Lulu.com is an e-commerce company that distributes content for book authors, video producers, calendar designers and other intellectual property creators that can be captured in digital formats. At this time, Lulu.com has developed a successful niche market in print-on-demand books within the United States. However, the vision of its founder is much larger. The president is faced with the strategic dilemma of whether to expand Lulu.com's product offerings or to focus on internal operations for the next six to 12 months.
Swot Analysis of "Lulu.com" written by Darren Meister, Yinglei Wang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lulu.com Lulu.com's facing as an external strategic factors. Some of the topics covered in Lulu.com case study are - Strategic Management Strategies, Growth strategy, IT and Communication.
Some of the macro environment factors that can be used to understand the Lulu.com casestudy better are - – increasing transportation and logistics costs, cloud computing is disrupting traditional business models, geopolitical disruptions, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, wage bills are increasing,
central banks are concerned over increasing inflation, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lulu.com case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lulu.com Lulu.com's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lulu.com Lulu.com'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 Lulu.com can be done for the following purposes –
1. Strategic planning using facts provided in Lulu.com case study
2. Improving business portfolio management of Lulu.com Lulu.com's
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lulu.com Lulu.com's
Strengths Lulu.com | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lulu.com Lulu.com's in Lulu.com Harvard Business Review case study are -
Sustainable margins compare to other players in Communication industry
– Lulu.com firm has clearly differentiated products in the market place. This has enabled Lulu.com Lulu.com's to fetch slight price premium compare to the competitors in the Communication industry. The sustainable margins have also helped Lulu.com Lulu.com's to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Lulu.com Lulu.com's 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.
Operational resilience
– The operational resilience strategy in the Lulu.com 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.
Strong track record of project management
– Lulu.com Lulu.com'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.
Organizational Resilience of Lulu.com Lulu.com's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lulu.com Lulu.com's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Lulu.com Lulu.com's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lulu.com Lulu.com's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Lulu.com Lulu.com's 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 Darren Meister, Yinglei Wang 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.
Successful track record of launching new products
– Lulu.com Lulu.com's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lulu.com Lulu.com'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.
Learning organization
- Lulu.com Lulu.com'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 Lulu.com Lulu.com's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lulu.com Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Lulu.com Lulu.com's in the sector have low bargaining power. Lulu.com has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lulu.com Lulu.com's to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Lulu.com Lulu.com's 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.
Highly skilled collaborators
– Lulu.com Lulu.com's 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 Lulu.com HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Lulu.com | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lulu.com are -
No frontier risks strategy
– After analyzing the HBR case study Lulu.com, it seems that company is thinking about the frontier risks that can impact Communication 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.
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 Lulu.com Lulu.com's supply chain. Even after few cautionary changes mentioned in the HBR case study - Lulu.com, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lulu.com Lulu.com's vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lulu.com, is just above the industry average. Lulu.com Lulu.com's 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.
Lack of clear differentiation of Lulu.com Lulu.com's products
– To increase the profitability and margins on the products, Lulu.com Lulu.com's needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lulu.com, in the dynamic environment Lulu.com Lulu.com's has struggled to respond to the nimble upstart competition. Lulu.com Lulu.com's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Lulu.com Lulu.com's, firm in the HBR case study Lulu.com needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Lulu.com Lulu.com'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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lulu.com, it seems that the employees of Lulu.com Lulu.com'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 star products
– The top 2 products and services of the firm as mentioned in the Lulu.com 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 Lulu.com Lulu.com's has relatively successful track record of launching new products.
High cash cycle compare to competitors
Lulu.com Lulu.com's 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Lulu.com 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 Lulu.com Lulu.com's 's lucrative customers.
Opportunities Lulu.com | 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 Lulu.com are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lulu.com Lulu.com's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Lulu.com Lulu.com's 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, Lulu.com Lulu.com'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.
Using analytics as competitive advantage
– Lulu.com Lulu.com'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 Lulu.com - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lulu.com Lulu.com's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lulu.com Lulu.com's 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 Lulu.com Lulu.com's 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, Lulu.com Lulu.com'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, Lulu.com, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Lulu.com Lulu.com'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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lulu.com Lulu.com's can use these opportunities to build new business models that can help the communities that Lulu.com Lulu.com's operates in. Secondly it can use opportunities from government spending in Communication sector.
Developing new processes and practices
– Lulu.com Lulu.com's can develop new processes and procedures in Communication 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lulu.com Lulu.com's is facing challenges because of the dominance of functional experts in the organization. Lulu.com 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.
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. Lulu.com Lulu.com's 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 Lulu.com Lulu.com'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 Communication segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Lulu.com Lulu.com's to increase its market reach. Lulu.com Lulu.com's 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.
Threats Lulu.com External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lulu.com are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lulu.com Lulu.com's in the Communication industry. The Communication 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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. Lulu.com Lulu.com'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.
Increasing wage structure of Lulu.com Lulu.com'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 Lulu.com Lulu.com's.
Regulatory challenges
– Lulu.com Lulu.com'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 Communication industry regulations.
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. Lulu.com Lulu.com's needs to understand the core reasons impacting the Communication industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Lulu.com Lulu.com'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.
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.
Technology acceleration in Forth Industrial Revolution
– Lulu.com Lulu.com's has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Lulu.com Lulu.com's needs to keep up with the evolution of technology in the Communication 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lulu.com Lulu.com's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Lulu.com Lulu.com'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.
Environmental challenges
– Lulu.com Lulu.com'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. Lulu.com Lulu.com's can take advantage of this fund but it will also bring new competitors in the Communication industry.
Shortening product life cycle
– it is one of the major threat that Lulu.com Lulu.com's is facing in Communication sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Lulu.com 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 Lulu.com 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 Lulu.com 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 Lulu.com 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 Lulu.com 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 Lulu.com Lulu.com's needs to make to build a sustainable competitive advantage.