Lay's Potato Chips in Hungary (B1): Promotion Activity and Results SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Lay's Potato Chips in Hungary (B1): Promotion Activity and Results
Lay's was a second mover when it introduced its potato chips to rapidly evolving post-communist Hungary. By inserting cash into its potato chip bags, Lay's increased sales dramatically and permanently (i.e., also post-promotion). In contrast, after withdrawing a second "Money in the Bag" promotion, sales fell. Students prepare case A (5 pages) at home. Three in-class cases and a teaching note provide analysis and managerial implications.
Authors :: Miguel Brendl, Prashant Malaviya, Szocs Laslo
Swot Analysis of "Lay's Potato Chips in Hungary (B1): Promotion Activity and Results" written by Miguel Brendl, Prashant Malaviya, Szocs Laslo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lay's Potato facing as an external strategic factors. Some of the topics covered in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results case study are - Strategic Management Strategies, Decision making, Sales, Strategic thinking and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Lay's Potato Chips in Hungary (B1): Promotion Activity and Results casestudy better are - – there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels,
challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Lay's Potato Chips in Hungary (B1): Promotion Activity and Results
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lay's Potato, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lay's Potato 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results can be done for the following purposes –
1. Strategic planning using facts provided in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results case study
2. Improving business portfolio management of Lay's Potato
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 Lay's Potato
Strengths Lay's Potato Chips in Hungary (B1): Promotion Activity and Results | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lay's Potato in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results Harvard Business Review case study are -
Highly skilled collaborators
– Lay's Potato has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Lay's Potato is present in almost all the verticals within the industry. This has provided firm in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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.
Low bargaining power of suppliers
– Suppliers of Lay's Potato in the sector have low bargaining power. Lay's Potato Chips in Hungary (B1): Promotion Activity and Results has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lay's Potato to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Lay's Potato has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lay's Potato to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Lay's Potato
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lay's Potato does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Lay's Potato is one of the most innovative firm in sector. Manager in Lay's Potato Chips in Hungary (B1): Promotion Activity and Results Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Lay's Potato Chips in Hungary (B1): Promotion Activity and Results firm has clearly differentiated products in the market place. This has enabled Lay's Potato to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Lay's Potato to invest into research and development (R&D) and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Lay's Potato digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lay's Potato 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 Lay's Potato 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.
Superior customer experience
– The customer experience strategy of Lay's Potato in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Lay's Potato has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lay's Potato 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lay's Potato Chips in Hungary (B1): Promotion Activity and Results are -
Increasing silos among functional specialists
– The organizational structure of Lay's Potato is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Lay's Potato needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lay's Potato to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Lay's Potato 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lay's Potato Chips in Hungary (B1): Promotion Activity and Results, in the dynamic environment Lay's Potato has struggled to respond to the nimble upstart competition. Lay's Potato has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Lay's Potato supply chain. Even after few cautionary changes mentioned in the HBR case study - Lay's Potato Chips in Hungary (B1): Promotion Activity and Results, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lay's Potato vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Lay's Potato has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Low market penetration in new markets
– Outside its home market of Lay's Potato, firm in the HBR case study Lay's Potato Chips in Hungary (B1): Promotion Activity and Results needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Lay's Potato products
– To increase the profitability and margins on the products, Lay's Potato needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lay's Potato Chips in Hungary (B1): Promotion Activity and Results, it seems that the employees of Lay's Potato 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.
Slow decision making process
– As mentioned earlier in the report, Lay's Potato 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. Lay's Potato 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Miguel Brendl, Prashant Malaviya, Szocs Laslo suggests that, Lay's Potato is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Lay's Potato Chips in Hungary (B1): Promotion Activity and Results, 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.
Opportunities Lay's Potato Chips in Hungary (B1): Promotion Activity and Results | 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results are -
Using analytics as competitive advantage
– Lay's Potato 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lay's Potato to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Lay's Potato 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.
Buying journey improvements
– Lay's Potato can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lay's Potato can use these opportunities to build new business models that can help the communities that Lay's Potato operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Lay's Potato 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.
Developing new processes and practices
– Lay's Potato 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. Lay's Potato 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. Lay's Potato 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.
Better consumer reach
– The expansion of the 5G network will help Lay's Potato to increase its market reach. Lay's Potato will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Lay's Potato 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.
Manufacturing automation
– Lay's Potato 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.
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. Lay's Potato 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 Lay's Potato in the consumer business. Now Lay's Potato can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lay's Potato 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lay's Potato Chips in Hungary (B1): Promotion Activity and Results are -
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. Lay's Potato needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Environmental challenges
– Lay's Potato 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. Lay's Potato can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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 Lay's Potato business can come under increasing regulations regarding data privacy, data security, 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 Lay's Potato.
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. Lay's Potato 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.
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. Lay's Potato can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Lay's Potato has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Lay's Potato 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.
Regulatory challenges
– Lay's Potato 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lay's Potato Chips in Hungary (B1): Promotion Activity and Results, Lay's Potato 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lay's Potato with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Lay's Potato in the Sales & Marketing sector and impact the bottomline 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.
Shortening product life cycle
– it is one of the major threat that Lay's Potato is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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 Lay's Potato Chips in Hungary (B1): Promotion Activity and Results 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 Lay's Potato needs to make to build a sustainable competitive advantage.
