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 - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, geopolitical disruptions, increasing household debt because of falling income levels, increasing energy prices, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy,
competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, 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 -
Cross disciplinary teams
– Horizontal connected teams at the Chalhoub Gcc 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.
Effective Research and Development (R&D)
– Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East - 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
– Chalhoub Gcc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Chalhoub Group: A Luxury Success Story in the Middle East 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.
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.
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.
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.
Analytics focus
– Chalhoub Gcc 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 Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung 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
– 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 brand equity
– Chalhoub Gcc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chalhoub Gcc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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 -
Low market penetration in new markets
– Outside its home market of Chalhoub Gcc, firm in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Aligning sales with marketing
– It come across in the case study Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East can leverage the sales team experience to cultivate customer relationships as Chalhoub Gcc is planning to shift buying processes online.
High cash cycle compare to competitors
Chalhoub Gcc 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.
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.
Interest costs
– Compare to the competition, Chalhoub Gcc has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring
– The stress on hiring functional specialists at 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.
Capital Spending Reduction
– Even during the low interest decade, Chalhoub Gcc has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Chalhoub Gcc 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Chalhoub Gcc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chalhoub Gcc 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.
Developing new processes and practices
– Chalhoub Gcc can develop new processes and procedures in Leadership & Managing People 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
– 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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chalhoub Gcc can use these opportunities to build new business models that can help the communities that Chalhoub Gcc operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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.
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.
Leveraging digital technologies
– Chalhoub Gcc 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.
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 -
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.
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.
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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Chalhoub Gcc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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 .
Stagnating economy with rate increase
– Chalhoub Gcc 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 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.
