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 - – there is backlash against globalization, wage bills are increasing, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%,
challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, 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 -
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.
Ability to recruit top talent
– Macy's Lundgren is one of the leading recruiters in the industry. Managers in the Terry Lundgren at Macy's are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Ability to lead change in Leadership & Managing People field
– Macy's Lundgren 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 Macy's Lundgren in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
Aligning sales with marketing
– It come across in the case study Terry Lundgren at Macy's 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 Terry Lundgren at Macy's can leverage the sales team experience to cultivate customer relationships as Macy's Lundgren is planning to shift buying processes online.
Need for greater diversity
– Macy's Lundgren 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.
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.
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.
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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Macy's Lundgren is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Terry Lundgren at Macy's can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
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.
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.
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 -
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.
Loyalty marketing
– Macy's Lundgren has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Macy's Lundgren has opened avenues for new revenue streams for the organization in the industry. This can help Macy's Lundgren to build a more holistic ecosystem as suggested in the Terry Lundgren at Macy's case study. Macy's Lundgren can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 -
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.
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.
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 Macy's Lundgren business can come under increasing regulations regarding data privacy, data security, etc.
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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Macy's Lundgren can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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 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.
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.
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.
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.
