Case Study Description of Nestle Refrigerated Foods: Contadina Pasta & Pizza (A)
Nestle Co.'s Refrigerated Foods Division has very successfully launched its Contadina brand pasta and sauces. The new product has achieved nearly $100 million in sales in three years. The division now considers an extension into the pizza line. This case provides a detailed look at the use of simulated test markets to forecast a new product's potential.
Swot Analysis of "Nestle Refrigerated Foods: Contadina Pasta & Pizza (A)" written by V. Kasturi Rangan, Marie Bell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Contadina Refrigerated facing as an external strategic factors. Some of the topics covered in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) case study are - Strategic Management Strategies, Market research and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) casestudy better are - – there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
wage bills are increasing, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Nestle Refrigerated Foods: Contadina Pasta & Pizza (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Contadina Refrigerated, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Contadina Refrigerated 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) can be done for the following purposes –
1. Strategic planning using facts provided in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) case study
2. Improving business portfolio management of Contadina Refrigerated
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Contadina Refrigerated
Strengths Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Contadina Refrigerated in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– Contadina Refrigerated 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 Contadina Refrigerated in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Contadina Refrigerated digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Contadina Refrigerated 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.
High brand equity
– Contadina Refrigerated has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Contadina Refrigerated to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Contadina Refrigerated 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 Contadina Refrigerated is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Contadina Refrigerated is present in almost all the verticals within the industry. This has provided firm in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Contadina Refrigerated is one of the most innovative firm in sector. Manager in Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Contadina Refrigerated has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Contadina Refrigerated 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) firm has clearly differentiated products in the market place. This has enabled Contadina Refrigerated to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Contadina Refrigerated to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Contadina Refrigerated is one of the leading recruiters in the industry. Managers in the Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Contadina Refrigerated 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.
Low bargaining power of suppliers
– Suppliers of Contadina Refrigerated in the sector have low bargaining power. Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Contadina Refrigerated to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Contadina Refrigerated 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) are -
High cash cycle compare to competitors
Contadina Refrigerated 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.
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 Contadina Refrigerated supply chain. Even after few cautionary changes mentioned in the HBR case study - Nestle Refrigerated Foods: Contadina Pasta & Pizza (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Contadina Refrigerated vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Contadina Refrigerated 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Contadina Refrigerated has relatively successful track record of launching new products.
Products dominated business model
– Even though Contadina Refrigerated 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 - Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Contadina Refrigerated 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A), it seems that the employees of Contadina Refrigerated 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A), is just above the industry average. Contadina Refrigerated 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.
Capital Spending Reduction
– Even during the low interest decade, Contadina Refrigerated 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 bargaining power of channel partners
– Because of the regulatory requirements, V. Kasturi Rangan, Marie Bell suggests that, Contadina Refrigerated is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Contadina Refrigerated is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) | 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) are -
Buying journey improvements
– Contadina Refrigerated can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Contadina Refrigerated can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Contadina Refrigerated 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Contadina Refrigerated to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Contadina Refrigerated 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 Contadina Refrigerated to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Contadina Refrigerated 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, Nestle Refrigerated Foods: Contadina Pasta & Pizza (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Contadina Refrigerated 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.
Building a culture of innovation
– managers at Contadina Refrigerated 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 Sales & Marketing segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Contadina Refrigerated can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Contadina Refrigerated to increase its market reach. Contadina Refrigerated 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.
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 Contadina Refrigerated 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Contadina Refrigerated 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. Contadina Refrigerated 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.
Developing new processes and practices
– Contadina Refrigerated can develop new processes and procedures in Sales & Marketing 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.
Leveraging digital technologies
– Contadina Refrigerated 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.
Threats Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Contadina Refrigerated 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) .
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.
Consumer confidence and its impact on Contadina Refrigerated 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.
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 Contadina Refrigerated business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Contadina Refrigerated 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. Contadina Refrigerated can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Contadina Refrigerated
– 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 Contadina Refrigerated.
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 Contadina Refrigerated.
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 Contadina Refrigerated in the Sales & Marketing sector and impact the bottomline of the organization.
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. Contadina Refrigerated needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Contadina Refrigerated 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 Contadina Refrigerated is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Contadina Refrigerated has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Contadina Refrigerated needs to keep up with the evolution of technology in the Sales & Marketing 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.
Weighted SWOT Analysis of Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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 Contadina Refrigerated needs to make to build a sustainable competitive advantage.