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 - – wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
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.
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.
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.
Strong track record of project management
– Contadina Refrigerated is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Contadina Refrigerated in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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.
Analytics focus
– Contadina Refrigerated 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 V. Kasturi Rangan, Marie Bell 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.
High switching costs
– The high switching costs that Contadina Refrigerated 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.
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 -
Workers concerns about automation
– As automation is fast increasing in the segment, Contadina Refrigerated 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.
Slow decision making process
– As mentioned earlier in the report, Contadina Refrigerated 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. Contadina Refrigerated 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.
Low market penetration in new markets
– Outside its home market of Contadina Refrigerated, firm in the HBR case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A), it seems that company is thinking about the frontier risks that can impact Sales & Marketing 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 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Nestle Refrigerated Foods: Contadina Pasta & Pizza (A), in the dynamic environment Contadina Refrigerated has struggled to respond to the nimble upstart competition. Contadina Refrigerated has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Interest costs
– Compare to the competition, Contadina Refrigerated 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.
Increasing silos among functional specialists
– The organizational structure of Contadina Refrigerated is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Contadina Refrigerated needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Contadina Refrigerated to focus more on services rather than just following the product oriented approach.
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.
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 -
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.
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.
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.
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.
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.
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.
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. Contadina Refrigerated can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Contadina Refrigerated in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Contadina Refrigerated is facing challenges because of the dominance of functional experts in the organization. Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) 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.
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.
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.
Creating value in data economy
– The success of analytics program of Contadina Refrigerated has opened avenues for new revenue streams for the organization in the industry. This can help Contadina Refrigerated to build a more holistic ecosystem as suggested in the Nestle Refrigerated Foods: Contadina Pasta & Pizza (A) case study. Contadina Refrigerated can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 -
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.
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.
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.
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.
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.
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.
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.
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.
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) .
Regulatory challenges
– Contadina Refrigerated 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 Sales & Marketing industry regulations.
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.
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. Contadina Refrigerated will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Contadina Refrigerated in the Sales & Marketing industry. The Sales & Marketing 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.
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.
