LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET
LeShop, the first online supermarket in Switzerland, was launched in 1998 at the heart of the internet boom. While many other start-up online grocery businesses did not succeed, LeShop seemed to find a sustainable business model and achieved breakeven in the first quarter of 2006. By 2010, LeShop was established as the biggest online supermarket in Switzerland and one of Europe's largest pure-play online grocers. Its CEO, Christian Wanner, believed that the potential of the online grocery market was huge and expected his company to continue showing double-digit growth rates for years. In order to capitalize on this potential, LeShop faced a number of challenges. How could it attract more customers and increase the order frequency of existing users? How could it further optimize its operations to better meet consumers' needs while keeping fulfillment costs to a minimum? Finally, what strategic options did it have for expansion and diversification? Learning objectives: Challenges faced by online grocery retailers, in particular strategies used for driving growth and improving profitability. Marketing strategies to drive trial and loyalty. Comparison of various online business models, with specific focus on order fulfillment and delivery. Diversification and expansion strategies.
Swot Analysis of "LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET" written by Nikos Tsikriktsis, Valerie Keller-Birrer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Leshop Online facing as an external strategic factors. Some of the topics covered in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET case study are - Strategic Management Strategies, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic ,
increasing energy prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Leshop Online, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Leshop Online 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET can be done for the following purposes –
1. Strategic planning using facts provided in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET case study
2. Improving business portfolio management of Leshop Online
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 Leshop Online
Strengths LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Leshop Online in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Leshop Online in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Leshop Online 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 Nikos Tsikriktsis, Valerie Keller-Birrer 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.
Cross disciplinary teams
– Horizontal connected teams at the Leshop Online 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.
Low bargaining power of suppliers
– Suppliers of Leshop Online in the sector have low bargaining power. LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Leshop Online to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Leshop Online has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Leshop Online 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Leshop Online digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Leshop Online has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High switching costs
– The high switching costs that Leshop Online 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.
Effective Research and Development (R&D)
– Leshop Online 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Leshop Online 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Leshop Online 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 Leshop Online is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Leshop Online is one of the leading recruiters in the industry. Managers in the LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Leshop Online has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Leshop Online to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET are -
No frontier risks strategy
– After analyzing the HBR case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET, 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Leshop Online 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.
Slow decision making process
– As mentioned earlier in the report, Leshop Online 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. Leshop Online 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, Nikos Tsikriktsis, Valerie Keller-Birrer suggests that, Leshop Online 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 to strategic competitive environment developments
– As LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET HBR case study mentions - Leshop Online 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.
Need for greater diversity
– Leshop Online 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.
Low market penetration in new markets
– Outside its home market of Leshop Online, firm in the HBR case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 Leshop Online 's lucrative customers.
Aligning sales with marketing
– It come across in the case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET can leverage the sales team experience to cultivate customer relationships as Leshop Online is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET, in the dynamic environment Leshop Online has struggled to respond to the nimble upstart competition. Leshop Online has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 Leshop Online has relatively successful track record of launching new products.
Opportunities LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET | 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET are -
Creating value in data economy
– The success of analytics program of Leshop Online has opened avenues for new revenue streams for the organization in the industry. This can help Leshop Online to build a more holistic ecosystem as suggested in the LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET case study. Leshop Online can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Leshop Online 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 Leshop Online to hire the very best people irrespective of their geographical location.
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. Leshop Online can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Leshop Online can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Leshop Online 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.
Using analytics as competitive advantage
– Leshop Online 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Leshop Online to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Leshop Online 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Leshop Online can use these opportunities to build new business models that can help the communities that Leshop Online operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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 Leshop Online 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.
Loyalty marketing
– Leshop Online 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 Leshop Online to increase its market reach. Leshop Online 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.
Leveraging digital technologies
– Leshop Online 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Leshop Online is facing challenges because of the dominance of functional experts in the organization. LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET are -
Increasing wage structure of Leshop Online
– 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 Leshop Online.
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. Leshop Online 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.
Shortening product life cycle
– it is one of the major threat that Leshop Online is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Leshop Online can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET, Leshop Online 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 .
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 Leshop Online.
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.
Consumer confidence and its impact on Leshop Online 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Leshop Online can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Leshop Online 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.
Technology acceleration in Forth Industrial Revolution
– Leshop Online has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Leshop Online 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.
Environmental challenges
– Leshop Online 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. Leshop Online 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. Leshop Online needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Weighted SWOT Analysis of LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 Leshop Online needs to make to build a sustainable competitive advantage.