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 - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, there is backlash against globalization, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , geopolitical disruptions,
challanges to central banks by blockchain based private currencies, wage bills are increasing, 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 -
Operational resilience
– The operational resilience strategy in the Scharffen Berger Chocolate Maker (Abridged) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
Training and development
– Scharffen Berger has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Scharffen Berger Chocolate Maker (Abridged) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
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.
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.
Successful track record of launching new products
– Scharffen Berger has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Scharffen Berger 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.
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.
Innovation driven organization
– Scharffen Berger is one of the most innovative firm in sector. Manager in Scharffen Berger Chocolate Maker (Abridged) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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 -
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 Scharffen Berger supply chain. Even after few cautionary changes mentioned in the HBR case study - Scharffen Berger Chocolate Maker (Abridged), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Scharffen Berger 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, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Scharffen Berger Chocolate Maker (Abridged), is just above the industry average. Scharffen Berger needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Scharffen Berger Chocolate Maker (Abridged) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Scharffen Berger has relatively successful track record of launching new products.
Products dominated business model
– Even though Scharffen Berger has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Scharffen Berger Chocolate Maker (Abridged) should strive to include more intangible value offerings along with its core products and services.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Scharffen Berger 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 industry using digital technology.
Lack of clear differentiation of Scharffen Berger products
– To increase the profitability and margins on the products, Scharffen Berger needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Aligning sales with marketing
– It come across in the case study Scharffen Berger Chocolate Maker (Abridged) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Scharffen Berger Chocolate Maker (Abridged) can leverage the sales team experience to cultivate customer relationships as Scharffen Berger is planning to shift buying processes online.
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 -
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Scharffen Berger can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Scharffen Berger can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Scharffen Berger has opened avenues for new revenue streams for the organization in the industry. This can help Scharffen Berger to build a more holistic ecosystem as suggested in the Scharffen Berger Chocolate Maker (Abridged) case study. Scharffen Berger can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Scharffen Berger can use these opportunities to build new business models that can help the communities that Scharffen Berger operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Loyalty marketing
– Scharffen Berger 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.
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.
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.
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 Scharffen Berger 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.
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.
Buying journey improvements
– Scharffen Berger can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Scharffen Berger Chocolate Maker (Abridged) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
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.
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 -
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Scharffen Berger can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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) .
Technology acceleration in Forth Industrial Revolution
– Scharffen Berger has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Scharffen Berger needs to keep up with the evolution of technology in the Organizational Development 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Scharffen Berger Chocolate Maker (Abridged), Scharffen Berger may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
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.
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 Scharffen Berger in the Organizational Development sector and impact the bottomline of the organization.
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.
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.
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.
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.
Increasing wage structure of Scharffen Berger
– 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 Scharffen Berger.
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.