Chalhoub Group: A Luxury Success Story in the Middle East SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Chalhoub Group: A Luxury Success Story in the Middle East
This case illustrates the key role played by a local distributor in the luxury goods industry in the Middle East. By partnering with the Chalhoub Group, western firms have built a competitive advantage across the six countries of the Gulf Cooperation Council (GCC). While not typical of western luxury brands selling to global markets other than the Middle East, their alliances with the Chalhoub Group offer access to a vast network of 650 stores in prime locations in the GCC, many in new shopping malls. Chalhoub has retail outlets in 14 countries in the MENA region. Since its establishment in 1955, the Dubai-based Chalhoub has developed partnerships with Christian Dior, Sephora, Louis Vuitton, Fendi and many others. In so doing it has laid the foundations for the creation of own-concept stores, where it sells its own branded products.
Authors :: Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung
Swot Analysis of "Chalhoub Group: A Luxury Success Story in the Middle East" written by Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chalhoub Gcc facing as an external strategic factors. Some of the topics covered in Chalhoub Group: A Luxury Success Story in the Middle East case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Chalhoub Group: A Luxury Success Story in the Middle East casestudy better are - – talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, there is backlash against globalization, increasing household debt because of falling income levels, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%,
increasing transportation and logistics costs, increasing energy prices, etc
Introduction to SWOT Analysis of Chalhoub Group: A Luxury Success Story in the Middle East
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chalhoub Group: A Luxury Success Story in the Middle East case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chalhoub Gcc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East can be done for the following purposes –
1. Strategic planning using facts provided in Chalhoub Group: A Luxury Success Story in the Middle East case study
2. Improving business portfolio management of Chalhoub Gcc
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 Chalhoub Gcc
Strengths Chalhoub Group: A Luxury Success Story in the Middle East | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chalhoub Gcc in Chalhoub Group: A Luxury Success Story in the Middle East Harvard Business Review case study are -
Organizational Resilience of Chalhoub Gcc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Chalhoub Gcc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc 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.
Analytics focus
– Chalhoub Gcc 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 Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung 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.
Diverse revenue streams
– Chalhoub Gcc is present in almost all the verticals within the industry. This has provided firm in Chalhoub Group: A Luxury Success Story in the Middle East 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.
Ability to lead change in Leadership & Managing People field
– Chalhoub Gcc 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 Chalhoub Gcc in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Chalhoub Gcc 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 Chalhoub Gcc in the sector have low bargaining power. Chalhoub Group: A Luxury Success Story in the Middle East has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chalhoub Gcc to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Chalhoub Gcc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Chalhoub Group: A Luxury Success Story in the Middle East 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.
Highly skilled collaborators
– Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Chalhoub Gcc is one of the most innovative firm in sector. Manager in Chalhoub Group: A Luxury Success Story in the Middle East Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Chalhoub Gcc 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.
Weaknesses Chalhoub Group: A Luxury Success Story in the Middle East | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc supply chain. Even after few cautionary changes mentioned in the HBR case study - Chalhoub Group: A Luxury Success Story in the Middle East, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chalhoub Gcc vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Chalhoub Gcc 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Chalhoub Gcc, firm in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Chalhoub Group: A Luxury Success Story in the Middle East HBR case study mentions - Chalhoub Gcc 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East, it seems that the employees of Chalhoub Gcc 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.
Aligning sales with marketing
– It come across in the case study Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East can leverage the sales team experience to cultivate customer relationships as Chalhoub Gcc is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East, is just above the industry average. Chalhoub Gcc 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.
Lack of clear differentiation of Chalhoub Gcc products
– To increase the profitability and margins on the products, Chalhoub Gcc needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Chalhoub Gcc 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 - Chalhoub Group: A Luxury Success Story in the Middle East should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Chalhoub Gcc is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Chalhoub Gcc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chalhoub Gcc to focus more on services rather than just following the product oriented approach.
Opportunities Chalhoub Group: A Luxury Success Story in the Middle East | 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 Chalhoub Group: A Luxury Success Story in the Middle East are -
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. Chalhoub Gcc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Chalhoub Gcc 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.
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. Chalhoub Gcc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Chalhoub Gcc 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. Chalhoub Gcc 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Chalhoub Gcc is facing challenges because of the dominance of functional experts in the organization. Chalhoub Group: A Luxury Success Story in the Middle East 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.
Manufacturing automation
– Chalhoub Gcc 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.
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 Chalhoub Gcc in the consumer business. Now Chalhoub Gcc can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Chalhoub Gcc 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.
Developing new processes and practices
– Chalhoub Gcc 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, Chalhoub Gcc can use these opportunities to build new business models that can help the communities that Chalhoub Gcc operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Leveraging digital technologies
– Chalhoub Gcc 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 Chalhoub Gcc to increase its market reach. Chalhoub Gcc 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.
Buying journey improvements
– Chalhoub Gcc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Chalhoub Group: A Luxury Success Story in the Middle East 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.
Threats Chalhoub Group: A Luxury Success Story in the Middle East External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East are -
Regulatory challenges
– Chalhoub Gcc 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.
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
– Chalhoub Gcc 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.
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. Chalhoub Gcc needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chalhoub Gcc 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Chalhoub Group: A Luxury Success Story in the Middle East, Chalhoub Gcc 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 .
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 Chalhoub Gcc in the Leadership & Managing People sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chalhoub Gcc 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, Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East .
Environmental challenges
– Chalhoub Gcc 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. Chalhoub Gcc can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
Increasing wage structure of Chalhoub Gcc
– 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 Chalhoub Gcc.
Shortening product life cycle
– it is one of the major threat that Chalhoub Gcc is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Group: A Luxury Success Story in the Middle East 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 Chalhoub Gcc needs to make to build a sustainable competitive advantage.