SWOT Analysis / TOWS Matrix for Salvatore Ferragamo (United Kingdom)
Based on various researches at Oak Spring University , Salvatore Ferragamo is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing energy prices,
there is backlash against globalization, technology disruption, etc
Introduction to SWOT Analysis of Salvatore Ferragamo
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Salvatore Ferragamo can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Salvatore Ferragamo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Salvatore Ferragamo 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 Salvatore Ferragamo can be done for the following purposes –
1. Strategic planning of Salvatore Ferragamo
2. Improving business portfolio management of Salvatore Ferragamo
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Footwear sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Salvatore Ferragamo
Strengths of Salvatore Ferragamo | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Salvatore Ferragamo are -
Sustainable margins compare to other players in Footwear industry
– Salvatore Ferragamo has clearly differentiated products in the market place. This has enabled Salvatore Ferragamo to fetch slight price premium compare to the competitors in the Footwear industry. The sustainable margins have also helped Salvatore Ferragamo to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Salvatore Ferragamo 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.
Learning organization
- Salvatore Ferragamo 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 Salvatore Ferragamo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Salvatore Ferragamo emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Salvatore Ferragamo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Salvatore Ferragamo 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.
Diverse revenue streams
– Salvatore Ferragamo is present in almost all the verticals within the Footwear industry. This has provided Salvatore Ferragamo 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.
Highly skilled collaborators
– Salvatore Ferragamo has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Footwear industry. Secondly the value chain collaborators of Salvatore Ferragamo have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Salvatore Ferragamo has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Salvatore Ferragamo staying ahead in the Footwear industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of Salvatore Ferragamo comprises – understanding the underlying the factors in the Footwear 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.
Innovation driven organization
– Salvatore Ferragamo is one of the most innovative firm in Footwear sector.
Superior customer experience
– The customer experience strategy of Salvatore Ferragamo in Footwear industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Salvatore Ferragamo 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.
Organizational Resilience of Salvatore Ferragamo
– The covid-19 pandemic has put organizational resilience at the centre of everthing Salvatore Ferragamo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of Salvatore Ferragamo | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Salvatore Ferragamo are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Salvatore Ferragamo is slow explore the new channels of communication. These new channels of communication can help Salvatore Ferragamo to provide better information regarding Footwear products and services. It can also build an online community to further reach out to potential customers.
High dependence on Salvatore Ferragamo ‘s star products
– The top 2 products and services of Salvatore Ferragamo still accounts for major business revenue. This dependence on star products in Footwear industry has resulted into insufficient focus on developing new products, even though Salvatore Ferragamo has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Salvatore Ferragamo is dominated by functional specialists. It is not different from other players in the Footwear industry, but Salvatore Ferragamo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Salvatore Ferragamo to focus more on services in the Footwear industry rather than just following the product oriented approach.
Skills based hiring in Footwear industry
– The stress on hiring functional specialists at Salvatore Ferragamo has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative at Salvatore Ferragamo, in the dynamic environment of Footwear industry it has struggled to respond to the nimble upstart competition. Salvatore Ferragamo has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– From the 10K / annual statement of Salvatore Ferragamo, it seems that company is thinking out the frontier risks that can impact Footwear industry. 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.
Need for greater diversity
– Salvatore Ferragamo 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 Salvatore Ferragamo is one of the leading players in the Footwear industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Footwear industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Salvatore Ferragamo 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 Footwear industry using digital technology.
High cash cycle compare to competitors
Salvatore Ferragamo has a high cash cycle compare to other players in the Footwear 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 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 Salvatore Ferragamo supply chain. Even after few cautionary changes, Salvatore Ferragamo is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Salvatore Ferragamo vulnerable to further global disruptions in South East Asia.
Salvatore Ferragamo Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Salvatore Ferragamo are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Salvatore Ferragamo in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Footwear industry, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Salvatore Ferragamo 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 Salvatore Ferragamo to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions in Footwear industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Salvatore Ferragamo in the Footwear industry. Now Salvatore Ferragamo can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Salvatore Ferragamo can use the latest technology developments to improve its manufacturing and designing process in Footwear sector. 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.
Leveraging digital technologies
– Salvatore Ferragamo 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.
Learning at scale
– Online learning technologies has now opened space for Salvatore Ferragamo 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Footwear industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Salvatore Ferragamo 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. Salvatore Ferragamo 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.
Loyalty marketing
– Salvatore Ferragamo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Salvatore Ferragamo can use these opportunities to build new business models that can help the communities that Salvatore Ferragamo operates in. Secondly it can use opportunities from government spending in Footwear sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Salvatore Ferragamo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Salvatore Ferragamo can improve the customer journey of consumers in the Footwear industry by using analytics and artificial intelligence. It 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.
Better consumer reach
– The expansion of the 5G network will help Salvatore Ferragamo to increase its market reach. Salvatore Ferragamo 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.
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. Salvatore Ferragamo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Salvatore Ferragamo External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Salvatore Ferragamo are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Footwear industry are lowering. It can presents Salvatore Ferragamo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Footwear sector.
Regulatory challenges
– Salvatore Ferragamo 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 Footwear industry regulations.
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 Salvatore Ferragamo.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Salvatore Ferragamo 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 Salvatore Ferragamo prominent markets.
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.
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. Salvatore Ferragamo 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.
Environmental challenges
– Salvatore Ferragamo 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. Salvatore Ferragamo can take advantage of this fund but it will also bring new competitors in the Footwear industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Salvatore Ferragamo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Footwear sector.
Stagnating economy with rate increase
– Salvatore Ferragamo 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 Footwear industry.
Easy access to finance
– Easy access to finance in Footwear industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Salvatore Ferragamo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Salvatore Ferragamo 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 Footwear industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Salvatore Ferragamo is facing in Footwear sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Salvatore Ferragamo 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.
Weighted SWOT Analysis of Salvatore Ferragamo Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Salvatore Ferragamo 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 Salvatore Ferragamo 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 Salvatore Ferragamo 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 Salvatore Ferragamo 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 Salvatore Ferragamo needs to make to build a sustainable competitive advantage.
