Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods
Retail grocery sales represent a significant portion of the U.S. economy. The industry was highly competitive, with companies operating on low gross and net margins. As a result, grocery stores were generally under significant pressure to reduce their operating costs in order to maintain profitability. For the last several decades, the grocery industry grew roughly in line with gross domestic product and was considered a mature industry. In order for companies to succeed, they needed to find effective strategies to steal customers from competitors. Many sought to differentiate themselves through store format, store location, product mix, ancillary services, or quality of customer service. Strategies, however, could easily be imitated by competitors, putting grocery store chains under constant pressure to innovate and remain efficient. In general, growth also required the expansion into new store locations. Companies that failed to grow often went bankrupt or were acquired. This case explores executive compensation at four retail grocery stores: Safeway, Kroger, Costco, and Whole Foods. Consideration is given to each company's strategy and market position and corporate governance structure. Readers of the case are asked to evaluate in a critical manner the appropriateness of each company's compensation strategy and compensation levels, given company performance.
Swot Analysis of "Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods" written by David F. Larcker, Brian Tayan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Grocery Kroger facing as an external strategic factors. Some of the topics covered in Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods case study are - Strategic Management Strategies, Executive compensation and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods casestudy better are - – increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, cloud computing is disrupting traditional business models, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies,
digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Grocery Kroger, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Grocery Kroger 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods can be done for the following purposes –
1. Strategic planning using facts provided in Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods case study
2. Improving business portfolio management of Grocery Kroger
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 Grocery Kroger
Strengths Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Grocery Kroger in Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods Harvard Business Review case study are -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Grocery Kroger digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Grocery Kroger 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.
Strong track record of project management
– Grocery Kroger 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
– Grocery Kroger is one of the leading recruiters in the industry. Managers in the Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Grocery Kroger in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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.
Diverse revenue streams
– Grocery Kroger is present in almost all the verticals within the industry. This has provided firm in Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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.
Analytics focus
– Grocery Kroger 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 David F. Larcker, Brian Tayan 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.
Low bargaining power of suppliers
– Suppliers of Grocery Kroger in the sector have low bargaining power. Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Grocery Kroger to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Grocery Kroger 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 Grocery Kroger is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Grocery Kroger 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.
High brand equity
– Grocery Kroger has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Grocery Kroger to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Grocery Kroger 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods are -
Workers concerns about automation
– As automation is fast increasing in the segment, Grocery Kroger 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.
Products dominated business model
– Even though Grocery Kroger 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 - Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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 Grocery Kroger 's lucrative customers.
Need for greater diversity
– Grocery Kroger 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.
High cash cycle compare to competitors
Grocery Kroger 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Grocery Kroger has relatively successful track record of launching new products.
Lack of clear differentiation of Grocery Kroger products
– To increase the profitability and margins on the products, Grocery Kroger needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods, in the dynamic environment Grocery Kroger has struggled to respond to the nimble upstart competition. Grocery Kroger 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 Grocery Kroger is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Grocery Kroger needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Grocery Kroger to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods HBR case study mentions - Grocery Kroger 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.
No frontier risks strategy
– After analyzing the HBR case study Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods | 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Grocery Kroger to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Grocery Kroger 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.
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. Grocery Kroger 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. Grocery Kroger 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Grocery Kroger 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 Grocery Kroger 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 Grocery Kroger can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Grocery Kroger 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.
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 Grocery Kroger in the consumer business. Now Grocery Kroger can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Grocery Kroger can use these opportunities to build new business models that can help the communities that Grocery Kroger operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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. Grocery Kroger can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Grocery Kroger 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.
Buying journey improvements
– Grocery Kroger can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Grocery Kroger 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.
Creating value in data economy
– The success of analytics program of Grocery Kroger has opened avenues for new revenue streams for the organization in the industry. This can help Grocery Kroger to build a more holistic ecosystem as suggested in the Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods case study. Grocery Kroger can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods are -
High dependence on third party suppliers
– Grocery Kroger 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. Grocery Kroger 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.
Regulatory challenges
– Grocery Kroger 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
– Grocery Kroger has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Grocery Kroger 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.
Environmental challenges
– Grocery Kroger 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. Grocery Kroger 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 Grocery Kroger with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Grocery Kroger in the Leadership & Managing People sector and impact the bottomline of the organization.
Consumer confidence and its impact on Grocery Kroger 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Grocery Kroger.
Increasing wage structure of Grocery Kroger
– 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 Grocery Kroger.
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.
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. Grocery Kroger 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
– Grocery Kroger 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.
Weighted SWOT Analysis of Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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 Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco, and Whole Foods 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 Grocery Kroger needs to make to build a sustainable competitive advantage.
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