Case Study Description of Scharffen Berger Chocolate Maker (Abridged)
On April 26, 2003, Scharffen Berger Chocolate Maker opened its second retail store in the newly renovated San Francisco Ferry Building. It joined a number of other prestigious artisan food and specialty retail shops at this prime location at the foot of San Francisco's Market Street. The opening of this second store took place as Scharffen Berger was in the midst of rapid expansion. The company had recently raised $4 million in its second round of funding, and it had been growing at an average rate of 60% over the past five years. As the first new chocolate-making company to open its doors in the United States in the last 50 years, Scharffen Berger had achieved unprecedented success in an industry dominated by a handful of large-scale producers. Since they first set up shop in 1996, the company's two founders--John Scharffenberger and Robert Steinberg--gained national attention for their high-quality chocolate produced with small-scale European artisan methods. Through their dedication to quality, Scharffen Berger became a media darling and an important player in the burgeoning gourmet chocolate industry. Maintaining its carefully developed reputation for quality while expanding production capabilities was likely to be a key issue for the company as it continued to grow.
Swot Analysis of "Scharffen Berger Chocolate Maker (Abridged)" written by Michael T. Hannan, Greta Hsu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Scharffen Berger facing as an external strategic factors. Some of the topics covered in Scharffen Berger Chocolate Maker (Abridged) case study are - Strategic Management Strategies, Entrepreneurship, Organizational structure, Strategic planning and Organizational Development.
Some of the macro environment factors that can be used to understand the Scharffen Berger Chocolate Maker (Abridged) casestudy better are - – there is backlash against globalization, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, wage bills are increasing, talent flight as more people leaving formal jobs,
technology disruption, increasing energy prices, etc
Introduction to SWOT Analysis of Scharffen Berger Chocolate Maker (Abridged)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Scharffen Berger Chocolate Maker (Abridged) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Scharffen Berger, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Scharffen Berger 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 Scharffen Berger Chocolate Maker (Abridged) can be done for the following purposes –
1. Strategic planning using facts provided in Scharffen Berger Chocolate Maker (Abridged) case study
2. Improving business portfolio management of Scharffen Berger
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Scharffen Berger
Strengths Scharffen Berger Chocolate Maker (Abridged) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Scharffen Berger in Scharffen Berger Chocolate Maker (Abridged) Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Scharffen Berger in the sector have low bargaining power. Scharffen Berger Chocolate Maker (Abridged) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Scharffen Berger to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Scharffen Berger is one of the leading recruiters in the industry. Managers in the Scharffen Berger Chocolate Maker (Abridged) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Scharffen Berger has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Scharffen Berger to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Scharffen Berger has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Scharffen Berger has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Scharffen Berger Chocolate Maker (Abridged) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Scharffen Berger
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Scharffen Berger does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Scharffen Berger 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.
Effective Research and Development (R&D)
– Scharffen Berger has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Scharffen Berger Chocolate Maker (Abridged) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Scharffen Berger in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Scharffen Berger digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Scharffen Berger 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.
Sustainable margins compare to other players in Organizational Development industry
– Scharffen Berger Chocolate Maker (Abridged) firm has clearly differentiated products in the market place. This has enabled Scharffen Berger to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Scharffen Berger to invest into research and development (R&D) and innovation.
Ability to lead change in Organizational Development field
– Scharffen Berger is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Scharffen Berger in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Scharffen Berger Chocolate Maker (Abridged) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Scharffen Berger Chocolate Maker (Abridged) are -
Slow to strategic competitive environment developments
– As Scharffen Berger Chocolate Maker (Abridged) HBR case study mentions - Scharffen Berger takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Scharffen Berger Chocolate Maker (Abridged), it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Scharffen Berger Chocolate Maker (Abridged), in the dynamic environment Scharffen Berger has struggled to respond to the nimble upstart competition. Scharffen Berger has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Scharffen Berger Chocolate Maker (Abridged) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Scharffen Berger 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Scharffen Berger is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Scharffen Berger needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Scharffen Berger to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Scharffen Berger 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Scharffen Berger is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Scharffen Berger Chocolate Maker (Abridged) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Scharffen Berger 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.
Interest costs
– Compare to the competition, Scharffen Berger has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Scharffen Berger has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Scharffen Berger even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Scharffen Berger Chocolate Maker (Abridged), it seems that the employees of Scharffen Berger 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.
Opportunities Scharffen Berger Chocolate Maker (Abridged) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Scharffen Berger Chocolate Maker (Abridged) are -
Using analytics as competitive advantage
– Scharffen Berger has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Scharffen Berger Chocolate Maker (Abridged) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Scharffen Berger to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Scharffen Berger 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 Organizational Development segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Scharffen Berger can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Scharffen Berger can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Scharffen Berger can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Scharffen Berger 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.
Learning at scale
– Online learning technologies has now opened space for Scharffen Berger 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Scharffen Berger in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Scharffen Berger can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Scharffen Berger 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, as suggested in case study, Scharffen Berger Chocolate Maker (Abridged), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Scharffen Berger can develop new processes and procedures in Organizational Development 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Scharffen Berger 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 Scharffen Berger to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Scharffen Berger can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Scharffen Berger Chocolate Maker (Abridged) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Scharffen Berger Chocolate Maker (Abridged) are -
High dependence on third party suppliers
– Scharffen Berger 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.
Regulatory challenges
– Scharffen Berger 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 Organizational Development industry regulations.
Stagnating economy with rate increase
– Scharffen Berger can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Scharffen Berger with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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. Scharffen Berger 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Scharffen Berger in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Scharffen Berger business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Scharffen Berger 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. Scharffen Berger can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Consumer confidence and its impact on Scharffen Berger 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 the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Scharffen Berger 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 prominent markets illustrated in HBR case study Scharffen Berger Chocolate Maker (Abridged) .
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. Scharffen Berger needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Scharffen Berger is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Scharffen Berger Chocolate Maker (Abridged) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Scharffen Berger Chocolate Maker (Abridged) 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 the case study Scharffen Berger Chocolate Maker (Abridged) 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 the Harvard case study Scharffen Berger Chocolate Maker (Abridged) 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 Scharffen Berger Chocolate Maker (Abridged) is 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 Scharffen Berger needs to make to build a sustainable competitive advantage.
