Hugo Boss AG (BOSSn) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Hugo Boss AG (Germany)

Based on various researches at Oak Spring University , Hugo Boss AG is operating in a macro-environment that has been destablized by – there is backlash against globalization, talent flight as more people leaving formal jobs, wage bills are increasing, challanges to central banks by blockchain based private currencies, technology disruption, cloud computing is disrupting traditional business models, increasing energy prices, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , etc

---

---

---

---

Introduction to SWOT Analysis of Hugo Boss AG

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Hugo Boss AG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hugo Boss AG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hugo Boss AG 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 Hugo Boss AG can be done for the following purposes –
1. Strategic planning of Hugo Boss AG
2. Improving business portfolio management of Hugo Boss AG
3. Assessing feasibility of the new initiative in Germany
4. Making a Apparel/Accessories sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hugo Boss AG

---

Strengths of Hugo Boss AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Hugo Boss AG are -

Strong track record of project management in the Apparel/Accessories industry

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

Superior customer experience

– The customer experience strategy of Hugo Boss AG in Apparel/Accessories industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Diverse revenue streams

– Hugo Boss AG is present in almost all the verticals within the Apparel/Accessories industry. This has provided Hugo Boss AG 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.

Learning organization

- Hugo Boss AG 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 Hugo Boss AG is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Hugo Boss AG emphasize – knowledge, initiative, and innovation.

Cross disciplinary teams

– Horizontal connected teams at the Hugo Boss AG 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

– Hugo Boss AG 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.

Effective Research and Development (R&D)

– Hugo Boss AG has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Hugo Boss AG staying ahead in the Apparel/Accessories industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Organizational Resilience of Hugo Boss AG

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

Ability to lead change in Apparel/Accessories

– Hugo Boss AG is one of the leading players in the Apparel/Accessories industry in Germany. Over the years it has not only transformed the business landscape in the Apparel/Accessories industry in Germany but also across the existing markets. The ability to lead change has enabled Hugo Boss AG in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Digital Transformation in Apparel/Accessories industry

- digital transformation varies from industry to industry. For Hugo Boss AG digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hugo Boss AG 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.

Low bargaining power of suppliers

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

Successful track record of launching new products

– Hugo Boss AG has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hugo Boss AG 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 Hugo Boss AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Hugo Boss AG are -

Employees’ less understanding of Hugo Boss AG strategy

– From the outside it seems that the employees of Hugo Boss AG 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 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 Hugo Boss AG supply chain. Even after few cautionary changes, Hugo Boss AG is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hugo Boss AG vulnerable to further global disruptions in South East Asia.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hugo Boss AG is slow explore the new channels of communication. These new channels of communication can help Hugo Boss AG to provide better information regarding Apparel/Accessories products and services. It can also build an online community to further reach out to potential customers.

Workers concerns about automation

– As automation is fast increasing in the Apparel/Accessories industry, Hugo Boss AG 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 Apparel/Accessories industry

– The stress on hiring functional specialists at Hugo Boss AG 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.

Capital Spending Reduction

– Even during the low interest decade, Hugo Boss AG 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 Apparel/Accessories industry using digital technology.

No frontier risks strategy

– From the 10K / annual statement of Hugo Boss AG, it seems that company is thinking out the frontier risks that can impact Apparel/Accessories 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.

High dependence on Hugo Boss AG ‘s star products

– The top 2 products and services of Hugo Boss AG still accounts for major business revenue. This dependence on star products in Apparel/Accessories industry has resulted into insufficient focus on developing new products, even though Hugo Boss AG has relatively successful track record of launching new products.

Lack of clear differentiation of Hugo Boss AG products

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

High cash cycle compare to competitors

Hugo Boss AG has a high cash cycle compare to other players in the Apparel/Accessories industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Aligning sales with marketing

– From the outside it seems that Hugo Boss AG needs to have more collaboration between its sales team and marketing team. Sales professionals in the Apparel/Accessories industry have deep experience in developing customer relationships. Marketing department at Hugo Boss AG can leverage the sales team experience to cultivate customer relationships as Hugo Boss AG is planning to shift buying processes online.

---

Hugo Boss AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Hugo Boss AG are -

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 Hugo Boss AG 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.

Developing new processes and practices

– Hugo Boss AG can develop new processes and procedures in Apparel/Accessories 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.

Creating value in data economy

– The success of analytics program of Hugo Boss AG has opened avenues for new revenue streams for the organization in Apparel/Accessories industry. This can help Hugo Boss AG to build a more holistic ecosystem for Hugo Boss AG products in the Apparel/Accessories industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Building a culture of innovation

– managers at Hugo Boss AG 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 Apparel/Accessories industry.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Hugo Boss AG 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 Hugo Boss AG 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 Hugo Boss AG to hire the very best people irrespective of their geographical location.

Better consumer reach

– The expansion of the 5G network will help Hugo Boss AG to increase its market reach. Hugo Boss AG 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.

Learning at scale

– Online learning technologies has now opened space for Hugo Boss AG 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hugo Boss AG can use these opportunities to build new business models that can help the communities that Hugo Boss AG operates in. Secondly it can use opportunities from government spending in Apparel/Accessories sector.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Hugo Boss AG is facing challenges because of the dominance of functional experts in the organization. Hugo Boss AG can utilize new technology in the field of Apparel/Accessories industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Low interest rates

– Even though inflation is raising its head in most developed economies, Hugo Boss AG 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Hugo Boss AG 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 Hugo Boss AG 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

– Hugo Boss AG 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.

---

Threats Hugo Boss AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Hugo Boss AG are -

Regulatory challenges

– Hugo Boss AG 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 Apparel/Accessories industry regulations.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Apparel/Accessories industry are lowering. It can presents Hugo Boss AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Apparel/Accessories sector.

Technology acceleration in Forth Industrial Revolution

– Hugo Boss AG has witnessed rapid integration of technology during Covid-19 in the Apparel/Accessories industry. As one of the leading players in the industry, Hugo Boss AG needs to keep up with the evolution of technology in the Apparel/Accessories 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.

Environmental challenges

– Hugo Boss AG 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. Hugo Boss AG can take advantage of this fund but it will also bring new competitors in the Apparel/Accessories industry.

Increasing wage structure of Hugo Boss AG

– 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 Hugo Boss AG.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Hugo Boss AG 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 Hugo Boss AG prominent markets.

Easy access to finance

– Easy access to finance in Apparel/Accessories industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hugo Boss AG can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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. Hugo Boss AG needs to understand the core reasons impacting the Apparel/Accessories industry. This will help it in building a better workplace.

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 Hugo Boss AG.

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 Hugo Boss AG in the Apparel/Accessories 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, Hugo Boss AG may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Apparel/Accessories sector.

High dependence on third party suppliers

– Hugo Boss AG 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.

Consumer confidence and its impact on Hugo Boss AG 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 Apparel/Accessories industry and other sectors.

---

Weighted SWOT Analysis of Hugo Boss AG Template, Example

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

--- ---