Case Study Description of Overstock.com and Worldstock
In mid-2006, Overstock.com faced a daunting set of business challenges. Founded in 1999 as an online "closeout" retailer, the $800 million company had more than 15 million unique visitors a month, 10 million life-to-date customers, and greater than 500,000 active SKUs in roughly 20 product categories. However, while it had come within one half of a percent, the firm had yet to realize an annual profit. Moreover, the tremendous growth that had enabled the company to become on online shopping giant appeared to be slowing at an alarming rate. At least partly as a result of the challenges facing the core business, Worldstocki??the company's socially responsible initiativei??was also in jeopardy. Started by CEO Patrick Byrne in 2001, the division leveraged the firm's infrastructure to market handicrafts produced by third world artisans to the mainstream U.S. retail market via a designated portal on the Overstock.com website. However, working with third world artisans turned out to be significantly more expensive than originally anticipated. By mid-2006, Worldstock's "self-sustaining" model for economic development was projected to contribute nearly $1 million to the company's losses that year. Although most managers were cautious about criticizing the CEO's "pet project," a few felt the company had to address (what they saw as) the negative the impact that Worldstock was having on Overstock's financial performance. As a result, all those committed to the Worldstock model, from CEO Byrne to Division Manager Angela Ramirez, faced the thorny questions about how to balance these new fiscal imperatives with the group's philanthropic and social objectives. While no one wanted to openly acknowledge it, some stakeholders wondered if Worldstock might eventually be shut down or spun off if the situation did not improve.
Swot Analysis of "Overstock.com and Worldstock" written by James A. Phills, Lyn Denend includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Worldstock Overstock.com facing as an external strategic factors. Some of the topics covered in Overstock.com and Worldstock case study are - Strategic Management Strategies, Innovation, Internet, Social enterprise, Strategic planning and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Overstock.com and Worldstock casestudy better are - – increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, there is backlash against globalization,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, etc
Introduction to SWOT Analysis of Overstock.com and Worldstock
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Overstock.com and Worldstock case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Worldstock Overstock.com, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Worldstock Overstock.com 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 Overstock.com and Worldstock can be done for the following purposes –
1. Strategic planning using facts provided in Overstock.com and Worldstock case study
2. Improving business portfolio management of Worldstock Overstock.com
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 Worldstock Overstock.com
Strengths Overstock.com and Worldstock | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Worldstock Overstock.com in Overstock.com and Worldstock Harvard Business Review case study are -
Training and development
– Worldstock Overstock.com has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Overstock.com and Worldstock 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.
Learning organization
- Worldstock Overstock.com 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 Worldstock Overstock.com is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Overstock.com and Worldstock Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Leadership & Managing People industry
– Overstock.com and Worldstock firm has clearly differentiated products in the market place. This has enabled Worldstock Overstock.com to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Worldstock Overstock.com to invest into research and development (R&D) and innovation.
Organizational Resilience of Worldstock Overstock.com
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Worldstock Overstock.com does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Worldstock Overstock.com 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 Overstock.com and Worldstock HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Worldstock Overstock.com in the sector have low bargaining power. Overstock.com and Worldstock has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Worldstock Overstock.com to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Leadership & Managing People field
– Worldstock Overstock.com 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 Worldstock Overstock.com in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Worldstock Overstock.com is one of the leading recruiters in the industry. Managers in the Overstock.com and Worldstock are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Worldstock Overstock.com 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 Overstock.com and Worldstock - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Worldstock Overstock.com digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Worldstock Overstock.com has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Worldstock Overstock.com is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Worldstock Overstock.com has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Worldstock Overstock.com 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 Overstock.com and Worldstock | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Overstock.com and Worldstock are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Worldstock Overstock.com supply chain. Even after few cautionary changes mentioned in the HBR case study - Overstock.com and Worldstock, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Worldstock Overstock.com vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Overstock.com and Worldstock, 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.
Interest costs
– Compare to the competition, Worldstock Overstock.com 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.
Slow decision making process
– As mentioned earlier in the report, Worldstock Overstock.com 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. Worldstock Overstock.com 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Overstock.com and Worldstock, is just above the industry average. Worldstock Overstock.com needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Worldstock Overstock.com 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.
Increasing silos among functional specialists
– The organizational structure of Worldstock Overstock.com is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Worldstock Overstock.com needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Worldstock Overstock.com to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Worldstock Overstock.com 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.
Skills based hiring
– The stress on hiring functional specialists at Worldstock Overstock.com 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Overstock.com and Worldstock, it seems that the employees of Worldstock Overstock.com don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Worldstock Overstock.com is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Overstock.com and Worldstock can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Overstock.com and Worldstock | 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 Overstock.com and Worldstock are -
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. Worldstock Overstock.com can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Worldstock Overstock.com is facing challenges because of the dominance of functional experts in the organization. Overstock.com and Worldstock 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.
Learning at scale
– Online learning technologies has now opened space for Worldstock Overstock.com 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 Worldstock Overstock.com can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Worldstock Overstock.com 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.
Buying journey improvements
– Worldstock Overstock.com can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Overstock.com and Worldstock 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.
Developing new processes and practices
– Worldstock Overstock.com 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Worldstock Overstock.com 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, Overstock.com and Worldstock, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Worldstock Overstock.com 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.
Creating value in data economy
– The success of analytics program of Worldstock Overstock.com has opened avenues for new revenue streams for the organization in the industry. This can help Worldstock Overstock.com to build a more holistic ecosystem as suggested in the Overstock.com and Worldstock case study. Worldstock Overstock.com can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Worldstock Overstock.com 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.
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. Worldstock Overstock.com 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
– Worldstock Overstock.com 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 Overstock.com and Worldstock - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Worldstock Overstock.com to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Overstock.com and Worldstock External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Overstock.com and Worldstock are -
Regulatory challenges
– Worldstock Overstock.com 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.
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 Worldstock Overstock.com business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Worldstock Overstock.com
– 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 Worldstock Overstock.com.
High dependence on third party suppliers
– Worldstock Overstock.com 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.
Stagnating economy with rate increase
– Worldstock Overstock.com 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.
Technology acceleration in Forth Industrial Revolution
– Worldstock Overstock.com has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Worldstock Overstock.com 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.
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. Worldstock Overstock.com can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Worldstock Overstock.com 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Worldstock Overstock.com 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.
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. Worldstock Overstock.com needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Worldstock Overstock.com 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 Overstock.com and Worldstock .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Overstock.com and Worldstock, Worldstock Overstock.com 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 .
Weighted SWOT Analysis of Overstock.com and Worldstock 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 Overstock.com and Worldstock 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 Overstock.com and Worldstock 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 Overstock.com and Worldstock 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 Overstock.com and Worldstock 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 Worldstock Overstock.com needs to make to build a sustainable competitive advantage.
