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 - – cloud computing is disrupting traditional business models, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing commodity prices, there is increasing trade war between United States & China,
supply chains are disrupted by pandemic , increasing household debt because of falling income levels, 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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
Ability to recruit top talent
– Lay's Potato is one of the leading recruiters in the industry. Managers in the Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Lay's Potato in the sector have low bargaining power. Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions 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.
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 -
Products dominated business model
– Even though Lay's Potato 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 - Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions, 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.
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.
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.
Need for greater diversity
– Lay's Potato 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.
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.
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.
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.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions, 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.
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 -
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.
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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lay's Potato 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lay's Potato can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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 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.
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.
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 (B2): Long-Term Effects of Promotions, 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 .
Consumer confidence and its impact on Lay's Potato 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lay's Potato 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 Lay's Potato Chips in Hungary (B2): Long-Term Effects of Promotions .
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.
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.
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.