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 – supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs,
technology disruption, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
Digital Transformation in Footwear industry
- digital transformation varies from industry to industry. For Salvatore Ferragamo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Salvatore Ferragamo 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.
Training and development
– Salvatore Ferragamo has one of the best training and development program in Consumer Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
Analytics focus
– Salvatore Ferragamo 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 Footwear industry. The technology infrastructure of United Kingdom is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Salvatore Ferragamo is one of the most innovative firm in Footwear sector.
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.
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.
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.
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.
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.
Weaknesses of Salvatore Ferragamo | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Salvatore Ferragamo are -
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.
Lack of clear differentiation of Salvatore Ferragamo products
– To increase the profitability and margins on the products, Salvatore Ferragamo needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ less understanding of Salvatore Ferragamo strategy
– From the outside it seems that the employees of Salvatore Ferragamo 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.
High bargaining power of channel partners in Footwear industry
– because of the regulatory requirements in United Kingdom, Salvatore Ferragamo 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 Footwear industry.
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.
High operating costs
– Compare to the competitors, Salvatore Ferragamo has high operating costs in the Footwear industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Salvatore Ferragamo lucrative customers.
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.
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.
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.
Interest costs
– Compare to the competition, Salvatore Ferragamo 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.
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.
Salvatore Ferragamo Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Salvatore Ferragamo are -
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.
Building a culture of innovation
– managers at Salvatore Ferragamo 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 Footwear industry.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Salvatore Ferragamo 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.
Using analytics as competitive advantage
– Salvatore Ferragamo has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Footwear sector. This continuous investment in analytics has enabled Salvatore Ferragamo to build a competitive advantage using analytics. The analytics driven competitive advantage can help Salvatore Ferragamo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Footwear industry, but it has also influenced the consumer preferences. Salvatore Ferragamo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Salvatore Ferragamo can develop new processes and procedures in Footwear industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, 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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Salvatore Ferragamo 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 Salvatore Ferragamo to hire the very best people irrespective of their geographical location.
Threats Salvatore Ferragamo External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Salvatore Ferragamo are -
Technology acceleration in Forth Industrial Revolution
– Salvatore Ferragamo has witnessed rapid integration of technology during Covid-19 in the Footwear industry. As one of the leading players in the industry, Salvatore Ferragamo needs to keep up with the evolution of technology in the Footwear 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.
Increasing wage structure of Salvatore Ferragamo
– 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 Salvatore Ferragamo.
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 Salvatore Ferragamo in the Footwear sector and impact the bottomline of the organization.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.