BuildDirect: Constructing a Culture That Can Weather the Storms SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of BuildDirect: Constructing a Culture That Can Weather the Storms
After a delayed shipment of flooring materials impeded Jeff Booth's ability to complete a construction project on schedule, he, along with cofounder Robert Banks, was determined to solve the inefficiency of the heavyweight building supply industry. They founded BuildDirect, an e-commerce company based on a sophisticated technology platform that optimized the shipment of home improvement products. Since its founding in 1999, BuildDirect faced several near-death strategic and economic challenges, including the fallout of 9/11 and the 2008 housing crisis. In spite of these challenges, Booth and Banks never wavered in prioritizing corporate culture over bottom line results. To guide effective employee actions and behaviors, three core values of honesty, integrity, and respect for others had been engrained into the company's DNA. Rituals such as daily "huddles" strengthened employee morale, increased emotional intelligence, and enhanced customer service. Company culture was a major competitive advantage; employees felt empowered to view the home improvement purchase process as an enriching experience, rather than as a mere transaction. In 2014, prospects looked promising. BuildDirect had raised CAD $30 million in Series B funding in a round led by Mohr Davidow Ventures. Headcount doubled in 2013, and was projected to double again in 2014. Customers enjoyed savings of up to 80% of retail prices. Booth and Banks were concerned, however, that continued rapid growth would threaten the culture that was so critical to their success. The cofounders needed to determine how to maintain this winning culture. What aspects of the company's daily operations needed to be changed, and which ones safeguarded at all costs?
Authors :: Robert I. Sutton, Hayagreeva Rao, Rebecca Hinds
Swot Analysis of "BuildDirect: Constructing a Culture That Can Weather the Storms" written by Robert I. Sutton, Hayagreeva Rao, Rebecca Hinds includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Builddirect Booth facing as an external strategic factors. Some of the topics covered in BuildDirect: Constructing a Culture That Can Weather the Storms case study are - Strategic Management Strategies, Growth strategy, Innovation, Leadership, Motivating people, Organizational culture, Organizational structure, Psychology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the BuildDirect: Constructing a Culture That Can Weather the Storms casestudy better are - – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing energy prices,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of BuildDirect: Constructing a Culture That Can Weather the Storms
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in BuildDirect: Constructing a Culture That Can Weather the Storms case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Builddirect Booth, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Builddirect Booth 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 BuildDirect: Constructing a Culture That Can Weather the Storms can be done for the following purposes –
1. Strategic planning using facts provided in BuildDirect: Constructing a Culture That Can Weather the Storms case study
2. Improving business portfolio management of Builddirect Booth
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 Builddirect Booth
Strengths BuildDirect: Constructing a Culture That Can Weather the Storms | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Builddirect Booth in BuildDirect: Constructing a Culture That Can Weather the Storms Harvard Business Review case study are -
Strong track record of project management
– Builddirect Booth is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Builddirect Booth in the sector have low bargaining power. BuildDirect: Constructing a Culture That Can Weather the Storms has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Builddirect Booth to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the BuildDirect: Constructing a Culture That Can Weather the Storms 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.
Cross disciplinary teams
– Horizontal connected teams at the Builddirect Booth 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– BuildDirect: Constructing a Culture That Can Weather the Storms firm has clearly differentiated products in the market place. This has enabled Builddirect Booth to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Builddirect Booth to invest into research and development (R&D) and innovation.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Builddirect Booth digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Builddirect Booth 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.
Ability to lead change in Leadership & Managing People field
– Builddirect Booth 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 Builddirect Booth 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
– Builddirect Booth is one of the leading recruiters in the industry. Managers in the BuildDirect: Constructing a Culture That Can Weather the Storms 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)
– Builddirect Booth 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 BuildDirect: Constructing a Culture That Can Weather the Storms - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Builddirect Booth is present in almost all the verticals within the industry. This has provided firm in BuildDirect: Constructing a Culture That Can Weather the Storms 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.
