This case is available in only hard copy format (HBP does not have digital distribution rights to the content). As a result, a digital Educator Copy of the case is not available through this web site.Priceline empowered consumers to "name their own price" for airline tickets and hotel rooms; then it shopped these offers to marketers. Priceline's founder Jay Walker described the resulting transactions as a new ecosystem, that helped consumers realize lower prices while allowing marketers to turn excess inventory into profit and, in so doing, price discriminate without damaging their brands or their published prices. Airline tickets and hotel reservations were only the starting point for Priceline, however. By the end of 1999, Priceline had made inroads into the mortgage, new car sales, and car rental businesses. In November, Walker launched Priceline WebHouse Club to bring the "name-your-price" concept to groceries, with plans to eventually scale WebHouse to include almost every type of retailing. Several pressing issues confront the Priceline WebHouse management team in this case. First, the company had yet to close a deal with any major brand manufacturer. Thus, to satisfy customers, WebHouse subsidized member savings out of its own coffers, which, combined with early consumer success, led to significant losses and cash burn. To continue its customer acquisition, Walker projected that $200 million to $500 million in additional capital would be necessary. Meanwhile, the company confronted questions about where and how quickly it should expand.
Swot Analysis of "Priceline WebHouse Club" written by Thomas R. Eisenmann, Jon K. Rust includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Webhouse Priceline facing as an external strategic factors. Some of the topics covered in Priceline WebHouse Club case study are - Strategic Management Strategies, Disruptive innovation, Entrepreneurship, Internet and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Priceline WebHouse Club casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing,
talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Priceline WebHouse Club
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Priceline WebHouse Club case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Webhouse Priceline, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Webhouse Priceline 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 Priceline WebHouse Club can be done for the following purposes –
1. Strategic planning using facts provided in Priceline WebHouse Club case study
2. Improving business portfolio management of Webhouse Priceline
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Webhouse Priceline
Strengths Priceline WebHouse Club | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Webhouse Priceline in Priceline WebHouse Club Harvard Business Review case study are -
Diverse revenue streams
– Webhouse Priceline is present in almost all the verticals within the industry. This has provided firm in Priceline WebHouse Club 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.
Strong track record of project management
– Webhouse Priceline is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Webhouse Priceline digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Webhouse Priceline 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 switching costs
– The high switching costs that Webhouse Priceline 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.
Training and development
– Webhouse Priceline has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Priceline WebHouse Club 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.
Low bargaining power of suppliers
– Suppliers of Webhouse Priceline in the sector have low bargaining power. Priceline WebHouse Club has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Webhouse Priceline to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Priceline WebHouse Club Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Webhouse Priceline 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.
Superior customer experience
– The customer experience strategy of Webhouse Priceline in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Webhouse Priceline 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 Thomas R. Eisenmann, Jon K. Rust 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Priceline WebHouse Club firm has clearly differentiated products in the market place. This has enabled Webhouse Priceline to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Webhouse Priceline to invest into research and development (R&D) and innovation.
Innovation driven organization
– Webhouse Priceline is one of the most innovative firm in sector. Manager in Priceline WebHouse Club Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Priceline WebHouse Club | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Priceline WebHouse Club are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Webhouse Priceline is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Priceline WebHouse Club 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, Webhouse Priceline 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. Webhouse Priceline 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.
Increasing silos among functional specialists
– The organizational structure of Webhouse Priceline is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Webhouse Priceline needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Webhouse Priceline to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Webhouse Priceline needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Webhouse Priceline, firm in the HBR case study Priceline WebHouse Club needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Webhouse Priceline 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 - Priceline WebHouse Club should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Priceline WebHouse Club, in the dynamic environment Webhouse Priceline has struggled to respond to the nimble upstart competition. Webhouse Priceline has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Priceline WebHouse Club that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Priceline WebHouse Club can leverage the sales team experience to cultivate customer relationships as Webhouse Priceline is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Thomas R. Eisenmann, Jon K. Rust suggests that, Webhouse Priceline 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Priceline WebHouse Club 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 Webhouse Priceline 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Priceline WebHouse Club 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 Webhouse Priceline has relatively successful track record of launching new products.
Opportunities Priceline WebHouse Club | 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 Priceline WebHouse Club are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Webhouse Priceline can use these opportunities to build new business models that can help the communities that Webhouse Priceline operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Building a culture of innovation
– managers at Webhouse Priceline 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 Innovation & Entrepreneurship segment.
Using analytics as competitive advantage
– Webhouse Priceline 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 Priceline WebHouse Club - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Webhouse Priceline to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Webhouse Priceline to increase its market reach. Webhouse Priceline 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Webhouse Priceline is facing challenges because of the dominance of functional experts in the organization. Priceline WebHouse Club 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. Webhouse Priceline can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Webhouse Priceline can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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 Webhouse Priceline 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.
Learning at scale
– Online learning technologies has now opened space for Webhouse Priceline 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.
Creating value in data economy
– The success of analytics program of Webhouse Priceline has opened avenues for new revenue streams for the organization in the industry. This can help Webhouse Priceline to build a more holistic ecosystem as suggested in the Priceline WebHouse Club case study. Webhouse Priceline can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Webhouse Priceline can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Webhouse Priceline can develop new processes and procedures in Innovation & Entrepreneurship 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.
Loyalty marketing
– Webhouse Priceline 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.
Threats Priceline WebHouse Club External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Priceline WebHouse Club are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Webhouse Priceline with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Priceline WebHouse Club, Webhouse Priceline may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
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. Webhouse Priceline needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Webhouse Priceline in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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 Webhouse Priceline.
Increasing wage structure of Webhouse Priceline
– 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 Webhouse Priceline.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Webhouse Priceline can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Webhouse Priceline 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.
High dependence on third party suppliers
– Webhouse Priceline 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.
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.
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 Webhouse Priceline in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Webhouse Priceline 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.
Weighted SWOT Analysis of Priceline WebHouse Club 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 Priceline WebHouse Club 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 Priceline WebHouse Club 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 Priceline WebHouse Club 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 Priceline WebHouse Club 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 Webhouse Priceline needs to make to build a sustainable competitive advantage.