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 - – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , technology disruption, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies,
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 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 -
Operational resilience
– The operational resilience strategy in the LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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.
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.
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.
Sustainable margins compare to other players in Leadership & Managing People industry
– LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET firm has clearly differentiated products in the market place. This has enabled Leshop Online to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Leshop Online to invest into research and development (R&D) and innovation.
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.
Training and development
– Leshop Online has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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.
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.
Organizational Resilience of Leshop Online
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Leshop Online does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Diverse revenue streams
– Leshop Online is present in almost all the verticals within the industry. This has provided firm in LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET 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 lead change in Leadership & Managing People field
– Leshop Online is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Leshop Online in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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 -
Increasing silos among functional specialists
– The organizational structure of Leshop Online is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Leshop Online needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Leshop Online to focus more on services rather than just following the product oriented approach.
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.
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.
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.
Lack of clear differentiation of Leshop Online products
– To increase the profitability and margins on the products, Leshop Online needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Capital Spending Reduction
– Even during the low interest decade, Leshop Online 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.
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.
Skills based hiring
– The stress on hiring functional specialists at Leshop Online 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.
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.
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 -
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.
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. Leshop Online can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Leshop Online 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, LESHOP: A SUCCESS STORY IN THE ONLINE GROCERY MARKET, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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. Leshop Online 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. Leshop Online 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.
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.
Learning at scale
– Online learning technologies has now opened space for Leshop Online 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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Leshop Online 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.
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.
Building a culture of innovation
– managers at Leshop Online can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
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 -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Leshop Online with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Leshop Online business can come under increasing regulations regarding data privacy, data security, etc.
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.
Stagnating economy with rate increase
– Leshop Online 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.
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 .
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.
Regulatory challenges
– Leshop Online 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.
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.
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 Leshop Online in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Leshop Online high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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 .
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.
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.