Company e-Harmony Business Model and Business Level Strategy - Case Study Example

Case Studies Case Studies e-harmony The company, e-Harmony was formed in the year, 2000.The main focus of the company is to bring single people together by making compatible matches. The company is facing issues as there are many other similar companies, which are copying the features of e-Harmony in order to broaden their scope (Piskorski, Halaburda, & Smith, 2008). In order to have an understanding on strategic position of the company and the industry, Porters five forces can be used. Porters Five Forces Rivalry among Competing Firms: High After examining the case, it can deduced that the level of competition is high as the industry growth rate is slow which makes the number of the competitors grow and as a result, they taking up more sales. In this regard, it is essential to state that there is similar size of the competing firms, which are giving the same service, thus undifferentiated business strategy or service by the companies increases the competition among them as well. Threat of New Entrants: Medium Threat of new entrants is medium because if any general industry launches itself then there are low barriers but in terms of a target market there are large barriers. However, it can be said that a slow industry also means that there is less chance of new entrees to emerge. The capital requirement to launch such company is low, which makes new entrees to emerge more frequently. Threat of Substitutes: High The presence of offline matchmakers makes the threat of substitute high. There are other social networking sites like Face Book, where people are able to find their compatible mates. As there are low switching costs so people may use these traditional methods of dating more than the online match making companies. Moreover, as the company is providing an undifferentiated product so the threat is high. Bargaining Power of Suppliers: High The bargaining power of suppliers is high as there are low switching costs and there is a lack of individuals who have expertise in this industry. Bargaining Power of Buyers: High As magnitude of substitute products are high and there are low switching costs so it can be said that the bargaining power of buyers is high. Moreover, mostly people are more prices sensitive which makes them more inclined towards bargaining. The buyer volume is high which makes the customers dictate prices of the services. e-Harmony’s value Preposition (Business Model) and Business Level Strategy e-Harmony uses a business framework in which the customers first need to make their profile on the site. Company limits the number of results per day so that the judgment errors are reduced. There is selective filtering of the customers according to their marital status and poor personality profile. Moreover, customer’s behavior is analyzed and there are recommendation systems that provide connections to people of their self-interest. The company continues to improve their services by using Five Factor psychological model, which makes the customers inclined towards the company, making their service differentiated. In order to develop their clientele, the company uses revolutionary matching algorithm, guided and open communication, eHarmony labs that are value-creating activities. Home Depot: The company was founded in 1978 and is one the largest home improvement retailers. They are not just involve in selling building materials, plumbing and house improvement products but also provides services like “to do it for me customers” through which the company installs everything at home like carpeting, painting, flooring, instilling cabinets etc. The company’s name is well-established brand name but lately, there was a rise in its competitive forces like Lowe’s. In this regard, SWOT analysis is being conducted to estimate the strategic position of the company in the market. SWOT analysis Strengths Execution of services: A case study indicates that even at the time of financial crises and recession, the company continued to execute their working effectively and their annual earnings did not decrease. Such retailers are able to sustain and increase their market share. Product Innovation: It is the fastest growing company as it has product alliances with United State’s leading manufacturers that use innovative and high quality products and “do it yourself” services. Professional Clientele: One of the major strengths of the company is that the clientele is vast who place large orders. Moreover, as the company continues to invent new services like e-receipts and loyalty program, this increases the number of clientele. Shareholder Friendly: As mentioned before, the company is revenue generating which increases market share for the company, thus returns are high for the shareholders, which is the strength of the company. Weaknesses It is a small online company. An Internet based competitor like Amazon targets more customers as they provide quick home deliveries. The other weakness lies on the fact that it is present in a prime domestic market. Opportunities Research indicates that there is more maintenance demand from aging homes around the country. Moreover, as the company provides cheap financing options they may be able to target more customers. Home Depot also continues to expand in 2014, which creates further opportunities for them. They have also taken initiative of improving and modifying merchandise processes, order management and building effective supply chain management systems that can add value to their products and services. Threats The first threat for the company is in terms of rising interest rate, which has a considerable amount of impact on consumer spending. As the home buying and mortgage rates increase it also has a negative effect in the buying pattern of the customers. Besides, these it is seen that in stormy and bad weather, customers are less likely to take interest in the home products and services. Hence, if there is a low demand for such products and feeble housing market, then sales would reduce and threaten the company. Conclusion It can be concluded that the strengths and opportunities of the company is that they continue to produce good quality products and services, which overshadow their strengths and threats. However, the company can continue to expand and focus on online service would be beneficial for them in the long run. Reference Piskorski, M. J., Halaburda, H., & Smith, T. (2008). eHarmony. Harvard Business School. Read More