Case Study Description of H.J. Heinz Co.: Plastic Bottle Ketchup (B)
The Heinz Ketchup product manager discovers she does not have sufficient finished inventory and production capacity to meet trade demand for a new plastic bottle ketchup. Alternatives include cancelling promotion events and putting the trade on allocation.
Swot Analysis of "H.J. Heinz Co.: Plastic Bottle Ketchup (B)" written by John A. Quelch, John L. Teopaco includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ketchup Heinz facing as an external strategic factors. Some of the topics covered in H.J. Heinz Co.: Plastic Bottle Ketchup (B) case study are - Strategic Management Strategies, Product development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the H.J. Heinz Co.: Plastic Bottle Ketchup (B) casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, increasing commodity prices, talent flight as more people leaving formal jobs, increasing energy prices, increasing government debt because of Covid-19 spendings,
increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of H.J. Heinz Co.: Plastic Bottle Ketchup (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in H.J. Heinz Co.: Plastic Bottle Ketchup (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ketchup Heinz, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ketchup Heinz 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) can be done for the following purposes –
1. Strategic planning using facts provided in H.J. Heinz Co.: Plastic Bottle Ketchup (B) case study
2. Improving business portfolio management of Ketchup Heinz
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 Ketchup Heinz
Strengths H.J. Heinz Co.: Plastic Bottle Ketchup (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ketchup Heinz in H.J. Heinz Co.: Plastic Bottle Ketchup (B) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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.
High brand equity
– Ketchup Heinz has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ketchup Heinz to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Ketchup Heinz is one of the most innovative firm in sector. Manager in H.J. Heinz Co.: Plastic Bottle Ketchup (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Ketchup Heinz 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 John A. Quelch, John L. Teopaco 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.
Low bargaining power of suppliers
– Suppliers of Ketchup Heinz in the sector have low bargaining power. H.J. Heinz Co.: Plastic Bottle Ketchup (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ketchup Heinz to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Sales & Marketing industry
– H.J. Heinz Co.: Plastic Bottle Ketchup (B) firm has clearly differentiated products in the market place. This has enabled Ketchup Heinz to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Ketchup Heinz to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Ketchup Heinz has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ketchup Heinz has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Ketchup Heinz in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Ketchup Heinz 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Ketchup Heinz 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
- Ketchup Heinz 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 Ketchup Heinz is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in H.J. Heinz Co.: Plastic Bottle Ketchup (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Ketchup Heinz is one of the leading recruiters in the industry. Managers in the H.J. Heinz Co.: Plastic Bottle Ketchup (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses H.J. Heinz Co.: Plastic Bottle Ketchup (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of H.J. Heinz Co.: Plastic Bottle Ketchup (B) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Ketchup Heinz 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study H.J. Heinz Co.: Plastic Bottle Ketchup (B), in the dynamic environment Ketchup Heinz has struggled to respond to the nimble upstart competition. Ketchup Heinz 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, Ketchup Heinz is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study H.J. Heinz Co.: Plastic Bottle Ketchup (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study H.J. Heinz Co.: Plastic Bottle Ketchup (B), it seems that the employees of Ketchup Heinz 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
Ketchup Heinz 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.
Lack of clear differentiation of Ketchup Heinz products
– To increase the profitability and margins on the products, Ketchup Heinz needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Ketchup Heinz is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Ketchup Heinz needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ketchup Heinz to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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 Ketchup Heinz 's lucrative customers.
Aligning sales with marketing
– It come across in the case study H.J. Heinz Co.: Plastic Bottle Ketchup (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case H.J. Heinz Co.: Plastic Bottle Ketchup (B) can leverage the sales team experience to cultivate customer relationships as Ketchup Heinz is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Ketchup Heinz 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.
Interest costs
– Compare to the competition, Ketchup Heinz 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.
Opportunities H.J. Heinz Co.: Plastic Bottle Ketchup (B) | 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) are -
Building a culture of innovation
– managers at Ketchup Heinz 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.
Manufacturing automation
– Ketchup Heinz 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ketchup Heinz 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ketchup Heinz 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.
Better consumer reach
– The expansion of the 5G network will help Ketchup Heinz to increase its market reach. Ketchup Heinz 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ketchup Heinz 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, H.J. Heinz Co.: Plastic Bottle Ketchup (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Ketchup Heinz can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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.
Developing new processes and practices
– Ketchup Heinz 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.
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. Ketchup Heinz 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. Ketchup Heinz 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ketchup Heinz can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ketchup Heinz is facing challenges because of the dominance of functional experts in the organization. H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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.
Creating value in data economy
– The success of analytics program of Ketchup Heinz has opened avenues for new revenue streams for the organization in the industry. This can help Ketchup Heinz to build a more holistic ecosystem as suggested in the H.J. Heinz Co.: Plastic Bottle Ketchup (B) case study. Ketchup Heinz can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ketchup Heinz can use these opportunities to build new business models that can help the communities that Ketchup Heinz operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Threats H.J. Heinz Co.: Plastic Bottle Ketchup (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ketchup Heinz with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Ketchup Heinz has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Ketchup Heinz 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.
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.
Regulatory challenges
– Ketchup Heinz 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 Ketchup Heinz is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Ketchup Heinz.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ketchup Heinz 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.
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. Ketchup Heinz needs to understand the core reasons impacting the Sales & Marketing 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 Ketchup Heinz in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Ketchup Heinz 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.
Environmental challenges
– Ketchup Heinz 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. Ketchup Heinz can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Consumer confidence and its impact on Ketchup Heinz 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.
Weighted SWOT Analysis of H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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 H.J. Heinz Co.: Plastic Bottle Ketchup (B) 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 Ketchup Heinz needs to make to build a sustainable competitive advantage.