Terry Lundgren at Macy's SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Terry Lundgren at Macy's
In 2008 and 2009, a period of severe economic turmoil, Macy's CEO Terry Lundgren led a large-scale transformation of the iconic department store. Having previously converted the many department stores owned by Macy's to the Macy's names (except Bloomingdale's), Lundgren and his team set out to create a more efficient, dynamic organization. Their "One Macy's" initiative consolidated and centralized all key functions, while their "My Macy's" initiative focused on customizing the offerings of individual stores to local markets. By 2011, Macy's had many advantages, including an energized, highly experienced executive team; a nationwide presence and strong brand in the U.S.; a competitive offering of private label and exclusive brands; and, following the execution of One Macy's and My Macy's, a fresh, unique foundation for future growth. However, the company still faces significant challenges, including low sales productivity (in part due to the large size of its stores), the decline of mall-based shopping, poor floor-level sales capabilities, lack of appeal to younger consumers, intensifying competition, and an overall dearth of future growth opportunities. This case allows students to assess Lundgren's leadership to date and options for the future, as well as the overall viability of the department store business model.
Authors :: Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred
Swot Analysis of "Terry Lundgren at Macy's" written by Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Macy's Lundgren facing as an external strategic factors. Some of the topics covered in Terry Lundgren at Macy's case study are - Strategic Management Strategies, Competition, Competitive strategy, Leadership, Marketing, Organizational culture and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Terry Lundgren at Macy's casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing transportation and logistics costs,
increasing energy prices, increasing commodity prices, etc
Introduction to SWOT Analysis of Terry Lundgren at Macy's
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Terry Lundgren at Macy's case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Macy's Lundgren, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Macy's Lundgren 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 Terry Lundgren at Macy's can be done for the following purposes –
1. Strategic planning using facts provided in Terry Lundgren at Macy's case study
2. Improving business portfolio management of Macy's Lundgren
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 Macy's Lundgren
Strengths Terry Lundgren at Macy's | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Macy's Lundgren in Terry Lundgren at Macy's Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Macy's Lundgren in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Macy's Lundgren 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 Terry Lundgren at Macy's HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Macy's Lundgren is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Macy's Lundgren has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Macy's Lundgren to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Macy's Lundgren is one of the most innovative firm in sector. Manager in Terry Lundgren at Macy's Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Macy's Lundgren
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Macy's Lundgren does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Macy's Lundgren digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Macy's Lundgren 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.
Low bargaining power of suppliers
– Suppliers of Macy's Lundgren in the sector have low bargaining power. Terry Lundgren at Macy's has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Macy's Lundgren to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Macy's Lundgren 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.
Ability to recruit top talent
– Macy's Lundgren is one of the leading recruiters in the industry. Managers in the Terry Lundgren at Macy's are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Macy's Lundgren has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Terry Lundgren at Macy's 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.
High switching costs
– The high switching costs that Macy's Lundgren 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.
Weaknesses Terry Lundgren at Macy's | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Terry Lundgren at Macy's are -
High bargaining power of channel partners
– Because of the regulatory requirements, Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred suggests that, Macy's Lundgren 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.
Slow decision making process
– As mentioned earlier in the report, Macy's Lundgren 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. Macy's Lundgren 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 cash cycle compare to competitors
Macy's Lundgren 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.
Products dominated business model
– Even though Macy's Lundgren 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 - Terry Lundgren at Macy's 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 Macy's Lundgren 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Terry Lundgren at Macy's 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 Macy's Lundgren 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Macy's Lundgren is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Terry Lundgren at Macy's can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Macy's Lundgren is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Macy's Lundgren needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Macy's Lundgren to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Terry Lundgren at Macy's HBR case study mentions - Macy's Lundgren 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Macy's Lundgren 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Terry Lundgren at Macy's 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 Macy's Lundgren has relatively successful track record of launching new products.
Opportunities Terry Lundgren at Macy's | 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 Terry Lundgren at Macy's 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, Macy's Lundgren can use these opportunities to build new business models that can help the communities that Macy's Lundgren 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, Macy's Lundgren is facing challenges because of the dominance of functional experts in the organization. Terry Lundgren at Macy's 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.
Better consumer reach
– The expansion of the 5G network will help Macy's Lundgren to increase its market reach. Macy's Lundgren 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.
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. Macy's Lundgren 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. Macy's Lundgren 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.
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. Macy's Lundgren 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
– Macy's Lundgren 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 Terry Lundgren at Macy's - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Macy's Lundgren to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Macy's Lundgren 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.
Developing new processes and practices
– Macy's Lundgren 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.
Manufacturing automation
– Macy's Lundgren 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Macy's Lundgren 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 Macy's Lundgren to hire the very best people irrespective of their geographical location.
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. Macy's Lundgren can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Macy's Lundgren can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Terry Lundgren at Macy's 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.
Learning at scale
– Online learning technologies has now opened space for Macy's Lundgren 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.
Threats Terry Lundgren at Macy's External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Terry Lundgren at Macy's are -
Increasing wage structure of Macy's Lundgren
– 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 Macy's Lundgren.
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.
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 Macy's Lundgren business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Macy's Lundgren 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.
Regulatory challenges
– Macy's Lundgren 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.
Shortening product life cycle
– it is one of the major threat that Macy's Lundgren is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Macy's Lundgren can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Macy's Lundgren has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Macy's Lundgren 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.
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 Macy's Lundgren.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Terry Lundgren at Macy's, Macy's Lundgren 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 .
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. Macy's Lundgren 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.
Environmental challenges
– Macy's Lundgren 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. Macy's Lundgren can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Weighted SWOT Analysis of Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Macy's Lundgren needs to make to build a sustainable competitive advantage.
