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 - – increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing transportation and logistics costs, increasing commodity prices,
there is backlash against globalization, there is increasing trade war between United States & China, 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 -
High switching costs
– The high switching costs that Macy's Lundgren 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
– 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.
Organizational Resilience of Macy's Lundgren
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Macy's Lundgren does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Macy's Lundgren 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 Macy's Lundgren is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Terry Lundgren at Macy's Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Terry Lundgren at Macy's 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.
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.
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.
Innovation driven organization
– Macy's Lundgren is one of the most innovative firm in sector. Manager in Terry Lundgren at Macy's Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
Analytics focus
– Macy's Lundgren 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 Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred 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.
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 -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Terry Lundgren at Macy's, in the dynamic environment Macy's Lundgren has struggled to respond to the nimble upstart competition. Macy's Lundgren has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Macy's Lundgren 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.
Low market penetration in new markets
– Outside its home market of Macy's Lundgren, firm in the HBR case study Terry Lundgren at Macy's needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Lack of clear differentiation of Macy's Lundgren products
– To increase the profitability and margins on the products, Macy's Lundgren needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Macy's Lundgren 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Terry Lundgren at Macy's, is just above the industry average. Macy's Lundgren 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Jose B. Alvarez, Robert Steven Kaplan, Natalie Kindred suggests that, Macy's Lundgren 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.
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.
Products dominated business model
– Even though Macy's Lundgren has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Terry Lundgren at Macy's should strive to include more intangible value offerings along with its core products and services.
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.
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 -
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. Macy's Lundgren 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. Macy's Lundgren 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.
Building a culture of innovation
– managers at Macy's Lundgren 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.
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.
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.
Using analytics as competitive advantage
– Macy's Lundgren 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 Terry Lundgren at Macy's - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Macy's Lundgren to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Macy's Lundgren 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 Macy's Lundgren to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Macy's Lundgren can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Macy's Lundgren 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, Terry Lundgren at Macy's, 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 Macy's Lundgren 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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
High dependence on third party suppliers
– Macy's Lundgren 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
– 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.
Environmental challenges
– Macy's Lundgren 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. Macy's Lundgren can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Terry Lundgren at Macy's, Macy's Lundgren 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 .
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.
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.
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.
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.
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.
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.