Fossil (FOSL) SWOT Analysis / TOWS Matrix / MBA Resources
Jewelry & Silverware
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Fossil (United States)
Based on various researches at Oak Spring University , Fossil is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, there is backlash against globalization,
increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Fossil can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fossil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fossil 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 Fossil can be done for the following purposes –
1. Strategic planning of Fossil
2. Improving business portfolio management of Fossil
3. Assessing feasibility of the new initiative in United States
4. Making a Jewelry & Silverware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fossil
Strengths of Fossil | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fossil are -
Training and development
– Fossil 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.
Operational resilience
– The operational resilience strategy of Fossil comprises – understanding the underlying the factors in the Jewelry & Silverware 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.
Organizational Resilience of Fossil
– The covid-19 pandemic has put organizational resilience at the centre of everthing Fossil does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Fossil has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Jewelry & Silverware industry. Secondly the value chain collaborators of Fossil have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management in the Jewelry & Silverware industry
– Fossil 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 Fossil in the Consumer Cyclical sector have low bargaining power. Fossil has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fossil to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Fossil 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
- Fossil 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 Fossil is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Fossil emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Fossil is one of the leading players in the Jewelry & Silverware 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
– Fossil has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fossil 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.
Sustainable margins compare to other players in Jewelry & Silverware industry
– Fossil has clearly differentiated products in the market place. This has enabled Fossil to fetch slight price premium compare to the competitors in the Jewelry & Silverware industry. The sustainable margins have also helped Fossil to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Fossil has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Fossil staying ahead in the Jewelry & Silverware industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses of Fossil | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fossil are -
Lack of clear differentiation of Fossil products
– To increase the profitability and margins on the products, Fossil needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee of Fossil is just above the Jewelry & Silverware industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative at Fossil, in the dynamic environment of Jewelry & Silverware industry it has struggled to respond to the nimble upstart competition. Fossil has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Fossil has a high cash cycle compare to other players in the Jewelry & Silverware 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 Fossil ‘s star products
– The top 2 products and services of Fossil still accounts for major business revenue. This dependence on star products in Jewelry & Silverware industry has resulted into insufficient focus on developing new products, even though Fossil has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Fossil is one of the leading players in the Jewelry & Silverware industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Jewelry & Silverware industry in last five years.
Need for greater diversity
– Fossil 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.
Increasing silos among functional specialists
– The organizational structure of Fossil is dominated by functional specialists. It is not different from other players in the Jewelry & Silverware industry, but Fossil needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fossil to focus more on services in the Jewelry & Silverware industry rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fossil is slow explore the new channels of communication. These new channels of communication can help Fossil to provide better information regarding Jewelry & Silverware products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of Fossil strategy
– From the outside it seems that the employees of Fossil 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 operating costs
– Compare to the competitors, Fossil has high operating costs in the Jewelry & Silverware industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Fossil lucrative customers.
Fossil Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Fossil are -
Better consumer reach
– The expansion of the 5G network will help Fossil to increase its market reach. Fossil 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.
Loyalty marketing
– Fossil 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.
Creating value in data economy
– The success of analytics program of Fossil has opened avenues for new revenue streams for the organization in Jewelry & Silverware industry. This can help Fossil to build a more holistic ecosystem for Fossil products in the Jewelry & Silverware industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fossil 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 Fossil 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 Jewelry & Silverware industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fossil in the Jewelry & Silverware industry. Now Fossil can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Fossil can improve the customer journey of consumers in the Jewelry & Silverware 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.
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. Fossil can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Jewelry & Silverware industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fossil 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. Fossil 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.
Building a culture of innovation
– managers at Fossil 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 Jewelry & Silverware industry.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Jewelry & Silverware industry, but it has also influenced the consumer preferences. Fossil can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fossil in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Jewelry & Silverware industry, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Fossil has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Jewelry & Silverware sector. This continuous investment in analytics has enabled Fossil to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fossil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fossil 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 Fossil to hire the very best people irrespective of their geographical location.
Threats Fossil External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Fossil are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fossil 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 Fossil prominent markets.
High dependence on third party suppliers
– Fossil 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.
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. Fossil 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.
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 Fossil.
Shortening product life cycle
– it is one of the major threat that Fossil is facing in Jewelry & Silverware sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Consumer confidence and its impact on Fossil 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 Jewelry & Silverware industry and other sectors.
Regulatory challenges
– Fossil 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 Jewelry & Silverware industry regulations.
Easy access to finance
– Easy access to finance in Jewelry & Silverware industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fossil can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Jewelry & Silverware industry are lowering. It can presents Fossil with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Jewelry & Silverware sector.
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 Fossil in the Jewelry & Silverware sector and impact the bottomline of the organization.
Environmental challenges
– Fossil 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. Fossil can take advantage of this fund but it will also bring new competitors in the Jewelry & Silverware industry.
Weighted SWOT Analysis of Fossil Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Fossil 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 Fossil 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 Fossil 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 Fossil 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 Fossil needs to make to build a sustainable competitive advantage.
