Juan Valdez: Innovation in Caffeination SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Juan Valdez: Innovation in Caffeination
Corporate entrepreneurs attempt to revive Colombia's famous Juan Valdez brand in the age of Starbucks, with cafA? chain and packaged coffee ventures. In the 1970s and '80s, the iconic Juan Valdez ingredient brand was the most recognized in the world of coffee. The success of advertising based on this character garners the Colombian coffee industry price premiums in international markets, especially the US. By the 2000s, Colombia's coffee sector is being battered and its branding power diminished as cafA? chains such as Starbucks increasingly capture profits in the value chain. In reaction, Colombia's coffee federation develops a semi-independent, for-profit branding arm - Procafecol - to rebuild the Juan Valdez brand. Procafecol launches the first Juan Valdez cafes and a packaged coffee line, putting Colombian coffee into competition with many of its traditional customers. The case examines the successes and failures of the first five years of the new strategy, encouraging discussion of what changes must be made to Procafecol's innovation program.
Swot Analysis of "Juan Valdez: Innovation in Caffeination" written by Michael I. Norton, Jeremy Dann includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Valdez Coffee facing as an external strategic factors. Some of the topics covered in Juan Valdez: Innovation in Caffeination case study are - Strategic Management Strategies, Change management, Competitive strategy, Entrepreneurship, Innovation, International business, Sales and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Juan Valdez: Innovation in Caffeination casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, geopolitical disruptions, increasing energy prices, increasing household debt because of falling income levels, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , there is backlash against globalization, etc
Introduction to SWOT Analysis of Juan Valdez: Innovation in Caffeination
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Juan Valdez: Innovation in Caffeination case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Valdez Coffee, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Valdez Coffee 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 Juan Valdez: Innovation in Caffeination can be done for the following purposes –
1. Strategic planning using facts provided in Juan Valdez: Innovation in Caffeination case study
2. Improving business portfolio management of Valdez Coffee
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 Valdez Coffee
Strengths Juan Valdez: Innovation in Caffeination | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Valdez Coffee in Juan Valdez: Innovation in Caffeination Harvard Business Review case study are -
Diverse revenue streams
– Valdez Coffee is present in almost all the verticals within the industry. This has provided firm in Juan Valdez: Innovation in Caffeination case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Sales & Marketing field
– Valdez Coffee 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 Valdez Coffee in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Valdez Coffee in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Valdez Coffee 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.
Cross disciplinary teams
– Horizontal connected teams at the Valdez Coffee 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.
Training and development
– Valdez Coffee has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Juan Valdez: Innovation in Caffeination 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.
Organizational Resilience of Valdez Coffee
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Valdez Coffee does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Sales & Marketing industry
– Juan Valdez: Innovation in Caffeination firm has clearly differentiated products in the market place. This has enabled Valdez Coffee to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Valdez Coffee to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Valdez Coffee 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 Juan Valdez: Innovation in Caffeination - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Valdez Coffee 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 Valdez Coffee is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Juan Valdez: Innovation in Caffeination Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Valdez Coffee is one of the leading recruiters in the industry. Managers in the Juan Valdez: Innovation in Caffeination are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Valdez Coffee digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Valdez Coffee 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.
Weaknesses Juan Valdez: Innovation in Caffeination | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Juan Valdez: Innovation in Caffeination are -
High bargaining power of channel partners
– Because of the regulatory requirements, Michael I. Norton, Jeremy Dann suggests that, Valdez Coffee 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.
Aligning sales with marketing
– It come across in the case study Juan Valdez: Innovation in Caffeination 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 Juan Valdez: Innovation in Caffeination can leverage the sales team experience to cultivate customer relationships as Valdez Coffee is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Valdez Coffee is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Juan Valdez: Innovation in Caffeination can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Valdez Coffee 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. Valdez Coffee 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.
Increasing silos among functional specialists
– The organizational structure of Valdez Coffee is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Valdez Coffee needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Valdez Coffee to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Valdez Coffee supply chain. Even after few cautionary changes mentioned in the HBR case study - Juan Valdez: Innovation in Caffeination, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Valdez Coffee vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Valdez Coffee has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Valdez Coffee products
– To increase the profitability and margins on the products, Valdez Coffee needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Valdez Coffee 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.
Interest costs
– Compare to the competition, Valdez Coffee 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.
No frontier risks strategy
– After analyzing the HBR case study Juan Valdez: Innovation in Caffeination, 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 Juan Valdez: Innovation in Caffeination | 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 Juan Valdez: Innovation in Caffeination are -
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. Valdez Coffee can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Valdez Coffee to increase its market reach. Valdez Coffee 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.
Buying journey improvements
– Valdez Coffee can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Juan Valdez: Innovation in Caffeination 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, Valdez Coffee can use these opportunities to build new business models that can help the communities that Valdez Coffee operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Valdez Coffee 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, Juan Valdez: Innovation in Caffeination, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Valdez Coffee 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 Valdez Coffee to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Valdez Coffee 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. Valdez Coffee can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Valdez Coffee 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 Juan Valdez: Innovation in Caffeination - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Valdez Coffee to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Valdez Coffee 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. Valdez Coffee 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Valdez Coffee 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.
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 Valdez Coffee 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
– Valdez Coffee 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.
Threats Juan Valdez: Innovation in Caffeination External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Juan Valdez: Innovation in Caffeination are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Valdez Coffee 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 Juan Valdez: Innovation in Caffeination .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Juan Valdez: Innovation in Caffeination, Valdez Coffee 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 Valdez Coffee with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Valdez Coffee.
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 Valdez Coffee in the Sales & Marketing sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Valdez Coffee is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Valdez Coffee needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Valdez Coffee 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.
Technology acceleration in Forth Industrial Revolution
– Valdez Coffee has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Valdez Coffee 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.
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. Valdez Coffee 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.
Stagnating economy with rate increase
– Valdez Coffee 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Valdez Coffee 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.
Weighted SWOT Analysis of Juan Valdez: Innovation in Caffeination 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 Juan Valdez: Innovation in Caffeination 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 Juan Valdez: Innovation in Caffeination 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 Juan Valdez: Innovation in Caffeination 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 Juan Valdez: Innovation in Caffeination 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 Valdez Coffee needs to make to build a sustainable competitive advantage.