Learning organization
- Builddirect Booth 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 Builddirect Booth is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in BuildDirect: Constructing a Culture That Can Weather the Storms Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Builddirect Booth has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Builddirect Booth to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses BuildDirect: Constructing a Culture That Can Weather the Storms | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BuildDirect: Constructing a Culture That Can Weather the Storms 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 Builddirect Booth supply chain. Even after few cautionary changes mentioned in the HBR case study - BuildDirect: Constructing a Culture That Can Weather the Storms, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Builddirect Booth vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Builddirect Booth 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. Builddirect Booth 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, Robert I. Sutton, Hayagreeva Rao, Rebecca Hinds suggests that, Builddirect Booth 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study BuildDirect: Constructing a Culture That Can Weather the Storms, in the dynamic environment Builddirect Booth has struggled to respond to the nimble upstart competition. Builddirect Booth 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 BuildDirect: Constructing a Culture That Can Weather the Storms 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 Builddirect Booth has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study BuildDirect: Constructing a Culture That Can Weather the Storms 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 BuildDirect: Constructing a Culture That Can Weather the Storms can leverage the sales team experience to cultivate customer relationships as Builddirect Booth is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study BuildDirect: Constructing a Culture That Can Weather the Storms, 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.
Increasing silos among functional specialists
– The organizational structure of Builddirect Booth is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Builddirect Booth needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Builddirect Booth to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Builddirect Booth 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.
Lack of clear differentiation of Builddirect Booth products
– To increase the profitability and margins on the products, Builddirect Booth needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study BuildDirect: Constructing a Culture That Can Weather the Storms, is just above the industry average. Builddirect Booth 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.
Opportunities BuildDirect: Constructing a Culture That Can Weather the Storms | 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 BuildDirect: Constructing a Culture That Can Weather the Storms are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Builddirect Booth 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, BuildDirect: Constructing a Culture That Can Weather the Storms, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Builddirect Booth 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.
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. Builddirect Booth can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Builddirect Booth can use these opportunities to build new business models that can help the communities that Builddirect Booth operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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. Builddirect Booth can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Builddirect Booth 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 Builddirect Booth to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Builddirect Booth can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. BuildDirect: Constructing a Culture That Can Weather the Storms 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.
Building a culture of innovation
– managers at Builddirect Booth 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Builddirect Booth can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Builddirect Booth to increase its market reach. Builddirect Booth 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.
Using analytics as competitive advantage
– Builddirect Booth 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 BuildDirect: Constructing a Culture That Can Weather the Storms - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Builddirect Booth 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, Builddirect Booth 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.
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 Builddirect Booth 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.
Threats BuildDirect: Constructing a Culture That Can Weather the Storms External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study BuildDirect: Constructing a Culture That Can Weather the Storms are -
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. Builddirect Booth needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Builddirect Booth with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study BuildDirect: Constructing a Culture That Can Weather the Storms, Builddirect Booth 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 .
High dependence on third party suppliers
– Builddirect Booth 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.
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 Builddirect Booth in the Leadership & Managing People sector and impact the bottomline of the organization.
Environmental challenges
– Builddirect Booth 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. Builddirect Booth can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Stagnating economy with rate increase
– Builddirect Booth 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, Builddirect Booth 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 BuildDirect: Constructing a Culture That Can Weather the Storms .
Technology acceleration in Forth Industrial Revolution
– Builddirect Booth has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Builddirect Booth 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.
Consumer confidence and its impact on Builddirect Booth 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.
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. Builddirect Booth 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.
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 Builddirect Booth.
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.
Weighted SWOT Analysis of BuildDirect: Constructing a Culture That Can Weather the Storms 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 BuildDirect: Constructing a Culture That Can Weather the Storms 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 BuildDirect: Constructing a Culture That Can Weather the Storms 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 BuildDirect: Constructing a Culture That Can Weather the Storms 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 BuildDirect: Constructing a Culture That Can Weather the Storms 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 Builddirect Booth needs to make to build a sustainable competitive advantage.
