Case Study Description of DD Traders: Sourcing for DEMDACO
DD Traders was the Asian branch of DEMDACO, a privately held company that wholesaled unique gift products, which were marketed and distributed to the specialty retail channel in the United States (as well as some international markets). Carolyn Glasow recognized an opportunity to leverage a quantitative approach to sourcing future allocations across vendors that would also improve the short-term demand transparency that was provided to the company's key business partners, which could lead to increased bargaining power for price negotiations and production lead-times. This was a recurring issue for Glasow and her sourcing team: how should she allocate product purchases among the various manufacturers that bid for the opportunity to supply products to DD Traders?
Authors :: Peter C. Bell, Carolyn Glasow, Julia Ho
Swot Analysis of "DD Traders: Sourcing for DEMDACO" written by Peter C. Bell, Carolyn Glasow, Julia Ho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dd Demdaco facing as an external strategic factors. Some of the topics covered in DD Traders: Sourcing for DEMDACO case study are - Strategic Management Strategies, International business, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the DD Traders: Sourcing for DEMDACO casestudy better are - – increasing government debt because of Covid-19 spendings, technology disruption, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, wage bills are increasing,
there is backlash against globalization, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of DD Traders: Sourcing for DEMDACO
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in DD Traders: Sourcing for DEMDACO case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dd Demdaco, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dd Demdaco 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 DD Traders: Sourcing for DEMDACO can be done for the following purposes –
1. Strategic planning using facts provided in DD Traders: Sourcing for DEMDACO case study
2. Improving business portfolio management of Dd Demdaco
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dd Demdaco
Strengths DD Traders: Sourcing for DEMDACO | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dd Demdaco in DD Traders: Sourcing for DEMDACO Harvard Business Review case study are -
Effective Research and Development (R&D)
– Dd Demdaco 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 DD Traders: Sourcing for DEMDACO - 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 switching costs
– The high switching costs that Dd Demdaco has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Global Business industry
– DD Traders: Sourcing for DEMDACO firm has clearly differentiated products in the market place. This has enabled Dd Demdaco to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Dd Demdaco to invest into research and development (R&D) and innovation.
Learning organization
- Dd Demdaco 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 Dd Demdaco is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in DD Traders: Sourcing for DEMDACO Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Dd Demdaco has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dd Demdaco 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.
Ability to lead change in Global Business field
– Dd Demdaco 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 Dd Demdaco in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Dd Demdaco in the sector have low bargaining power. DD Traders: Sourcing for DEMDACO has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dd Demdaco to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Dd Demdaco has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in DD Traders: Sourcing for DEMDACO 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Dd Demdaco digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dd Demdaco has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Dd Demdaco has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dd Demdaco to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Dd Demdaco is one of the most innovative firm in sector. Manager in DD Traders: Sourcing for DEMDACO Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Dd Demdaco is present in almost all the verticals within the industry. This has provided firm in DD Traders: Sourcing for DEMDACO 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 DD Traders: Sourcing for DEMDACO | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of DD Traders: Sourcing for DEMDACO are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study DD Traders: Sourcing for DEMDACO, is just above the industry average. Dd Demdaco 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the DD Traders: Sourcing for DEMDACO 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 Dd Demdaco has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Dd Demdaco 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 Dd Demdaco 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study DD Traders: Sourcing for DEMDACO, it seems that the employees of Dd Demdaco 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.
No frontier risks strategy
– After analyzing the HBR case study DD Traders: Sourcing for DEMDACO, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Products dominated business model
– Even though Dd Demdaco 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 - DD Traders: Sourcing for DEMDACO should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Dd Demdaco 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 bargaining power of channel partners
– Because of the regulatory requirements, Peter C. Bell, Carolyn Glasow, Julia Ho suggests that, Dd Demdaco 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dd Demdaco is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study DD Traders: Sourcing for DEMDACO can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Dd Demdaco 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. Dd Demdaco even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities DD Traders: Sourcing for DEMDACO | 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 DD Traders: Sourcing for DEMDACO are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Dd Demdaco can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dd Demdaco 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. Dd Demdaco can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dd Demdaco 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.
Learning at scale
– Online learning technologies has now opened space for Dd Demdaco 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.
Better consumer reach
– The expansion of the 5G network will help Dd Demdaco to increase its market reach. Dd Demdaco 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.
Creating value in data economy
– The success of analytics program of Dd Demdaco has opened avenues for new revenue streams for the organization in the industry. This can help Dd Demdaco to build a more holistic ecosystem as suggested in the DD Traders: Sourcing for DEMDACO case study. Dd Demdaco can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Dd Demdaco can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dd Demdaco 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. Dd Demdaco 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.
Building a culture of innovation
– managers at Dd Demdaco 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 Global Business segment.
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 Dd Demdaco 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.
Loyalty marketing
– Dd Demdaco has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Dd Demdaco can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. DD Traders: Sourcing for DEMDACO 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 DD Traders: Sourcing for DEMDACO External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study DD Traders: Sourcing for DEMDACO are -
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 Dd Demdaco business can come under increasing regulations regarding data privacy, data security, etc.
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 Dd Demdaco.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dd Demdaco 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 DD Traders: Sourcing for DEMDACO .
Regulatory challenges
– Dd Demdaco 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 Global Business industry regulations.
Stagnating economy with rate increase
– Dd Demdaco 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.
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 Dd Demdaco in the Global Business sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dd Demdaco in the Global Business industry. The Global Business 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. Dd Demdaco needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Dd Demdaco is facing in Global Business 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. Dd Demdaco 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.
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 Dd Demdaco
– 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 Dd Demdaco.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dd Demdaco can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of DD Traders: Sourcing for DEMDACO 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 DD Traders: Sourcing for DEMDACO 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 DD Traders: Sourcing for DEMDACO 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 DD Traders: Sourcing for DEMDACO 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 DD Traders: Sourcing for DEMDACO 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 Dd Demdaco needs to make to build a sustainable competitive advantage.
