Terry Lundgren at Macy's SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Terry Lundgren at Macy's
In 2008 and 2009, a period of severe economic turmoil, Macy's CEO Terry Lundgren led a large-scale transformation of the iconic department store. Having previously converted the many department stores owned by Macy's to the Macy's names (except Bloomingdale's), Lundgren and his team set out to create a more efficient, dynamic organization. Their "One Macy's" initiative consolidated and centralized all key functions, while their "My Macy's" initiative focused on customizing the offerings of individual stores to local markets. By 2011, Macy's had many advantages, including an energized, highly experienced executive team; a nationwide presence and strong brand in the U.S.; a competitive offering of private label and exclusive brands; and, following the execution of One Macy's and My Macy's, a fresh, unique foundation for future growth. However, the company still faces significant challenges, including low sales productivity (in part due to the large size of its stores), the decline of mall-based shopping, poor floor-level sales capabilities, lack of appeal to younger consumers, intensifying competition, and an overall dearth of future growth opportunities. This case allows students to assess Lundgren's leadership to date and options for the future, as well as the overall viability of the department store business model.
Authors :: Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred
Swot Analysis of "Terry Lundgren at Macy's" written by Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Macy's Lundgren facing as an external strategic factors. Some of the topics covered in Terry Lundgren at Macy's case study are - Strategic Management Strategies, Competition, Competitive strategy, Leadership, Marketing, Organizational culture and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Terry Lundgren at Macy's casestudy better are - – geopolitical disruptions, there is increasing trade war between United States & China, increasing commodity prices, cloud computing is disrupting traditional business models, technology disruption, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
increasing household debt because of falling income levels, wage bills are increasing, etc
Introduction to SWOT Analysis of Terry Lundgren at Macy's
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Terry Lundgren at Macy's case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Macy's Lundgren, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Macy's Lundgren 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 Terry Lundgren at Macy's can be done for the following purposes –
1. Strategic planning using facts provided in Terry Lundgren at Macy's case study
2. Improving business portfolio management of Macy's Lundgren
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 Macy's Lundgren
Strengths Terry Lundgren at Macy's | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Macy's Lundgren in Terry Lundgren at Macy's Harvard Business Review case study are -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Macy's Lundgren digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Macy's Lundgren has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Macy's Lundgren has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Macy's Lundgren to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Macy's Lundgren in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Macy's Lundgren 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.
Training and development
– Macy's Lundgren has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Terry Lundgren at Macy's 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Terry Lundgren at Macy's firm has clearly differentiated products in the market place. This has enabled Macy's Lundgren to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Macy's Lundgren to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Macy's Lundgren in the sector have low bargaining power. Terry Lundgren at Macy's has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Macy's Lundgren to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Macy's Lundgren has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Macy's Lundgren 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.
Strong track record of project management
– Macy's Lundgren is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Macy's Lundgren is present in almost all the verticals within the industry. This has provided firm in Terry Lundgren at Macy's 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.
Highly skilled collaborators
– Macy's Lundgren 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 Terry Lundgren at Macy's HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Macy's Lundgren 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 Terry Lundgren at Macy's - 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 Terry Lundgren at Macy's | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Terry Lundgren at Macy's are -
High operating costs
– Compare to the competitors, firm in the HBR case study Terry Lundgren at Macy's 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 Macy's Lundgren 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Terry Lundgren at Macy's 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 Macy's Lundgren has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Terry Lundgren at Macy's HBR case study mentions - Macy's Lundgren 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.
Slow decision making process
– As mentioned earlier in the report, Macy's Lundgren 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. Macy's Lundgren 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.
Increasing silos among functional specialists
– The organizational structure of Macy's Lundgren is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Macy's Lundgren needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Macy's Lundgren to focus more on services rather than just following the product oriented approach.
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 Macy's Lundgren supply chain. Even after few cautionary changes mentioned in the HBR case study - Terry Lundgren at Macy's, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Macy's Lundgren vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Macy's Lundgren 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 Terry Lundgren at Macy's, it seems that the employees of Macy's Lundgren 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, Macy's Lundgren 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.
Capital Spending Reduction
– Even during the low interest decade, Macy's Lundgren 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.
No frontier risks strategy
– After analyzing the HBR case study Terry Lundgren at Macy's, 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.
Opportunities Terry Lundgren at Macy's | 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 Terry Lundgren at Macy's are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Macy's Lundgren 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.
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 Macy's Lundgren in the consumer business. Now Macy's Lundgren can target international markets with far fewer capital restrictions requirements than the existing system.
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. Macy's Lundgren can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Macy's Lundgren 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Macy's Lundgren can use these opportunities to build new business models that can help the communities that Macy's Lundgren 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. Macy's Lundgren can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Macy's Lundgren 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.
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 Macy's Lundgren 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.
Learning at scale
– Online learning technologies has now opened space for Macy's Lundgren 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.
Buying journey improvements
– Macy's Lundgren can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Terry Lundgren at Macy's 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.
Leveraging digital technologies
– Macy's Lundgren 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.
Better consumer reach
– The expansion of the 5G network will help Macy's Lundgren to increase its market reach. Macy's Lundgren 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Macy's Lundgren is facing challenges because of the dominance of functional experts in the organization. Terry Lundgren at Macy's case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Terry Lundgren at Macy's External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Terry Lundgren at Macy's are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Macy's Lundgren 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.
Increasing wage structure of Macy's Lundgren
– 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 Macy's Lundgren.
Shortening product life cycle
– it is one of the major threat that Macy's Lundgren is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Macy's Lundgren with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Macy's Lundgren 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 Terry Lundgren at Macy's .
Regulatory challenges
– Macy's Lundgren 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.
Stagnating economy with rate increase
– Macy's Lundgren 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
– Macy's Lundgren has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Macy's Lundgren 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.
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.
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. Macy's Lundgren 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.
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 Macy's Lundgren in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Macy's Lundgren needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Consumer confidence and its impact on Macy's Lundgren 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.
Weighted SWOT Analysis of Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Terry Lundgren at Macy's 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 Macy's Lundgren needs to make to build a sustainable competitive advantage.