Case Study Description of Fabindia Overseas Pvt. Ltd.
To maximize their effectiveness, color cases should be printed in color.Fabindia is a for-profit Indian retail company with the stated mission of providing employment to weavers and traditional handicraft artisans in rural India. Established in 1960 as an exporter of home furnishings, Fabindia has grown as a consumer-facing retailer of apparel, home furnishings, organic food, and body care products, and has plans to expand further. Given their mission, their supply chain is fragmented, geographically scattered, and unpredictable. Can they overcome these challenges and still grow profitably while staying committed to their mission?
Swot Analysis of "Fabindia Overseas Pvt. Ltd." written by Mukti Khaire includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fabindia Furnishings facing as an external strategic factors. Some of the topics covered in Fabindia Overseas Pvt. Ltd. case study are - Strategic Management Strategies, Corporate governance, Emerging markets, Entrepreneurial management, Growth strategy and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Fabindia Overseas Pvt. Ltd. casestudy better are - – talent flight as more people leaving formal jobs, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Fabindia Overseas Pvt. Ltd.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Fabindia Overseas Pvt. Ltd. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fabindia Furnishings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fabindia Furnishings 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 Fabindia Overseas Pvt. Ltd. can be done for the following purposes –
1. Strategic planning using facts provided in Fabindia Overseas Pvt. Ltd. case study
2. Improving business portfolio management of Fabindia Furnishings
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 Fabindia Furnishings
Strengths Fabindia Overseas Pvt. Ltd. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fabindia Furnishings in Fabindia Overseas Pvt. Ltd. Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Fabindia Overseas Pvt. Ltd. firm has clearly differentiated products in the market place. This has enabled Fabindia Furnishings to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Fabindia Furnishings to invest into research and development (R&D) and innovation.
Organizational Resilience of Fabindia Furnishings
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fabindia Furnishings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Fabindia Overseas Pvt. Ltd. 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.
Superior customer experience
– The customer experience strategy of Fabindia Furnishings in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Fabindia Furnishings has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fabindia Furnishings to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Fabindia Furnishings 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Fabindia Furnishings digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fabindia Furnishings 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.
Innovation driven organization
– Fabindia Furnishings is one of the most innovative firm in sector. Manager in Fabindia Overseas Pvt. Ltd. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Fabindia Furnishings 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 Fabindia Overseas Pvt. Ltd. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Fabindia Furnishings has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Fabindia Overseas Pvt. Ltd. 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.
Successful track record of launching new products
– Fabindia Furnishings has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fabindia Furnishings 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.
Highly skilled collaborators
– Fabindia Furnishings 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 Fabindia Overseas Pvt. Ltd. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Fabindia Overseas Pvt. Ltd. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fabindia Overseas Pvt. Ltd. are -
Increasing silos among functional specialists
– The organizational structure of Fabindia Furnishings is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Fabindia Furnishings needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fabindia Furnishings to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Fabindia Furnishings has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Fabindia Overseas Pvt. Ltd. HBR case study mentions - Fabindia Furnishings 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.
Lack of clear differentiation of Fabindia Furnishings products
– To increase the profitability and margins on the products, Fabindia Furnishings needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Fabindia Overseas Pvt. Ltd., it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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 Fabindia Furnishings supply chain. Even after few cautionary changes mentioned in the HBR case study - Fabindia Overseas Pvt. Ltd., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fabindia Furnishings vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Fabindia Overseas Pvt. Ltd. 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 Fabindia Furnishings 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Fabindia Overseas Pvt. Ltd., it seems that the employees of Fabindia Furnishings 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.
Aligning sales with marketing
– It come across in the case study Fabindia Overseas Pvt. Ltd. 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 Fabindia Overseas Pvt. Ltd. can leverage the sales team experience to cultivate customer relationships as Fabindia Furnishings is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Fabindia Furnishings 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Fabindia Overseas Pvt. Ltd., in the dynamic environment Fabindia Furnishings has struggled to respond to the nimble upstart competition. Fabindia Furnishings has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Fabindia Overseas Pvt. Ltd. | 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 Fabindia Overseas Pvt. Ltd. are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fabindia Furnishings 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. Fabindia Furnishings 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fabindia Furnishings 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 Fabindia Furnishings to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fabindia Furnishings can use these opportunities to build new business models that can help the communities that Fabindia Furnishings operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Manufacturing automation
– Fabindia Furnishings 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.
Learning at scale
– Online learning technologies has now opened space for Fabindia Furnishings 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fabindia Furnishings in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
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 Fabindia Furnishings 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Fabindia Furnishings can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Fabindia Furnishings 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 Fabindia Overseas Pvt. Ltd. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fabindia Furnishings to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Fabindia Furnishings 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fabindia Furnishings can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fabindia Furnishings 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, Fabindia Overseas Pvt. Ltd., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Fabindia Furnishings has opened avenues for new revenue streams for the organization in the industry. This can help Fabindia Furnishings to build a more holistic ecosystem as suggested in the Fabindia Overseas Pvt. Ltd. case study. Fabindia Furnishings can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Fabindia Overseas Pvt. Ltd. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Fabindia Overseas Pvt. Ltd. are -
Shortening product life cycle
– it is one of the major threat that Fabindia Furnishings is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Fabindia Furnishings.
Stagnating economy with rate increase
– Fabindia Furnishings 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.
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 Fabindia Furnishings business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Fabindia Furnishings 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 Innovation & Entrepreneurship industry regulations.
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. Fabindia Furnishings 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. Fabindia Furnishings 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.
Consumer confidence and its impact on Fabindia Furnishings 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.
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.
High dependence on third party suppliers
– Fabindia Furnishings 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.
Increasing wage structure of Fabindia Furnishings
– 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 Fabindia Furnishings.
Environmental challenges
– Fabindia Furnishings 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. Fabindia Furnishings can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Weighted SWOT Analysis of Fabindia Overseas Pvt. Ltd. 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 Fabindia Overseas Pvt. Ltd. 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 Fabindia Overseas Pvt. Ltd. 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 Fabindia Overseas Pvt. Ltd. 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 Fabindia Overseas Pvt. Ltd. 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 Fabindia Furnishings needs to make to build a sustainable competitive advantage.