Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions
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 (B2): Long-Term Effects of Promotions" 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 (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions casestudy better are - – there is increasing trade war between United States & China, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google,
wage bills are increasing, increasing energy prices, etc
Introduction to SWOT Analysis of Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions
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 (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions can be done for the following purposes –
1. Strategic planning using facts provided in Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions | 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 (B2): Long-Term Effects of Promotions Harvard Business Review case study are -
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.
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 (B2): Long-Term Effects of Promotions 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.
High switching costs
– The high switching costs that Lay's Potato 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.
Ability to lead change in Sales & Marketing field
– Lay's Potato 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 Lay's Potato in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Lay's Potato 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 Lay's Potato is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 (B2): Long-Term Effects of Promotions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Lay's Potato 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 Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Innovation driven organization
– Lay's Potato is one of the most innovative firm in sector. Manager in Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Lay's Potato 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 Miguel Brendl, Prashant Malaviya, Szocs Laslo 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.
Strong track record of project management
– Lay's Potato is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions are -
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.
Interest costs
– Compare to the competition, Lay's Potato 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Lay's Potato 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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions, is just above the industry average. Lay's Potato needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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 Lay's Potato has relatively successful track record of launching new products.
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.
Aligning sales with marketing
– It come across in the case study Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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 Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions can leverage the sales team experience to cultivate customer relationships as Lay's Potato is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions, 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.
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.
Opportunities Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions | 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 (B2): Long-Term Effects of Promotions are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lay's Potato is facing challenges because of the dominance of functional experts in the organization. Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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.
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.
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. Lay's Potato can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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 (B2): Long-Term Effects of Promotions - 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.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Lay's Potato has opened avenues for new revenue streams for the organization in the industry. This can help Lay's Potato to build a more holistic ecosystem as suggested in the Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions case study. Lay's Potato can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lay's Potato to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Lay's Potato to hire the very best people irrespective of their geographical location.
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 (B2): Long-Term Effects of Promotions 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.
Leveraging digital technologies
– Lay's Potato 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.
Threats Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions are -
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.
High dependence on third party suppliers
– Lay's Potato 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.
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.
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.
Increasing wage structure of Lay's Potato
– 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 Lay's Potato.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lay's Potato 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.
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.
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.
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.
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.
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.
Stagnating economy with rate increase
– Lay's Potato 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.
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.
Weighted SWOT Analysis of Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions 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 (B2): Long-Term Effects of Promotions 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.
