Case Study Description of Scharffen Berger Chocolate Maker
On April 26, 2003, Scharffen Berger Chocolate Maker opened its second retail store in the newly renovated San Francisco Ferry Building, joining a number of other prestigious artisan food and specialty retail shops at this prime location. The opening of this second store took place in the midst of the company's rapid expansion. Scharffen Berger had recently raised $4 million in its second round of funding, and it had grown 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 past 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" 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 case study are - Strategic Management Strategies, Entrepreneurship, Growth strategy, Organizational structure, Strategic planning and Organizational Development.
Some of the macro environment factors that can be used to understand the Scharffen Berger Chocolate Maker casestudy better are - – increasing energy prices, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, there is backlash against globalization,
there is increasing trade war between United States & China, geopolitical disruptions, etc
Introduction to SWOT Analysis of Scharffen Berger Chocolate Maker
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Scharffen Berger Chocolate Maker 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 can be done for the following purposes –
1. Strategic planning using facts provided in Scharffen Berger Chocolate Maker 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 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Scharffen Berger in Scharffen Berger Chocolate Maker Harvard Business Review case study are -
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.
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.
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 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.
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.
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 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.
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.
Innovation driven organization
– Scharffen Berger is one of the most innovative firm in sector. Manager in Scharffen Berger Chocolate Maker Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Scharffen Berger is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Scharffen Berger is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Scharffen Berger Chocolate Maker Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Scharffen Berger in the sector have low bargaining power. Scharffen Berger Chocolate Maker 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.
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.
Analytics focus
– Scharffen Berger is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael T. Hannan, Greta Hsu can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Scharffen Berger Chocolate Maker | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Scharffen Berger Chocolate Maker are -
High cash cycle compare to competitors
Scharffen Berger has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 should strive to include more intangible value offerings along with its core products and services.
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Scharffen Berger Chocolate Maker 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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Scharffen Berger needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study Scharffen Berger Chocolate Maker, 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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Scharffen Berger Chocolate Maker, 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.
Opportunities Scharffen Berger Chocolate Maker | 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 are -
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.
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, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Scharffen Berger in the consumer business. Now Scharffen Berger can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Better consumer reach
– The expansion of the 5G network will help Scharffen Berger to increase its market reach. Scharffen Berger will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
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.
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.
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 - 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.
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 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.
Threats Scharffen Berger Chocolate Maker 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 are -
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.
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.
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.
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.
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.
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.
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, 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 .
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.
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.
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.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Scharffen Berger.
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.
Weighted SWOT Analysis of Scharffen Berger Chocolate Maker 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 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 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 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 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.