Competing in the Age of Omnichannel Retailing SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Competing in the Age of Omnichannel Retailing
Erik Brynjolfsson (MIT Sloan School of Management), Yu Hu (Georgia Institute of Technology), and Mohammad S. Rahman (University of Calgary)This is an MIT Sloan Management Review article. Recent technology advances in mobile computing and augmented reality are blurring the boundaries between traditional and Internet retailing, enabling retailers to interact with consumers through multiple touch points and expose them to a rich blend of offline sensory information and online content. In the past, brick-and-mortar retail stores were unique in allowing consumers to touch and feel merchandise and provide instant gratification; Internet retailers, meantime, tried to woo shoppers with wide product selection, low prices and content such as product reviews and ratings. But as the retailing industry evolves toward a seamless "omnichannel retailing"experience, the distinctions between physical and online will vanish, the authors suggest, turning the world into a showroom without walls. This will push retailers and their supply-chain partners in other industries to rethink their competitive strategies The growing prevalence of location-based applications on mobile devices is a critical enabler. Mobile technology is well on its way to changing consumer behavior and expectations, the authors argue. By giving consumers more accurate information about product availability in local stores, retailers can draw people into stores who might otherwise have only looked for products online. The enhanced search capability is especially helpful with niche products, which are not always available in local stores. The availability of product price and availability information, the ability of consumers to shop online and pick up products in local stores, and the aggregation of offline information and online content have combined to make the retailing landscape increasingly competitive. Retailers used to rely on barriers such as geography and customer ignorance to advance their positions in traditional markets. However, technology is removing these barriers. The authors point to several possible success strategies for companies operating in the new competitive environment, including providing attractive pricing and curated product-related content; harnessing the power of data and analytics; avoiding direct price comparisons; learning to sell niche products; establishing switching costs; and embracing competition. In an omnichannel world, the authors say, there is a premium on learning rapidly from consumers and catering to their needs.
Authors :: Erik Brynjolfsson, Yu Jeffrey Hu, Mohammad S. Rahman
Swot Analysis of "Competing in the Age of Omnichannel Retailing" written by Erik Brynjolfsson, Yu Jeffrey Hu, Mohammad S. Rahman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Retailing Omnichannel facing as an external strategic factors. Some of the topics covered in Competing in the Age of Omnichannel Retailing case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Competing in the Age of Omnichannel Retailing casestudy better are - – geopolitical disruptions, increasing transportation and logistics costs, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, there is backlash against globalization, challanges to central banks by blockchain based private currencies,
increasing household debt because of falling income levels, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Competing in the Age of Omnichannel Retailing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Competing in the Age of Omnichannel Retailing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Retailing Omnichannel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Retailing Omnichannel 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 Competing in the Age of Omnichannel Retailing can be done for the following purposes –
1. Strategic planning using facts provided in Competing in the Age of Omnichannel Retailing case study
2. Improving business portfolio management of Retailing Omnichannel
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 Retailing Omnichannel
Strengths Competing in the Age of Omnichannel Retailing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Retailing Omnichannel in Competing in the Age of Omnichannel Retailing Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Competing in the Age of Omnichannel Retailing 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.
Ability to recruit top talent
– Retailing Omnichannel is one of the leading recruiters in the industry. Managers in the Competing in the Age of Omnichannel Retailing are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Retailing Omnichannel in the sector have low bargaining power. Competing in the Age of Omnichannel Retailing has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Retailing Omnichannel to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Retailing Omnichannel is present in almost all the verticals within the industry. This has provided firm in Competing in the Age of Omnichannel Retailing 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.
Organizational Resilience of Retailing Omnichannel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Retailing Omnichannel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Retailing Omnichannel 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 Erik Brynjolfsson, Yu Jeffrey Hu, Mohammad S. Rahman 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.
High switching costs
– The high switching costs that Retailing Omnichannel 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.
