E-business Transformation At the Crossroads: Sears' Dilemma SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of E-business Transformation At the Crossroads: Sears' Dilemma
This teaching case discusses the challenges facing Sears, Reobeck and Co., a leading retailer in United States, in its efforts to transform itself into an effective brick-and-click organization. In face of intense competition from other retailers and online e-tailers, Sears has continually expanded its online efforts in e-business transformation. This case traces the key e-business initiatives taken by Sears and highlights significant managerial challenges that were encountered during the formulation and execution of an effective e-business transformation strategy. The case presents the issues faced by a new CIO who had taken over the technology and e-business affairs at Sears at the end of 2002.
Authors :: C. Ranganathan, Shetty Analini, Gayathri Muthukumaran
Swot Analysis of "E-business Transformation At the Crossroads: Sears' Dilemma" written by C. Ranganathan, Shetty Analini, Gayathri Muthukumaran includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sears Transformation facing as an external strategic factors. Some of the topics covered in E-business Transformation At the Crossroads: Sears' Dilemma case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the E-business Transformation At the Crossroads: Sears' Dilemma casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing commodity prices, supply chains are disrupted by pandemic ,
technology disruption, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of E-business Transformation At the Crossroads: Sears' Dilemma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in E-business Transformation At the Crossroads: Sears' Dilemma case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sears Transformation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sears Transformation 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 E-business Transformation At the Crossroads: Sears' Dilemma can be done for the following purposes –
1. Strategic planning using facts provided in E-business Transformation At the Crossroads: Sears' Dilemma case study
2. Improving business portfolio management of Sears Transformation
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 Sears Transformation
Strengths E-business Transformation At the Crossroads: Sears' Dilemma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sears Transformation in E-business Transformation At the Crossroads: Sears' Dilemma Harvard Business Review case study are -
Training and development
– Sears Transformation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in E-business Transformation At the Crossroads: Sears' Dilemma 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.
Successful track record of launching new products
– Sears Transformation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sears Transformation 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.
Low bargaining power of suppliers
– Suppliers of Sears Transformation in the sector have low bargaining power. E-business Transformation At the Crossroads: Sears' Dilemma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sears Transformation to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Sears Transformation 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 E-business Transformation At the Crossroads: Sears' Dilemma - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Sears Transformation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Sears Transformation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sears Transformation 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 Sears Transformation 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.
Superior customer experience
– The customer experience strategy of Sears Transformation in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Sears Transformation 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 E-business Transformation At the Crossroads: Sears' Dilemma HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Sears Transformation is present in almost all the verticals within the industry. This has provided firm in E-business Transformation At the Crossroads: Sears' Dilemma 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– E-business Transformation At the Crossroads: Sears' Dilemma firm has clearly differentiated products in the market place. This has enabled Sears Transformation to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Sears Transformation to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Sears Transformation is one of the leading recruiters in the industry. Managers in the E-business Transformation At the Crossroads: Sears' Dilemma are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses E-business Transformation At the Crossroads: Sears' Dilemma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of E-business Transformation At the Crossroads: Sears' Dilemma are -
Slow decision making process
– As mentioned earlier in the report, Sears Transformation 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. Sears Transformation 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.
Products dominated business model
– Even though Sears Transformation 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 - E-business Transformation At the Crossroads: Sears' Dilemma should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study E-business Transformation At the Crossroads: Sears' Dilemma, 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the E-business Transformation At the Crossroads: Sears' Dilemma 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 Sears Transformation has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study E-business Transformation At the Crossroads: Sears' Dilemma, in the dynamic environment Sears Transformation has struggled to respond to the nimble upstart competition. Sears Transformation 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 Sears Transformation is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Sears Transformation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sears Transformation to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study E-business Transformation At the Crossroads: Sears' Dilemma, is just above the industry average. Sears Transformation 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.
Interest costs
– Compare to the competition, Sears Transformation 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.
Capital Spending Reduction
– Even during the low interest decade, Sears Transformation has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study E-business Transformation At the Crossroads: Sears' Dilemma 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 Sears Transformation 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Sears Transformation 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.
Opportunities E-business Transformation At the Crossroads: Sears' Dilemma | 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 E-business Transformation At the Crossroads: Sears' Dilemma are -
Manufacturing automation
– Sears Transformation 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sears Transformation 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, E-business Transformation At the Crossroads: Sears' Dilemma, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Sears Transformation 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.
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. Sears Transformation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sears Transformation 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sears Transformation can use these opportunities to build new business models that can help the communities that Sears Transformation operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sears Transformation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Sears Transformation 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.
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 Sears Transformation in the consumer business. Now Sears Transformation can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Sears Transformation 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sears Transformation 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 Sears Transformation to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Sears Transformation 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sears Transformation is facing challenges because of the dominance of functional experts in the organization. E-business Transformation At the Crossroads: Sears' Dilemma 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.
Threats E-business Transformation At the Crossroads: Sears' Dilemma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study E-business Transformation At the Crossroads: Sears' Dilemma are -
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.
Stagnating economy with rate increase
– Sears Transformation 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.
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 Sears Transformation in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sears Transformation 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.
High dependence on third party suppliers
– Sears Transformation 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.
Environmental challenges
– Sears Transformation 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. Sears Transformation can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Consumer confidence and its impact on Sears Transformation 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. Sears Transformation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Sears Transformation business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study E-business Transformation At the Crossroads: Sears' Dilemma, Sears Transformation 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 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. Sears Transformation needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing wage structure of Sears Transformation
– 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 Sears Transformation.
Weighted SWOT Analysis of E-business Transformation At the Crossroads: Sears' Dilemma 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 E-business Transformation At the Crossroads: Sears' Dilemma 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 E-business Transformation At the Crossroads: Sears' Dilemma 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 E-business Transformation At the Crossroads: Sears' Dilemma 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 E-business Transformation At the Crossroads: Sears' Dilemma 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 Sears Transformation needs to make to build a sustainable competitive advantage.