Case Study Description of Quaker Oat's Oatmeal Division
The hot breakfast cereal division of Quaker Oats was in serious decline, and the increasing American preference for speed and convenience at breakfast did not bode well for the category. The senior VP overseeing the hot breakfast division has been given an ultimatum by the CEO to turn the company's namesake product line around. She develops a marketing plan, but will it work?
Swot Analysis of "Quaker Oat's Oatmeal Division" written by Christie Nordhielm, Gretchen Hall includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Breakfast Quaker facing as an external strategic factors. Some of the topics covered in Quaker Oat's Oatmeal Division case study are - Strategic Management Strategies, Pricing, Strategy and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Quaker Oat's Oatmeal Division casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, wage bills are increasing, talent flight as more people leaving formal jobs,
competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Quaker Oat's Oatmeal Division
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Quaker Oat's Oatmeal Division case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Breakfast Quaker, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Breakfast Quaker 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 Quaker Oat's Oatmeal Division can be done for the following purposes –
1. Strategic planning using facts provided in Quaker Oat's Oatmeal Division case study
2. Improving business portfolio management of Breakfast Quaker
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 Breakfast Quaker
Strengths Quaker Oat's Oatmeal Division | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Breakfast Quaker in Quaker Oat's Oatmeal Division Harvard Business Review case study are -
Training and development
– Breakfast Quaker has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Quaker Oat's Oatmeal Division Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– Quaker Oat's Oatmeal Division firm has clearly differentiated products in the market place. This has enabled Breakfast Quaker to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Breakfast Quaker to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Breakfast Quaker is one of the leading recruiters in the industry. Managers in the Quaker Oat's Oatmeal Division are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Breakfast Quaker 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 Breakfast Quaker is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Quaker Oat's Oatmeal Division Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Breakfast Quaker 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.
Effective Research and Development (R&D)
– Breakfast Quaker 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 Quaker Oat's Oatmeal Division - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Breakfast Quaker in the sector have low bargaining power. Quaker Oat's Oatmeal Division has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Breakfast Quaker to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Breakfast Quaker is present in almost all the verticals within the industry. This has provided firm in Quaker Oat's Oatmeal Division 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.
Ability to lead change in Sales & Marketing field
– Breakfast Quaker 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 Breakfast Quaker in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Breakfast Quaker 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 Christie Nordhielm, Gretchen Hall 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 brand equity
– Breakfast Quaker has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Breakfast Quaker to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Breakfast Quaker has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Breakfast Quaker 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.
Weaknesses Quaker Oat's Oatmeal Division | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Quaker Oat's Oatmeal Division are -
Workers concerns about automation
– As automation is fast increasing in the segment, Breakfast Quaker 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.
Interest costs
– Compare to the competition, Breakfast Quaker 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.
Slow to strategic competitive environment developments
– As Quaker Oat's Oatmeal Division HBR case study mentions - Breakfast Quaker takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Breakfast Quaker is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Breakfast Quaker needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Breakfast Quaker to focus more on services rather than just following the product oriented approach.
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 Breakfast Quaker supply chain. Even after few cautionary changes mentioned in the HBR case study - Quaker Oat's Oatmeal Division, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Breakfast Quaker vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Breakfast Quaker 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 - Quaker Oat's Oatmeal Division should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Breakfast Quaker 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.
Skills based hiring
– The stress on hiring functional specialists at Breakfast Quaker 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.
Lack of clear differentiation of Breakfast Quaker products
– To increase the profitability and margins on the products, Breakfast Quaker needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Breakfast Quaker 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. Breakfast Quaker 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Quaker Oat's Oatmeal Division, it seems that the employees of Breakfast Quaker 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.
Opportunities Quaker Oat's Oatmeal Division | 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 Quaker Oat's Oatmeal Division 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 Breakfast Quaker 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.
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. Breakfast Quaker can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Breakfast Quaker in the consumer business. Now Breakfast Quaker can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Breakfast Quaker 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.
Building a culture of innovation
– managers at Breakfast Quaker 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Breakfast Quaker 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, Quaker Oat's Oatmeal Division, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Breakfast Quaker 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. Breakfast Quaker 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Breakfast Quaker can use these opportunities to build new business models that can help the communities that Breakfast Quaker operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Using analytics as competitive advantage
– Breakfast Quaker 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 Quaker Oat's Oatmeal Division - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Breakfast Quaker to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Breakfast Quaker can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Breakfast Quaker 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Breakfast Quaker is facing challenges because of the dominance of functional experts in the organization. Quaker Oat's Oatmeal Division 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Breakfast Quaker 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.
Threats Quaker Oat's Oatmeal Division External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Quaker Oat's Oatmeal Division are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Breakfast Quaker with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Breakfast Quaker
– 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 Breakfast Quaker.
Regulatory challenges
– Breakfast Quaker 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.
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. Breakfast Quaker 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.
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 Breakfast Quaker in the Sales & Marketing sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Breakfast Quaker is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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. Breakfast Quaker needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Breakfast Quaker 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 Quaker Oat's Oatmeal Division .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Breakfast Quaker 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.
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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Breakfast Quaker can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Breakfast Quaker 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.
Weighted SWOT Analysis of Quaker Oat's Oatmeal Division 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 Quaker Oat's Oatmeal Division 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 Quaker Oat's Oatmeal Division 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 Quaker Oat's Oatmeal Division 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 Quaker Oat's Oatmeal Division 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 Breakfast Quaker needs to make to build a sustainable competitive advantage.
