Case Study Description of U.S. Retail Coffee Market (A)
Set in mid-1978, this case covers all aspects of the U.S. retail coffee market both cross-sectionally and historically. The market is recovering from dramatic price rises and volume drops. The overall issue is the forecast of future market evolution and the implications for the marketing strategy of each major producer. Students have to make explicit 5- and 10-year sales and market share forecasts and draw up BCG-type portfolio matrices. Case is part of a two-day series, beginning with an aggregate view of the entire market and its evolution and narrowing to a view of market strategy for a single brand.
Swot Analysis of "U.S. Retail Coffee Market (A)" written by George S. Yip, Jeffrey R. Williams includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Market Coffee facing as an external strategic factors. Some of the topics covered in U.S. Retail Coffee Market (A) case study are - Strategic Management Strategies, Demographics, Financial markets, Forecasting, Marketing, Research & development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the U.S. Retail Coffee Market (A) casestudy better are - – supply chains are disrupted by pandemic , increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, wage bills are increasing, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing commodity prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of U.S. Retail Coffee Market (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in U.S. Retail Coffee Market (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Market Coffee, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Market Coffee 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 U.S. Retail Coffee Market (A) can be done for the following purposes –
1. Strategic planning using facts provided in U.S. Retail Coffee Market (A) case study
2. Improving business portfolio management of Market Coffee
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 Market Coffee
Strengths U.S. Retail Coffee Market (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Market Coffee in U.S. Retail Coffee Market (A) Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– U.S. Retail Coffee Market (A) firm has clearly differentiated products in the market place. This has enabled Market Coffee to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Market Coffee to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Market Coffee 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 Market Coffee 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 Market Coffee in the sector have low bargaining power. U.S. Retail Coffee Market (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Market Coffee to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Market Coffee is present in almost all the verticals within the industry. This has provided firm in U.S. Retail Coffee Market (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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Market Coffee digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Market Coffee 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.
Cross disciplinary teams
– Horizontal connected teams at the Market Coffee 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.
Ability to recruit top talent
– Market Coffee is one of the leading recruiters in the industry. Managers in the U.S. Retail Coffee Market (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.
Innovation driven organization
– Market Coffee is one of the most innovative firm in sector. Manager in U.S. Retail Coffee Market (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Market Coffee has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Market Coffee to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Market Coffee
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Market Coffee does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the U.S. Retail Coffee Market (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.
Superior customer experience
– The customer experience strategy of Market Coffee in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses U.S. Retail Coffee Market (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of U.S. Retail Coffee Market (A) are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Market Coffee is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study U.S. Retail Coffee Market (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.
Slow decision making process
– As mentioned earlier in the report, Market Coffee 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. Market Coffee 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study U.S. Retail Coffee Market (A), in the dynamic environment Market Coffee has struggled to respond to the nimble upstart competition. Market Coffee has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Market Coffee is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Market Coffee needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Market Coffee to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the U.S. Retail Coffee Market (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 Market Coffee has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Market Coffee, firm in the HBR case study U.S. Retail Coffee Market (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Market Coffee products
– To increase the profitability and margins on the products, Market Coffee needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Market Coffee 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.
Products dominated business model
– Even though Market Coffee 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 - U.S. Retail Coffee Market (A) should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Market Coffee 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 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 Market Coffee supply chain. Even after few cautionary changes mentioned in the HBR case study - U.S. Retail Coffee Market (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Market Coffee vulnerable to further global disruptions in South East Asia.
Opportunities U.S. Retail Coffee Market (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 U.S. Retail Coffee Market (A) are -
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 Market Coffee 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.
Using analytics as competitive advantage
– Market Coffee 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 U.S. Retail Coffee Market (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Market Coffee to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Market Coffee 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.
Leveraging digital technologies
– Market Coffee 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Market Coffee is facing challenges because of the dominance of functional experts in the organization. U.S. Retail Coffee Market (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.
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. Market Coffee 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. Market Coffee 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.
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 Market Coffee in the consumer business. Now Market Coffee can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Market Coffee can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Market Coffee can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Market Coffee has opened avenues for new revenue streams for the organization in the industry. This can help Market Coffee to build a more holistic ecosystem as suggested in the U.S. Retail Coffee Market (A) case study. Market Coffee can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Market Coffee can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Loyalty marketing
– Market Coffee 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.
Buying journey improvements
– Market Coffee can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. U.S. Retail Coffee Market (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.
Threats U.S. Retail Coffee Market (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study U.S. Retail Coffee Market (A) are -
Shortening product life cycle
– it is one of the major threat that Market Coffee is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Market Coffee 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. Market Coffee can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study U.S. Retail Coffee Market (A), Market Coffee may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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 Market Coffee in the Sales & Marketing sector and impact the bottomline of the organization.
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 Market Coffee.
Technology acceleration in Forth Industrial Revolution
– Market Coffee has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Market Coffee 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.
Increasing wage structure of Market Coffee
– 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 Market Coffee.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Market Coffee with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Market Coffee 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 U.S. Retail Coffee Market (A) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Market Coffee 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.
Regulatory challenges
– Market Coffee 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.
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 Market Coffee business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of U.S. Retail Coffee Market (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 U.S. Retail Coffee Market (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 U.S. Retail Coffee Market (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 U.S. Retail Coffee Market (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 U.S. Retail Coffee Market (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 Market Coffee needs to make to build a sustainable competitive advantage.
