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 - – wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing commodity prices,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , 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 -
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.
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.
Superior customer experience
– The customer experience strategy of Chalhoub Gcc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
High brand equity
– Chalhoub Gcc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chalhoub Gcc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Chalhoub Gcc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chalhoub Gcc 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.
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.
Effective Research and Development (R&D)
– Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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 -
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Frederic Godart, Andrew Shipilov, Brian Henry, Nancy Leung suggests that, Chalhoub Gcc 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.
Need for greater diversity
– Chalhoub Gcc 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.
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.
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.
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.
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.
No frontier risks strategy
– After analyzing the HBR case study Chalhoub Group: A Luxury Success Story in the Middle East, 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Chalhoub Group: A Luxury Success Story in the Middle East, in the dynamic environment Chalhoub Gcc has struggled to respond to the nimble upstart competition. Chalhoub Gcc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 -
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chalhoub Gcc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Chalhoub Gcc 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 Chalhoub Gcc to hire the very best people irrespective of their geographical location.
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.
Using analytics as competitive advantage
– Chalhoub Gcc 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 Chalhoub Group: A Luxury Success Story in the Middle East - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chalhoub Gcc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chalhoub Gcc 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chalhoub Gcc 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, Chalhoub Group: A Luxury Success Story in the Middle East, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Chalhoub Gcc 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.
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 -
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.
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. Chalhoub Gcc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Chalhoub Gcc 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
– 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.
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.
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.
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.
Consumer confidence and its impact on Chalhoub Gcc 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.
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 .
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.
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. Chalhoub Gcc 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.
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.
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.
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.