Highly skilled collaborators
– Retailing Omnichannel 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 Competing in the Age of Omnichannel Retailing HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Retailing Omnichannel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Retailing Omnichannel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Competing in the Age of Omnichannel Retailing 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 Retailing Omnichannel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Retailing Omnichannel 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.
Effective Research and Development (R&D)
– Retailing Omnichannel 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 Competing in the Age of Omnichannel Retailing - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Competing in the Age of Omnichannel Retailing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Competing in the Age of Omnichannel Retailing are -
High bargaining power of channel partners
– Because of the regulatory requirements, Erik Brynjolfsson, Yu Jeffrey Hu, Mohammad S. Rahman suggests that, Retailing Omnichannel 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Competing in the Age of Omnichannel Retailing, is just above the industry average. Retailing Omnichannel 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Competing in the Age of Omnichannel Retailing, it seems that the employees of Retailing Omnichannel 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.
Interest costs
– Compare to the competition, Retailing Omnichannel 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.
Low market penetration in new markets
– Outside its home market of Retailing Omnichannel, firm in the HBR case study Competing in the Age of Omnichannel Retailing needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Retailing Omnichannel is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Retailing Omnichannel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Retailing Omnichannel to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Competing in the Age of Omnichannel Retailing HBR case study mentions - Retailing Omnichannel 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Competing in the Age of Omnichannel Retailing 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 Retailing Omnichannel 's lucrative customers.
Need for greater diversity
– Retailing Omnichannel 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Retailing Omnichannel 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 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 Retailing Omnichannel supply chain. Even after few cautionary changes mentioned in the HBR case study - Competing in the Age of Omnichannel Retailing, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Retailing Omnichannel vulnerable to further global disruptions in South East Asia.
Opportunities Competing in the Age of Omnichannel Retailing | 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 Competing in the Age of Omnichannel Retailing are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Retailing Omnichannel in the consumer business. Now Retailing Omnichannel can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Retailing Omnichannel 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 Retailing Omnichannel to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Retailing Omnichannel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Competing in the Age of Omnichannel Retailing 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Retailing Omnichannel 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, Competing in the Age of Omnichannel Retailing, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Retailing Omnichannel 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.
Better consumer reach
– The expansion of the 5G network will help Retailing Omnichannel to increase its market reach. Retailing Omnichannel 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Retailing Omnichannel can use these opportunities to build new business models that can help the communities that Retailing Omnichannel operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Manufacturing automation
– Retailing Omnichannel 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Retailing Omnichannel 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.
Building a culture of innovation
– managers at Retailing Omnichannel 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.
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. Retailing Omnichannel 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. Retailing Omnichannel 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.
Using analytics as competitive advantage
– Retailing Omnichannel 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 Competing in the Age of Omnichannel Retailing - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Retailing Omnichannel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Retailing Omnichannel 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.
Threats Competing in the Age of Omnichannel Retailing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Competing in the Age of Omnichannel Retailing are -
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 Retailing Omnichannel business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Competing in the Age of Omnichannel Retailing, Retailing Omnichannel 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Retailing Omnichannel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Retailing Omnichannel in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing wage structure of Retailing Omnichannel
– 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 Retailing Omnichannel.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Retailing Omnichannel 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.
Consumer confidence and its impact on Retailing Omnichannel demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology 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.
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 Retailing Omnichannel.
Stagnating economy with rate increase
– Retailing Omnichannel 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.
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. Retailing Omnichannel needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Environmental challenges
– Retailing Omnichannel 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. Retailing Omnichannel can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Retailing Omnichannel 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.
Weighted SWOT Analysis of Competing in the Age of Omnichannel Retailing 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 Competing in the Age of Omnichannel Retailing 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 Competing in the Age of Omnichannel Retailing 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 Competing in the Age of Omnichannel Retailing 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 Competing in the Age of Omnichannel Retailing 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 Retailing Omnichannel needs to make to build a sustainable competitive advantage.
