Essay Quality Function Deployment and Swot Analysis

2052 Words Jun 6th, 2006 9 Pages
Table of Contents
Executive Summary 2
Case Analysis Overview 2
Environmental Background 3
SWOT Analysis: Strengths 3
SWOT Analysis: Weaknesses 3
SWOT Analysis: Opportunities 4
SWOT Analysis: Threats 4
Problems: Flawed Capacity Strategy 5
Problems: Lack of QFD 5
Problems: Management Focused on the "Home Run" 5
Potential Alternative Scenario I: Increase Product Variety 5
Lessons Learned/Conclusion 7
Appendix: Figure 1 – Growth of Web Purchases & Online Grocery Purchases 8
Appendix: Figure 2 -- Webvan vs. Brick & Mortar Grocery, Order Size & Frequency 9
Appendix: Figure 3 – Avg Daily Unit Break-Even Analysis 10
Appendix: Figure 4 – Adding Capacity 10
Appendix: Figure 5 – Quality Functional Deployment: House of Quality 11
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Independent forecasts of online grocery growth varied by 66%. Second, consumer purchase surveys indicated customers did not highly favor purchasing groceries online. Third, dotcom stocks – unbeknownst to Webvan – were about to bust, as is widely documented. Capital markets eventually dried up as dotcom companies failed to deliver profit. Finally, the grocery business is known for its razor thin operating margins, which were often below 2%. This was a significant threat to Webvan, as it strategy hinged on the successful entry into an already highly competitive industry. Webvan lagged the industry on other KPI's such as order frequency, and order size (See Figure 2).
Problems: Flawed Capacity Strategy
Webvan's central problem was its unsustainable fixed cost structure that required an impossibly high break-even point to sustain operations (See Figure 3). Further, the operating structure was so inflexible and fixed that capacity was greatly under-utilized. This cost the company millions in operating losses, and handcuffed the company from further expansion (See Figure 4).
Problems: Lack of QFD
A secondary problem is Webvan's failure to design the service delivery system around the expectations of the customer, and the operational capabilities of the firm. In this case, Webvan assumed customers needed same day delivery within a 30 minute window, and assumed the company could profitably deliver this service.

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