Case Study Description of Lipman: Vertical Integration in Fresh Tomatoes
Lipman, the largest open field fresh tomato grower and marketer in the United States, has been successfully pursuing an aggressive strategy of acquisitions over the last several years. End market consolidation in the retail space has driven vertical integration in the extremely competitive fresh tomato business, where farm gate prices have not changed in 30 years. The company is facing pressure from climate change, alternative uses for farm land, and a transition to the next generation of family ownership of the business.
Swot Analysis of "Lipman: Vertical Integration in Fresh Tomatoes" written by Jose B. Alvarez, Carin-Isabel Knoop includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lipman Tomato facing as an external strategic factors. Some of the topics covered in Lipman: Vertical Integration in Fresh Tomatoes case study are - Strategic Management Strategies, Mergers & acquisitions and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Lipman: Vertical Integration in Fresh Tomatoes casestudy better are - – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, increasing commodity prices, there is increasing trade war between United States & China,
wage bills are increasing, increasing energy prices, etc
Introduction to SWOT Analysis of Lipman: Vertical Integration in Fresh Tomatoes
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lipman: Vertical Integration in Fresh Tomatoes case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lipman Tomato, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lipman Tomato 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 Lipman: Vertical Integration in Fresh Tomatoes can be done for the following purposes –
1. Strategic planning using facts provided in Lipman: Vertical Integration in Fresh Tomatoes case study
2. Improving business portfolio management of Lipman Tomato
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 Lipman Tomato
Strengths Lipman: Vertical Integration in Fresh Tomatoes | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lipman Tomato in Lipman: Vertical Integration in Fresh Tomatoes Harvard Business Review case study are -
Strong track record of project management
– Lipman Tomato is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Lipman Tomato in the sector have low bargaining power. Lipman: Vertical Integration in Fresh Tomatoes has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lipman Tomato to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Lipman Tomato 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.
Highly skilled collaborators
– Lipman Tomato 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 Lipman: Vertical Integration in Fresh Tomatoes HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Lipman Tomato 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 Jose B. Alvarez, Carin-Isabel Knoop 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.
Operational resilience
– The operational resilience strategy in the Lipman: Vertical Integration in Fresh Tomatoes 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.
Successful track record of launching new products
– Lipman Tomato has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lipman Tomato 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.
Training and development
– Lipman Tomato has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lipman: Vertical Integration in Fresh Tomatoes 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Lipman Tomato digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lipman Tomato 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.
Effective Research and Development (R&D)
– Lipman Tomato 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 Lipman: Vertical Integration in Fresh Tomatoes - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Lipman Tomato is one of the most innovative firm in sector. Manager in Lipman: Vertical Integration in Fresh Tomatoes Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Sales & Marketing field
– Lipman Tomato 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 Lipman Tomato in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Lipman: Vertical Integration in Fresh Tomatoes | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lipman: Vertical Integration in Fresh Tomatoes are -
Low market penetration in new markets
– Outside its home market of Lipman Tomato, firm in the HBR case study Lipman: Vertical Integration in Fresh Tomatoes needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lipman: Vertical Integration in Fresh Tomatoes, in the dynamic environment Lipman Tomato has struggled to respond to the nimble upstart competition. Lipman Tomato has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Lipman Tomato 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 - Lipman: Vertical Integration in Fresh Tomatoes should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Jose B. Alvarez, Carin-Isabel Knoop suggests that, Lipman Tomato 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.
Skills based hiring
– The stress on hiring functional specialists at Lipman Tomato 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lipman: Vertical Integration in Fresh Tomatoes, it seems that the employees of Lipman Tomato 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 Lipman: Vertical Integration in Fresh Tomatoes, is just above the industry average. Lipman Tomato 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.
Aligning sales with marketing
– It come across in the case study Lipman: Vertical Integration in Fresh Tomatoes 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 Lipman: Vertical Integration in Fresh Tomatoes can leverage the sales team experience to cultivate customer relationships as Lipman Tomato is planning to shift buying processes online.
Interest costs
– Compare to the competition, Lipman Tomato 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.
Capital Spending Reduction
– Even during the low interest decade, Lipman Tomato 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.
No frontier risks strategy
– After analyzing the HBR case study Lipman: Vertical Integration in Fresh Tomatoes, 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 Lipman: Vertical Integration in Fresh Tomatoes | 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 Lipman: Vertical Integration in Fresh Tomatoes are -
Creating value in data economy
– The success of analytics program of Lipman Tomato has opened avenues for new revenue streams for the organization in the industry. This can help Lipman Tomato to build a more holistic ecosystem as suggested in the Lipman: Vertical Integration in Fresh Tomatoes case study. Lipman Tomato can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Lipman Tomato 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.
Using analytics as competitive advantage
– Lipman Tomato 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 Lipman: Vertical Integration in Fresh Tomatoes - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lipman Tomato to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lipman Tomato can use these opportunities to build new business models that can help the communities that Lipman Tomato operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Lipman Tomato 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.
Buying journey improvements
– Lipman Tomato can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lipman: Vertical Integration in Fresh Tomatoes 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lipman Tomato 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lipman Tomato is facing challenges because of the dominance of functional experts in the organization. Lipman: Vertical Integration in Fresh Tomatoes 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.
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. Lipman Tomato can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Lipman Tomato 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lipman Tomato 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, Lipman: Vertical Integration in Fresh Tomatoes, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Lipman Tomato 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.
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 Lipman Tomato 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.
Threats Lipman: Vertical Integration in Fresh Tomatoes External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lipman: Vertical Integration in Fresh Tomatoes are -
Environmental challenges
– Lipman Tomato 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. Lipman Tomato can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
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. Lipman Tomato 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.
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 Lipman Tomato business can come under increasing regulations regarding data privacy, data security, etc.
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. Lipman Tomato can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Lipman Tomato
– 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 Lipman Tomato.
Technology acceleration in Forth Industrial Revolution
– Lipman Tomato has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Lipman Tomato 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.
Stagnating economy with rate increase
– Lipman Tomato 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.
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.
Consumer confidence and its impact on Lipman Tomato 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lipman Tomato 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
– Lipman Tomato 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.
Shortening product life cycle
– it is one of the major threat that Lipman Tomato 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 Lipman: Vertical Integration in Fresh Tomatoes 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 Lipman: Vertical Integration in Fresh Tomatoes 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 Lipman: Vertical Integration in Fresh Tomatoes 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 Lipman: Vertical Integration in Fresh Tomatoes 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 Lipman: Vertical Integration in Fresh Tomatoes 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 Lipman Tomato needs to make to build a sustainable competitive advantage.
