Experiential Exercise: Evaluation of Organization Issues

Subject: Strategic Management
Pages: 3
Words: 1104
Reading time:
5 min
Study level: Master

Summary

The COVID-19 pandemic has hugely impacted both the global and U.S. economies. The consequences of the coronavirus for the market are long-term, so businesses are still faced with the challenges of making decisions during a massive crisis. However, the pandemic has also helped companies in a way – by giving their customers a much-needed boost towards online shopping. Al-Omoush et al. (2020) suggest that “the pandemic has provided unprecedented opportunities to study the role of e-business solutions in global crises that sweep the world and disrupt offline life and human activity” (p. 285). The process of market digitalization is now more actual than ever, prospecting long-term consequences and no intention to stop after the end of the COVID-19 pandemic.

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The crisis prompted the management heads of companies to make difficult decisions to optimize existing business models, find ways to reduce costs and develop new business areas. For example, Farooq et al. (2021) state that “one of the two goals of re-stabilizing a business disruption is to shift operations and other activities towards digitally supported systems, upgrading overall reliability” (p. 2506). However, in the example article, the eyewear brand Warby Parker’s founders Neil Blumenthal and David Gilboa discuss their decision to open 35 new retail stores this year.

Both businessmen have explained that their main reasons behind this move were the consequences the pandemic had on their business. About 135 of their stores closed during the quarantine, but there was a considerable rise in online sales at the time of lockdown. Customers showed that they are quite willing to search, choose and order the glasses frames on the company’s website. Now, during a more controlled, no-lockdown phase of pandemics, the tendency to shop for Warby Parker’s products online remains and grows. Moreover, the company has found a way to negotiate with landlords for more flexible leases for their stores, and this has also affected the decision to open new ones heavily. Overall, the businessmen said they had met different business opportunities during the pandemic, which helped them increase their capital and map out new strategies for further developing their brand.

Company’s External Environment

In the presented case, the external circumstance that affected the brand’s sales the most was the virus outbreak, followed quickly by a pandemic and a massive lockdown. Instability, political changes, and troubles with transporting supplies from other countries have caused a significant imbalance between the external and internal corporate environments. According to David Gilboa in the interview with Scott from The Wall Street Journal (2021, May 29), “[they] have seen some delays on inbound shipments from other countries where transportation carriers are completely overwhelmed” (pp. 11). The impact of the lockdown and the quarantine held the most significance to the business, as it caused the store’s closure and the dismissal of a great number of employees. Das et al. (2021) state that “depletion of financial resources, resulting in financial scarcity, is a key consequence of pandemics, stemming from business closures and job losses” (p. 283). This kind of crisis was impossible to predict, and consequently, the brand experienced a downgrade in both sales and business development.

SWOT-Analysis

Brand’s strengths lie in the fact that the managing lead understands the importance of maintaining and developing the digital branch of the business. However, there is a significant weakness to online eyewear shopping, which is necessary to still come to an actual shop for a vision check for some of the brand’s products. There is no solution for that weak point yet. The opportunities that the business has experienced last are the perspective of opening new retails with a flexible lease and the ability to bring back the suspended workers. Lastly, the most apparent threat that the brand faces is the possibility of another pandemic and, consequentially, a new lockdown which will affect business even greater than before.

Company’s Internal Environment

For successful development, the organization must constantly identify the existing and potential opportunities concerning the most effective use of its internal resources – intellectual, informational, labor, material, financial, and other. In the example present, the brand’s main post-pandemics goal is to increase its profitability – for it, the managing lead intends to open new stores and, most possibly, advertise further the online sales. Seeing as the company has been successful in reclaiming almost all of its previously furloughed 1500 workers, the internal environment of the brand has become more stable.

SWOT-Analysis

Brand’s internal strength that affects the leaders’ decisions the most is the company’s current capital – it has not experienced too much of a financial loss during the hardest part of the pandemic. Moreover, the profits from online sales have been growing steadily since then. However, the weakness that could potentially hold the business down is the difficulty in finding part-time workers for the retail stores – still, it is quite surmountable. The brand’s opportunities now lie in the managing lead’s willingness for the company to go more public, as it would add to the brand’s general reliability. Finally, the possibility of the company’s workers suffering from COVID’s new strain and, by that hindering the company’s activities remains the biggest internal threat yet.

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Overall, the profit possibilities of the brand’s strategic decision to open new stores seem quite optimistic. Although it would not instantly remedy the damage that was done by the pandemic, this plan would certainly help the company regain its stability and improve its market presence. The decision to open new retail stores does not seem to be a corporate one, rather, it was a solution a managing lead of the founders made. The approach the brand founders chose considers both the internal factors of the company’s resources and capital and the external conditions of the present situation and appears to be a part of their new business strategy. Its functionality is yet to be proven, as there is still a possibility of a new wave of pandemics. Moreover, the effectiveness of this decision is also unclear at the time because the plan has not been fully launched yet. Nevertheless, the prognosis is quite good due to the financial and market stability of the brand.

SWOT-Analysis External Environment Internal Environment
Strengths Online sales are rising and being developed further The current financial state of the company is stable and secure
Weaknesses Some eyewear options require visiting an actual store for a vision check Difficulties in finding employees for new stores
Opportunities New stores on flexible leases and the comeback of suspended workers The company could go more public and gain more reliability
Threats New virus strain is rising now, with other pandemics in perspective Company’s employees falling victims to COVID

References

Al-Omoush, K. S., Simón-Moya, V., & Sendra-García, J. (2020). The impact of social capital and collaborative knowledge creation on e-business proactiveness and organizational agility in responding to the COVID-19 crisis. Journal of Innovation & Knowledge, 5(4), 279–288. Web.

Das, G., Jain, S. P., Maheswaran, D., Slotegraaf, R. J., & Srinivasan, R. (2021). Pandemics and marketing: insights, impacts, and research opportunities. Journal of the Academy of Marketing Science. Web.

Farooq, M. U., Hussain, A., Masood, T., & Habib, M. S. (2021). Supply Chain Operations Management in Pandemics: A State-of-the-Art Review Inspired by COVID-19. Sustainability, 13(5), 2504. Web.

Scott, C. L. (2021). Warby Parker Founders Explain Why They Are Adding 35 Stores After Pandemic. The Wall Street Journal. Web.