Case Study Description of Macy's Inc.: Turnaround Strategy in Crisis
In 2017, Macy's Inc. (Macy's), one of the world's largest and oldest premier department stores, announced it would close 100 stores and make other significant strategic changes to try to return the brand to its former glory. Macy's sales had fallen for eight straight quarters, causing investors to fear that the company was continuing to lose market share. The firm had been pursuing an aggressive strategy to optimize all facets of its business, but had its chief executive officer addressed all of the company's challenges in an optimal way? The department store industry was still experiencing an overall decline, and competition from online companies and off-price retailers was particularly severe. Could Macy's overcome these obstacles, refocus its strategy, and turn itself around? Won-Yong Oh is affiliated with University of Nevada, Las Vegas.
Swot Analysis of "Macy's Inc.: Turnaround Strategy in Crisis" written by Won-Yong Oh, Ratchel Zeng, Jessica Schuldhaus includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Macy's Department facing as an external strategic factors. Some of the topics covered in Macy's Inc.: Turnaround Strategy in Crisis case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Macy's Inc.: Turnaround Strategy in Crisis casestudy better are - – increasing energy prices, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, there is backlash against globalization, supply chains are disrupted by pandemic , wage bills are increasing,
increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Macy's Inc.: Turnaround Strategy in Crisis
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Macy's Inc.: Turnaround Strategy in Crisis case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Macy's Department, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Macy's Department 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 Macy's Inc.: Turnaround Strategy in Crisis can be done for the following purposes –
1. Strategic planning using facts provided in Macy's Inc.: Turnaround Strategy in Crisis case study
2. Improving business portfolio management of Macy's Department
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 Macy's Department
Strengths Macy's Inc.: Turnaround Strategy in Crisis | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Macy's Department in Macy's Inc.: Turnaround Strategy in Crisis Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Macy's Department in the sector have low bargaining power. Macy's Inc.: Turnaround Strategy in Crisis has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Macy's Department to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Macy's Department 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 Macy's Inc.: Turnaround Strategy in Crisis HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Macy's Department is one of the leading recruiters in the industry. Managers in the Macy's Inc.: Turnaround Strategy in Crisis are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Macy's Department has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Macy's Department 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.
Cross disciplinary teams
– Horizontal connected teams at the Macy's Department are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Macy's Department is present in almost all the verticals within the industry. This has provided firm in Macy's Inc.: Turnaround Strategy in Crisis 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.
Effective Research and Development (R&D)
– Macy's Department 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 Macy's Inc.: Turnaround Strategy in Crisis - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Macy's Department 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 Won-Yong Oh, Ratchel Zeng, Jessica Schuldhaus 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.
Superior customer experience
– The customer experience strategy of Macy's Department in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Macy's Department 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 Macy's Department is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Macy's Inc.: Turnaround Strategy in Crisis Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Macy's Department is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Macy's Department in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Macy's Department is one of the most innovative firm in sector. Manager in Macy's Inc.: Turnaround Strategy in Crisis Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Macy's Inc.: Turnaround Strategy in Crisis | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Macy's Inc.: Turnaround Strategy in Crisis are -
Low market penetration in new markets
– Outside its home market of Macy's Department, firm in the HBR case study Macy's Inc.: Turnaround Strategy in Crisis needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Macy's Department has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High cash cycle compare to competitors
Macy's Department 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.
Slow decision making process
– As mentioned earlier in the report, Macy's Department 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. Macy's Department 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Macy's Department 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 star products
– The top 2 products and services of the firm as mentioned in the Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Department has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Won-Yong Oh, Ratchel Zeng, Jessica Schuldhaus suggests that, Macy's Department 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.
Increasing silos among functional specialists
– The organizational structure of Macy's Department is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Macy's Department needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Macy's Department to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Macy's Inc.: Turnaround Strategy in Crisis, it seems that the employees of Macy's Department 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
– Macy's Department 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 operating costs
– Compare to the competitors, firm in the HBR case study Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Department 's lucrative customers.
Opportunities Macy's Inc.: Turnaround Strategy in Crisis | 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 Macy's Inc.: Turnaround Strategy in Crisis are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Macy's Department 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 Macy's Department to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Macy's Department 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, Macy's Inc.: Turnaround Strategy in Crisis, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Macy's Department has opened avenues for new revenue streams for the organization in the industry. This can help Macy's Department to build a more holistic ecosystem as suggested in the Macy's Inc.: Turnaround Strategy in Crisis case study. Macy's Department can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Macy's Department 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 Macy's Department 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Macy's Department in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Macy's Department 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
– Macy's Department 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Macy's Department can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Macy's Department can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Macy's Inc.: Turnaround Strategy in Crisis 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.
Manufacturing automation
– Macy's Department can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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 Macy's Department 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Macy's Department can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Macy's Inc.: Turnaround Strategy in Crisis External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Macy's Inc.: Turnaround Strategy in Crisis are -
Increasing wage structure of Macy's Department
– 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 Macy's Department.
Technology acceleration in Forth Industrial Revolution
– Macy's Department has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Macy's Department 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.
Stagnating economy with rate increase
– Macy's Department 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.
Consumer confidence and its impact on Macy's Department 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Macy's Inc.: Turnaround Strategy in Crisis, Macy's Department 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 .
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. Macy's Department needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Macy's Department business can come under increasing regulations regarding data privacy, data security, etc.
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.
Environmental challenges
– Macy's Department 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. Macy's Department can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Macy's Department 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 Strategy & Execution industry regulations.
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. Macy's Department can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Macy's Department 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Macy's Department 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 Macy's Inc.: Turnaround Strategy in Crisis .
Weighted SWOT Analysis of Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Inc.: Turnaround Strategy in Crisis 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 Macy's Department needs to make to build a sustainable competitive advantage.