The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms
Founded in 2007, Bolaven Farms is a coffee business with a social purpose. Set up in Laos and Hong Kong, Bolaven Farms aims at providing high-quality coffee to the worldwide public while helping to alleviate poverty among coffee farmers in Laos. The business model involves a full integration of the coffee supply chain, from planting the coffee seed to selling the final branded product to wholesale and retail customers. Consequently, farmers and the company benefit from excluding intermediaries from the supply chain and keeping profit margins for themselves. The company's vision of educating farmers and providing them with higher income for their work is very compelling to the public and was quickly picked up by the media. However, the business model has yet to be tested. For one thing, once the farmers graduate from the programme, they need employment assurance and additional land to cultivate. For another, the coffee market is a mature one, with many players and a multitude of competing and lower-priced offers to choose from. People find the company's vision very inspiring, but it is also very difficult to translate into viable actions. The company has already invested US$4.0 million in the project, but is still a long way from educating the public and finding customers willing to pay premium prices for the coffee. Both ends of the supply chain need further refinement, and Say is not willing to compromise on quality or price. The case begins with an introduction of the coffee industry and its practices. A description of Laos as a business environment for Bolaven Farms follows. The case describes the development and implementation of a business model that incorporates vertical integration supported by social networks. It allows for an advanced analysis of issues related to choosing an appropriate business model and focuses on the risks related to future expansion and resulting from the strategic choices of the entrepreneur.
Swot Analysis of "The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms" written by Marta K Dowejko, Gilbert Wong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Coffee Bolaven facing as an external strategic factors. Some of the topics covered in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms case study are - Strategic Management Strategies, Entrepreneurial management, Growth strategy, Influence, International business, Social enterprise, Supply chain and Organizational Development.
Some of the macro environment factors that can be used to understand the The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms casestudy better are - – there is increasing trade war between United States & China, increasing transportation and logistics costs, there is backlash against globalization, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google,
increasing household debt because of falling income levels, increasing energy prices, etc
Introduction to SWOT Analysis of The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Coffee Bolaven, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Coffee Bolaven 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms can be done for the following purposes –
1. Strategic planning using facts provided in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms case study
2. Improving business portfolio management of Coffee Bolaven
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 Coffee Bolaven
Strengths The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Coffee Bolaven in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms Harvard Business Review case study are -
High switching costs
– The high switching costs that Coffee Bolaven 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.
Learning organization
- Coffee Bolaven 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 Coffee Bolaven is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Coffee Bolaven digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Coffee Bolaven 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.
Highly skilled collaborators
– Coffee Bolaven 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Coffee Bolaven has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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.
Ability to lead change in Organizational Development field
– Coffee Bolaven 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 Coffee Bolaven in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Coffee Bolaven in the sector have low bargaining power. The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Coffee Bolaven to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Coffee Bolaven 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Coffee Bolaven is one of the most innovative firm in sector. Manager in The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Coffee Bolaven 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 Marta K Dowejko, Gilbert Wong 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.
Superior customer experience
– The customer experience strategy of Coffee Bolaven in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Coffee Bolaven
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Coffee Bolaven does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms, in the dynamic environment Coffee Bolaven has struggled to respond to the nimble upstart competition. Coffee Bolaven has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms, it seems that the employees of Coffee Bolaven 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms, is just above the industry average. Coffee Bolaven 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.
Products dominated business model
– Even though Coffee Bolaven 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 - The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Coffee Bolaven 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.
Capital Spending Reduction
– Even during the low interest decade, Coffee Bolaven 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.
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 Coffee Bolaven supply chain. Even after few cautionary changes mentioned in the HBR case study - The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Coffee Bolaven vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Coffee Bolaven 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. Coffee Bolaven 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.
High operating costs
– Compare to the competitors, firm in the HBR case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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 Coffee Bolaven 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Coffee Bolaven 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.
Opportunities The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms | 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms are -
Buying journey improvements
– Coffee Bolaven can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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.
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. Coffee Bolaven 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. Coffee Bolaven 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.
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. Coffee Bolaven can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Coffee Bolaven 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.
Creating value in data economy
– The success of analytics program of Coffee Bolaven has opened avenues for new revenue streams for the organization in the industry. This can help Coffee Bolaven to build a more holistic ecosystem as suggested in the The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms case study. Coffee Bolaven can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Coffee Bolaven is facing challenges because of the dominance of functional experts in the organization. The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. Coffee Bolaven 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, Coffee Bolaven 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.
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 Coffee Bolaven 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Coffee Bolaven can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Coffee Bolaven 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Coffee Bolaven 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 Coffee Bolaven to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Coffee Bolaven can use these opportunities to build new business models that can help the communities that Coffee Bolaven operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Threats The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms are -
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.
Consumer confidence and its impact on Coffee Bolaven 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms, Coffee Bolaven 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 .
Shortening product life cycle
– it is one of the major threat that Coffee Bolaven is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Coffee Bolaven 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.
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 Coffee Bolaven business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Coffee Bolaven 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.
Increasing wage structure of Coffee Bolaven
– 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 Coffee Bolaven.
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. Coffee Bolaven needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
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 Coffee Bolaven in the Organizational Development sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Coffee Bolaven 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.
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 Coffee Bolaven.
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. Coffee Bolaven 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.
Weighted SWOT Analysis of The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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 The Lao Coffee Industry: Implementing Vertical Integration for a Social Cause at Bolaven Farms 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 Coffee Bolaven needs to make to build a sustainable competitive advantage.
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