SWOT Analysis / TOWS Matrix for Build-A-Bear Workshop (United States)
Based on various researches at Oak Spring University , Build-A-Bear Workshop is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, increasing energy prices, increasing government debt because of Covid-19 spendings, wage bills are increasing,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Build-A-Bear Workshop
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Build-A-Bear Workshop can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Build-A-Bear Workshop, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Build-A-Bear Workshop 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 Build-A-Bear Workshop can be done for the following purposes –
1. Strategic planning of Build-A-Bear Workshop
2. Improving business portfolio management of Build-A-Bear Workshop
3. Assessing feasibility of the new initiative in United States
4. Making a Retail (Specialty) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Build-A-Bear Workshop
Strengths of Build-A-Bear Workshop | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Build-A-Bear Workshop are -
Strong track record of project management in the Retail (Specialty) industry
– Build-A-Bear Workshop is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Build-A-Bear Workshop has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Build-A-Bear Workshop to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Retail (Specialty)
– Build-A-Bear Workshop is one of the leading players in the Retail (Specialty) industry in United States. Over the years it has not only transformed the business landscape in the Retail (Specialty) industry in United States but also across the existing markets. The ability to lead change has enabled Build-A-Bear Workshop in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Build-A-Bear Workshop 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.
Diverse revenue streams
– Build-A-Bear Workshop is present in almost all the verticals within the Retail (Specialty) industry. This has provided Build-A-Bear Workshop 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.
Low bargaining power of suppliers
– Suppliers of Build-A-Bear Workshop in the Services sector have low bargaining power. Build-A-Bear Workshop has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Build-A-Bear Workshop to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Build-A-Bear Workshop is one of the most innovative firm in Retail (Specialty) sector.
Learning organization
- Build-A-Bear Workshop 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 Build-A-Bear Workshop is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Build-A-Bear Workshop emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Build-A-Bear Workshop in Retail (Specialty) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Build-A-Bear Workshop has one of the best training and development program in Services 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.
Ability to recruit top talent
– Build-A-Bear Workshop is one of the leading players in the Retail (Specialty) industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Build-A-Bear Workshop has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Build-A-Bear Workshop 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.
Weaknesses of Build-A-Bear Workshop | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Build-A-Bear Workshop are -
Low market penetration in new markets
– Outside its home market of United States, Build-A-Bear Workshop needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Build-A-Bear Workshop 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.
Products dominated business model
– Even though Build-A-Bear Workshop has some of the most successful models in the Retail (Specialty) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Build-A-Bear Workshop should strive to include more intangible value offerings along with its core products and services.
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 Build-A-Bear Workshop supply chain. Even after few cautionary changes, Build-A-Bear Workshop is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Build-A-Bear Workshop vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Build-A-Bear Workshop needs to have more collaboration between its sales team and marketing team. Sales professionals in the Retail (Specialty) industry have deep experience in developing customer relationships. Marketing department at Build-A-Bear Workshop can leverage the sales team experience to cultivate customer relationships as Build-A-Bear Workshop is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Build-A-Bear Workshop has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Specialty) industry over the last five years. Build-A-Bear Workshop 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Build-A-Bear Workshop is slow explore the new channels of communication. These new channels of communication can help Build-A-Bear Workshop to provide better information regarding Retail (Specialty) products and services. It can also build an online community to further reach out to potential customers.
High dependence on Build-A-Bear Workshop ‘s star products
– The top 2 products and services of Build-A-Bear Workshop still accounts for major business revenue. This dependence on star products in Retail (Specialty) industry has resulted into insufficient focus on developing new products, even though Build-A-Bear Workshop has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Build-A-Bear Workshop is one of the leading players in the Retail (Specialty) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Specialty) industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative at Build-A-Bear Workshop, in the dynamic environment of Retail (Specialty) industry it has struggled to respond to the nimble upstart competition. Build-A-Bear Workshop 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
– Build-A-Bear Workshop 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.
Build-A-Bear Workshop Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Build-A-Bear Workshop are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Build-A-Bear Workshop in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Retail (Specialty) 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, Build-A-Bear Workshop 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 Build-A-Bear Workshop to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Build-A-Bear Workshop 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Specialty) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Build-A-Bear Workshop 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. Build-A-Bear Workshop 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 Retail (Specialty) industry, but it has also influenced the consumer preferences. Build-A-Bear Workshop 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
– Build-A-Bear Workshop can develop new processes and procedures in Retail (Specialty) 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Build-A-Bear Workshop 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.
Leveraging digital technologies
– Build-A-Bear Workshop 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 Build-A-Bear Workshop 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.
Building a culture of innovation
– managers at Build-A-Bear Workshop 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 Retail (Specialty) industry.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Build-A-Bear Workshop 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 Build-A-Bear Workshop to hire the very best people irrespective of their geographical location.
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 Build-A-Bear Workshop 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.
Creating value in data economy
– The success of analytics program of Build-A-Bear Workshop has opened avenues for new revenue streams for the organization in Retail (Specialty) industry. This can help Build-A-Bear Workshop to build a more holistic ecosystem for Build-A-Bear Workshop products in the Retail (Specialty) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Build-A-Bear Workshop External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Build-A-Bear Workshop are -
High dependence on third party suppliers
– Build-A-Bear Workshop 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Specialty) industry are lowering. It can presents Build-A-Bear Workshop with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Specialty) sector.
Easy access to finance
– Easy access to finance in Retail (Specialty) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Build-A-Bear Workshop can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Build-A-Bear Workshop in Retail (Specialty) industry. The Retail (Specialty) 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.
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. Build-A-Bear Workshop 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.
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 Build-A-Bear Workshop in the Retail (Specialty) sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Build-A-Bear Workshop is facing in Retail (Specialty) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Build-A-Bear Workshop.
Technology acceleration in Forth Industrial Revolution
– Build-A-Bear Workshop has witnessed rapid integration of technology during Covid-19 in the Retail (Specialty) industry. As one of the leading players in the industry, Build-A-Bear Workshop needs to keep up with the evolution of technology in the Retail (Specialty) 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.
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. Build-A-Bear Workshop needs to understand the core reasons impacting the Retail (Specialty) industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Build-A-Bear Workshop may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Specialty) sector.
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 Build-A-Bear Workshop business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Build-A-Bear Workshop 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 Build-A-Bear Workshop prominent markets.
Weighted SWOT Analysis of Build-A-Bear Workshop Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Build-A-Bear Workshop 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 Build-A-Bear Workshop 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 Build-A-Bear Workshop 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 Build-A-Bear Workshop 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 Build-A-Bear Workshop needs to make to build a sustainable competitive advantage.