Ethan Allen Interiors (ETH) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Ethan Allen Interiors (United States)

Based on various researches at Oak Spring University , Ethan Allen Interiors is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, cloud computing is disrupting traditional business models, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Ethan Allen Interiors

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Ethan Allen Interiors can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ethan Allen Interiors, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ethan Allen Interiors 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Ethan Allen Interiors can be done for the following purposes –
1. Strategic planning of Ethan Allen Interiors
2. Improving business portfolio management of Ethan Allen Interiors
3. Assessing feasibility of the new initiative in United States
4. Making a Furniture & Fixtures sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ethan Allen Interiors

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Strengths of Ethan Allen Interiors | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Ethan Allen Interiors are -

Sustainable margins compare to other players in Furniture & Fixtures industry

– Ethan Allen Interiors has clearly differentiated products in the market place. This has enabled Ethan Allen Interiors to fetch slight price premium compare to the competitors in the Furniture & Fixtures industry. The sustainable margins have also helped Ethan Allen Interiors to invest into research and development (R&D) and innovation.

Strong track record of project management in the Furniture & Fixtures industry

– Ethan Allen Interiors is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Low bargaining power of suppliers

– Suppliers of Ethan Allen Interiors in the Consumer Cyclical sector have low bargaining power. Ethan Allen Interiors has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ethan Allen Interiors to manage not only supply disruptions but also source products at highly competitive prices.

Learning organization

- Ethan Allen Interiors 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 Ethan Allen Interiors is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Ethan Allen Interiors emphasize – knowledge, initiative, and innovation.

Organizational Resilience of Ethan Allen Interiors

– The covid-19 pandemic has put organizational resilience at the centre of everthing Ethan Allen Interiors does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Highly skilled collaborators

– Ethan Allen Interiors has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Furniture & Fixtures industry. Secondly the value chain collaborators of Ethan Allen Interiors have helped the firm to develop new products and bring them quickly to the marketplace.

Diverse revenue streams

– Ethan Allen Interiors is present in almost all the verticals within the Furniture & Fixtures industry. This has provided Ethan Allen Interiors 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.

Effective Research and Development (R&D)

– Ethan Allen Interiors has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Ethan Allen Interiors staying ahead in the Furniture & Fixtures industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Cross disciplinary teams

– Horizontal connected teams at the Ethan Allen Interiors 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.

Training and development

– Ethan Allen Interiors 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.

High brand equity

– Ethan Allen Interiors has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ethan Allen Interiors to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– Ethan Allen Interiors is one of the leading players in the Furniture & Fixtures 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.

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Weaknesses of Ethan Allen Interiors | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Ethan Allen Interiors are -

Interest costs

– Compare to the competition, Ethan Allen Interiors 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.

Employees’ less understanding of Ethan Allen Interiors strategy

– From the outside it seems that the employees of Ethan Allen Interiors 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.

Increasing silos among functional specialists

– The organizational structure of Ethan Allen Interiors is dominated by functional specialists. It is not different from other players in the Furniture & Fixtures industry, but Ethan Allen Interiors needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ethan Allen Interiors to focus more on services in the Furniture & Fixtures industry rather than just following the product oriented approach.

Need for greater diversity

– Ethan Allen Interiors 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.

Ability to respond to the competition

– As the decision making is very deliberative at Ethan Allen Interiors, in the dynamic environment of Furniture & Fixtures industry it has struggled to respond to the nimble upstart competition. Ethan Allen Interiors has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Lack of clear differentiation of Ethan Allen Interiors products

– To increase the profitability and margins on the products, Ethan Allen Interiors needs to provide more differentiated products than what it is currently offering in the marketplace.

Aligning sales with marketing

– From the outside it seems that Ethan Allen Interiors needs to have more collaboration between its sales team and marketing team. Sales professionals in the Furniture & Fixtures industry have deep experience in developing customer relationships. Marketing department at Ethan Allen Interiors can leverage the sales team experience to cultivate customer relationships as Ethan Allen Interiors is planning to shift buying processes online.

Slow to strategic competitive environment developments

– As Ethan Allen Interiors is one of the leading players in the Furniture & Fixtures industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Furniture & Fixtures industry in last five years.

Workers concerns about automation

– As automation is fast increasing in the Furniture & Fixtures industry, Ethan Allen Interiors 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.

Skills based hiring in Furniture & Fixtures industry

– The stress on hiring functional specialists at Ethan Allen Interiors 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ethan Allen Interiors is slow explore the new channels of communication. These new channels of communication can help Ethan Allen Interiors to provide better information regarding Furniture & Fixtures products and services. It can also build an online community to further reach out to potential customers.

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Ethan Allen Interiors Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Ethan Allen Interiors are -

Loyalty marketing

– Ethan Allen Interiors 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Ethan Allen Interiors 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.

Better consumer reach

– The expansion of the 5G network will help Ethan Allen Interiors to increase its market reach. Ethan Allen Interiors 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Ethan Allen Interiors can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ethan Allen Interiors 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 Ethan Allen Interiors to hire the very best people irrespective of their geographical location.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ethan Allen Interiors can use these opportunities to build new business models that can help the communities that Ethan Allen Interiors operates in. Secondly it can use opportunities from government spending in Furniture & Fixtures sector.

Developing new processes and practices

– Ethan Allen Interiors can develop new processes and procedures in Furniture & Fixtures 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.

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 Ethan Allen Interiors to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

Leveraging digital technologies

– Ethan Allen Interiors 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Ethan Allen Interiors 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 Ethan Allen Interiors to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Using analytics as competitive advantage

– Ethan Allen Interiors has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Furniture & Fixtures sector. This continuous investment in analytics has enabled Ethan Allen Interiors to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ethan Allen Interiors to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Building a culture of innovation

– managers at Ethan Allen Interiors 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 Furniture & Fixtures industry.

Buying journey improvements

– Ethan Allen Interiors can improve the customer journey of consumers in the Furniture & Fixtures 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.

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Threats Ethan Allen Interiors External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Ethan Allen Interiors are -

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Ethan Allen Interiors in Furniture & Fixtures industry. The Furniture & Fixtures 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.

Shortening product life cycle

– it is one of the major threat that Ethan Allen Interiors is facing in Furniture & Fixtures sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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 Ethan Allen Interiors business can come under increasing regulations regarding data privacy, data security, etc.

Regulatory challenges

– Ethan Allen Interiors 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 Furniture & Fixtures industry regulations.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Ethan Allen Interiors 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 Ethan Allen Interiors prominent markets.

High dependence on third party suppliers

– Ethan Allen Interiors 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.

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 Ethan Allen Interiors.

Environmental challenges

– Ethan Allen Interiors 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. Ethan Allen Interiors can take advantage of this fund but it will also bring new competitors in the Furniture & Fixtures industry.

Technology acceleration in Forth Industrial Revolution

– Ethan Allen Interiors has witnessed rapid integration of technology during Covid-19 in the Furniture & Fixtures industry. As one of the leading players in the industry, Ethan Allen Interiors needs to keep up with the evolution of technology in the Furniture & Fixtures 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.

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 Ethan Allen Interiors in the Furniture & Fixtures sector and impact the bottomline of the organization.

Stagnating economy with rate increase

– Ethan Allen Interiors 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 Furniture & Fixtures industry.

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.

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. Ethan Allen Interiors 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.

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Weighted SWOT Analysis of Ethan Allen Interiors Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Ethan Allen Interiors 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 Ethan Allen Interiors 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 Ethan Allen Interiors 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 Ethan Allen Interiors 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 Ethan Allen Interiors needs to make to build a sustainable competitive advantage.

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