Case Study Description of Semir's E-Commerce: Success and Exploration
Zhejiang Semir E-Commerce Co. Ltd., the online subsidiary of Chinese casual clothing company Zhejiang Semir Group Co. Ltd. (Semir), grew continuously from its launch in 2012 to become a main contributor to Semir's success, contributing approximately 30 per cent of Semir's annual revenue by 2016. Semir entered the online market relatively late after many competing Chinese clothing manufacturers had already established their presence online. Yet it became the industry leader in terms of e-commerce revenue. It differed from other major clothing firms mainly in its implementation of the management philosophy of Kazuo Inamori, particularly his Amoeba Management method and his belief in altruism and a win-win approach to business. Semir worked to create supply chain relationships that were true partnerships, and it promoted the various brands in its multi-brand strategy through celebrity endorsements and online marketing. Like its major competitors, Semir was exploring online-to-offline (O2O) models in the clothing industry. In 2016, the company faced a rapidly changing online environment and increasing competition in the industry. It needed a strategy to maintain its early success in e-commerce. It also needed to determine what kind of O2O model to adopt and how to deal with competition from fast-fashion retailers in the online marketplace. Juan Shan, William Wei, Xiaojia Sunny Wang are affiliated with MacEwan University.
Authors :: Juan Shan, William Wei, Xiaojia Sunny Wang
Swot Analysis of "Semir's E-Commerce: Success and Exploration" written by Juan Shan, William Wei, Xiaojia Sunny Wang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Semir Semir's facing as an external strategic factors. Some of the topics covered in Semir's E-Commerce: Success and Exploration case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Semir's E-Commerce: Success and Exploration casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, increasing transportation and logistics costs, talent flight as more people leaving formal jobs,
geopolitical disruptions, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Semir's E-Commerce: Success and Exploration
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Semir's E-Commerce: Success and Exploration case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Semir Semir's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Semir Semir's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Semir's E-Commerce: Success and Exploration can be done for the following purposes –
1. Strategic planning using facts provided in Semir's E-Commerce: Success and Exploration case study
2. Improving business portfolio management of Semir Semir's
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Semir Semir's
Strengths Semir's E-Commerce: Success and Exploration | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Semir Semir's in Semir's E-Commerce: Success and Exploration Harvard Business Review case study are -
Training and development
– Semir Semir's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Semir's E-Commerce: Success and Exploration 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.
Strong track record of project management
– Semir Semir's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Semir's E-Commerce: Success and Exploration 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.
Diverse revenue streams
– Semir Semir's is present in almost all the verticals within the industry. This has provided firm in Semir's E-Commerce: Success and Exploration 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.
Successful track record of launching new products
– Semir Semir's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Semir Semir's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Semir Semir's is one of the most innovative firm in sector. Manager in Semir's E-Commerce: Success and Exploration Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Semir Semir's in the sector have low bargaining power. Semir's E-Commerce: Success and Exploration has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Semir Semir's to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Semir Semir's 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 Semir's E-Commerce: Success and Exploration - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Semir Semir's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Semir Semir's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Sales & Marketing industry
– Semir's E-Commerce: Success and Exploration firm has clearly differentiated products in the market place. This has enabled Semir Semir's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Semir Semir's to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Semir Semir's 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 Semir Semir's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Semir Semir's 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 Semir Semir's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Semir's E-Commerce: Success and Exploration Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Semir's E-Commerce: Success and Exploration | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Semir's E-Commerce: Success and Exploration are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Semir's E-Commerce: Success and Exploration 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 Semir Semir's has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Semir's E-Commerce: Success and Exploration, it seems that the employees of Semir Semir's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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 Semir Semir's supply chain. Even after few cautionary changes mentioned in the HBR case study - Semir's E-Commerce: Success and Exploration, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Semir Semir's vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Semir Semir's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Semir's E-Commerce: Success and Exploration should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Semir Semir's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring
– The stress on hiring functional specialists at Semir Semir's 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Juan Shan, William Wei, Xiaojia Sunny Wang suggests that, Semir Semir's 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 to strategic competitive environment developments
– As Semir's E-Commerce: Success and Exploration HBR case study mentions - Semir Semir's 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.
Low market penetration in new markets
– Outside its home market of Semir Semir's, firm in the HBR case study Semir's E-Commerce: Success and Exploration needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Semir's E-Commerce: Success and Exploration, in the dynamic environment Semir Semir's has struggled to respond to the nimble upstart competition. Semir Semir's 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 Semir Semir's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Semir Semir's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Semir Semir's to focus more on services rather than just following the product oriented approach.
Opportunities Semir's E-Commerce: Success and Exploration | 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 Semir's E-Commerce: Success and Exploration are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Semir Semir's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Semir Semir's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Semir Semir's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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 Semir Semir's in the consumer business. Now Semir Semir's can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Semir Semir's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Semir's E-Commerce: Success and Exploration 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
– Semir Semir's can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Leveraging digital technologies
– Semir Semir's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Semir Semir's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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. Semir Semir's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Semir Semir's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Semir Semir's can use these opportunities to build new business models that can help the communities that Semir Semir's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Semir Semir's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Semir Semir's 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, Semir's E-Commerce: Success and Exploration, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Semir Semir's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Semir's E-Commerce: Success and Exploration - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Semir Semir's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Semir's E-Commerce: Success and Exploration External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Semir's E-Commerce: Success and Exploration are -
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. Semir Semir's 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
– Semir Semir's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Semir Semir's 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, Semir Semir's 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 Semir's E-Commerce: Success and Exploration .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Semir Semir's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Semir Semir's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
High dependence on third party suppliers
– Semir Semir's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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 Semir Semir's business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Semir Semir's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Semir Semir's can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Semir Semir's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Semir Semir's.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Semir Semir's in the Sales & Marketing industry. The Sales & Marketing 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 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. Semir Semir's needs to understand the core reasons impacting the Sales & Marketing 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.
Weighted SWOT Analysis of Semir's E-Commerce: Success and Exploration 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 Semir's E-Commerce: Success and Exploration 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 Semir's E-Commerce: Success and Exploration 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 Semir's E-Commerce: Success and Exploration 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 Semir's E-Commerce: Success and Exploration 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 Semir Semir's needs to make to build a sustainable competitive advantage.