Chalhoub Group: A Luxury Success Story in the Middle East SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Chalhoub Group: A Luxury Success Story in the Middle East
This case illustrates the key role played by a local distributor in the luxury goods industry in the Middle East. By partnering with the Chalhoub Group, western firms have built a competitive advantage across the six countries of the Gulf Cooperation Council (GCC). While not typical of western luxury brands selling to global markets other than the Middle East, their alliances with the Chalhoub Group offer access to a vast network of 650 stores in prime locations in the GCC, many in new shopping malls. Chalhoub has retail outlets in 14 countries in the MENA region. Since its establishment in 1955, the Dubai-based Chalhoub has developed partnerships with Christian Dior, Sephora, Louis Vuitton, Fendi and many others. In so doing it has laid the foundations for the creation of own-concept stores, where it sells its own branded products.
Authors :: Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung
Swot Analysis of "Chalhoub Group: A Luxury Success Story in the Middle East" written by Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chalhoub Gcc facing as an external strategic factors. Some of the topics covered in Chalhoub Group: A Luxury Success Story in the Middle East case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Chalhoub Group: A Luxury Success Story in the Middle East casestudy better are - – there is backlash against globalization, central banks are concerned over increasing inflation, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels,
geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Chalhoub Group: A Luxury Success Story in the Middle East
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chalhoub Group: A Luxury Success Story in the Middle East case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chalhoub Gcc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East can be done for the following purposes –
1. Strategic planning using facts provided in Chalhoub Group: A Luxury Success Story in the Middle East case study
2. Improving business portfolio management of Chalhoub Gcc
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Chalhoub Gcc
Strengths Chalhoub Group: A Luxury Success Story in the Middle East | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chalhoub Gcc in Chalhoub Group: A Luxury Success Story in the Middle East Harvard Business Review case study are -
Successful track record of launching new products
– Chalhoub Gcc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Chalhoub Gcc 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.
High switching costs
– The high switching costs that Chalhoub Gcc 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.
Diverse revenue streams
– Chalhoub Gcc is present in almost all the verticals within the industry. This has provided firm in Chalhoub Group: A Luxury Success Story in the Middle East 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.
Ability to recruit top talent
– Chalhoub Gcc is one of the leading recruiters in the industry. Managers in the Chalhoub Group: A Luxury Success Story in the Middle East are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Chalhoub Gcc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chalhoub Gcc 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.
Strong track record of project management
– Chalhoub Gcc is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Chalhoub Gcc 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 Chalhoub Gcc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Chalhoub Group: A Luxury Success Story in the Middle East Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Chalhoub Gcc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– Chalhoub Group: A Luxury Success Story in the Middle East firm has clearly differentiated products in the market place. This has enabled Chalhoub Gcc to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Chalhoub Gcc to invest into research and development (R&D) and innovation.
Organizational Resilience of Chalhoub Gcc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Chalhoub Gcc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Chalhoub Gcc is one of the most innovative firm in sector. Manager in Chalhoub Group: A Luxury Success Story in the Middle East Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Chalhoub Group: A Luxury Success Story in the Middle East | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chalhoub Group: A Luxury Success Story in the Middle East are -
Increasing silos among functional specialists
– The organizational structure of Chalhoub Gcc is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Chalhoub Gcc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chalhoub Gcc to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Chalhoub Group: A Luxury Success Story in the Middle East, in the dynamic environment Chalhoub Gcc has struggled to respond to the nimble upstart competition. Chalhoub Gcc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Chalhoub Gcc is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Chalhoub Group: A Luxury Success Story in the Middle East 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 to strategic competitive environment developments
– As Chalhoub Group: A Luxury Success Story in the Middle East HBR case study mentions - Chalhoub Gcc 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.
Products dominated business model
– Even though Chalhoub Gcc 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 - Chalhoub Group: A Luxury Success Story in the Middle East should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Chalhoub Gcc 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.
Need for greater diversity
– Chalhoub Gcc 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 decision making process
– As mentioned earlier in the report, Chalhoub Gcc 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. Chalhoub Gcc 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung suggests that, Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc 's lucrative customers.
Opportunities Chalhoub Group: A Luxury Success Story in the Middle East | 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 Chalhoub Group: A Luxury Success Story in the Middle East are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Chalhoub Gcc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chalhoub Gcc 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. Chalhoub Gcc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Chalhoub Gcc 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Chalhoub Gcc in the consumer business. Now Chalhoub Gcc can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Chalhoub Gcc has opened avenues for new revenue streams for the organization in the industry. This can help Chalhoub Gcc to build a more holistic ecosystem as suggested in the Chalhoub Group: A Luxury Success Story in the Middle East case study. Chalhoub Gcc can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Chalhoub Gcc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Chalhoub Group: A Luxury Success Story in the Middle East suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Chalhoub Gcc can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chalhoub Gcc 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, Chalhoub Group: A Luxury Success Story in the Middle East, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Chalhoub Gcc 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. Chalhoub Gcc 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.
Better consumer reach
– The expansion of the 5G network will help Chalhoub Gcc to increase its market reach. Chalhoub Gcc 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Chalhoub Gcc 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 Chalhoub Gcc to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Chalhoub Gcc is facing challenges because of the dominance of functional experts in the organization. Chalhoub Group: A Luxury Success Story in the Middle East 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.
Threats Chalhoub Group: A Luxury Success Story in the Middle East External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East are -
Environmental challenges
– Chalhoub Gcc 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. Chalhoub Gcc can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Chalhoub Gcc needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Chalhoub Group: A Luxury Success Story in the Middle East, Chalhoub Gcc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chalhoub Gcc in the Leadership & Managing People industry. The Leadership & Managing People 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.
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. Chalhoub Gcc 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.
Regulatory challenges
– Chalhoub Gcc 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 Leadership & Managing People industry regulations.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chalhoub Gcc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Chalhoub Gcc in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing wage structure of Chalhoub Gcc
– 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 Chalhoub Gcc.
Technology acceleration in Forth Industrial Revolution
– Chalhoub Gcc has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Chalhoub Gcc needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Consumer confidence and its impact on Chalhoub Gcc 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.
Shortening product life cycle
– it is one of the major threat that Chalhoub Gcc is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc needs to make to build a sustainable competitive advantage.