenal: Losing Its Fast Growth to Amazon Business?" written by Arpita Agnihotri, Saurabh Bhattacharya includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fastenal Amazon facing as an external strategic factors. Some of the topics covered in Fastenal: Losing Its Fast Growth to Amazon Business? case study are - Strategic Management Strategies, Competitive strategy, Customers, Innovation and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Fastenal: Losing Its Fast Growth to Amazon Business? casestudy better are - – cloud computing is disrupting traditional business models, increasing energy prices, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, there is backlash against globalization, technology disruption, central banks are concerned over increasing inflation,
increasing commodity prices, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Fastenal: Losing Its Fast Growth to Amazon Business?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fastenal: Losing Its Fast Growth to Amazon Business? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fastenal Amazon, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fastenal Amazon 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 Fastenal: Losing Its Fast Growth to Amazon Business? can be done for the following purposes –
1. Strategic planning using facts provided in Fastenal: Losing Its Fast Growth to Amazon Business? case study
2. Improving business portfolio management of Fastenal Amazon
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fastenal Amazon
Strengths Fastenal: Losing Its Fast Growth to Amazon Business? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fastenal Amazon in Fastenal: Losing Its Fast Growth to Amazon Business? Harvard Business Review case study are -
Effective Research and Development (R&D)
– Fastenal Amazon 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 Fastenal: Losing Its Fast Growth to Amazon Business? - 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
– Fastenal Amazon is one of the most innovative firm in sector. Manager in Fastenal: Losing Its Fast Growth to Amazon Business? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Fastenal Amazon
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fastenal Amazon does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Fastenal Amazon 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 Fastenal: Losing Its Fast Growth to Amazon Business? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Fastenal Amazon has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fastenal Amazon 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.
Training and development
– Fastenal Amazon has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fastenal: Losing Its Fast Growth to Amazon Business? 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.
Learning organization
- Fastenal Amazon 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 Fastenal Amazon is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Fastenal: Losing Its Fast Growth to Amazon Business? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Fastenal Amazon 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 Arpita Agnihotri, Saurabh Bhattacharya 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.
Diverse revenue streams
– Fastenal Amazon is present in almost all the verticals within the industry. This has provided firm in Fastenal: Losing Its Fast Growth to Amazon Business? 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.
Operational resilience
– The operational resilience strategy in the Fastenal: Losing Its Fast Growth to Amazon Business? 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.
Cross disciplinary teams
– Horizontal connected teams at the Fastenal Amazon 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.
Ability to recruit top talent
– Fastenal Amazon is one of the leading recruiters in the industry. Managers in the Fastenal: Losing Its Fast Growth to Amazon Business? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Fastenal: Losing Its Fast Growth to Amazon Business? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fastenal: Losing Its Fast Growth to Amazon Business? are -
Slow decision making process
– As mentioned earlier in the report, Fastenal Amazon 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. Fastenal Amazon 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.
Slow to strategic competitive environment developments
– As Fastenal: Losing Its Fast Growth to Amazon Business? HBR case study mentions - Fastenal Amazon 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.
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 Fastenal Amazon supply chain. Even after few cautionary changes mentioned in the HBR case study - Fastenal: Losing Its Fast Growth to Amazon Business?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fastenal Amazon vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal: Losing Its Fast Growth to Amazon Business? can leverage the sales team experience to cultivate customer relationships as Fastenal Amazon is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Fastenal: Losing Its Fast Growth to Amazon Business?, is just above the industry average. Fastenal Amazon needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal Amazon 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Fastenal Amazon 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.
No frontier risks strategy
– After analyzing the HBR case study Fastenal: Losing Its Fast Growth to Amazon Business?, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fastenal: Losing Its Fast Growth to Amazon Business?, it seems that the employees of Fastenal Amazon 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Fastenal Amazon 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.
Low market penetration in new markets
– Outside its home market of Fastenal Amazon, firm in the HBR case study Fastenal: Losing Its Fast Growth to Amazon Business? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Fastenal: Losing Its Fast Growth to Amazon Business? | 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 Fastenal: Losing Its Fast Growth to Amazon Business? are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fastenal Amazon is facing challenges because of the dominance of functional experts in the organization. Fastenal: Losing Its Fast Growth to Amazon Business? 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fastenal Amazon 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, Fastenal: Losing Its Fast Growth to Amazon Business?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fastenal Amazon 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.
Manufacturing automation
– Fastenal Amazon can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
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 Fastenal Amazon 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.
Using analytics as competitive advantage
– Fastenal Amazon 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 Fastenal: Losing Its Fast Growth to Amazon Business? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fastenal Amazon to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Fastenal Amazon 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Fastenal Amazon can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Fastenal Amazon can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fastenal Amazon in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fastenal Amazon can use these opportunities to build new business models that can help the communities that Fastenal Amazon operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Developing new processes and practices
– Fastenal Amazon can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Fastenal Amazon can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Fastenal: Losing Its Fast Growth to Amazon Business? 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.
Threats Fastenal: Losing Its Fast Growth to Amazon Business? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fastenal: Losing Its Fast Growth to Amazon Business? are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fastenal Amazon with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Fastenal Amazon.
Regulatory challenges
– Fastenal Amazon 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 Leadership & Managing People industry regulations.
Technology acceleration in Forth Industrial Revolution
– Fastenal Amazon has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Fastenal Amazon needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Fastenal: Losing Its Fast Growth to Amazon Business?, Fastenal Amazon may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Fastenal Amazon in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Fastenal Amazon 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.
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 Fastenal Amazon business can come under increasing regulations regarding data privacy, data security, 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. Fastenal Amazon 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.
Stagnating economy with rate increase
– Fastenal Amazon 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.
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. Fastenal Amazon needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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.
Increasing wage structure of Fastenal Amazon
– 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 Fastenal Amazon.
Weighted SWOT Analysis of Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal: Losing Its Fast Growth to Amazon Business? 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 Fastenal Amazon needs to make to build a sustainable competitive advantage.
