Absolut Vodka: The Spirit of a Brand SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Absolut Vodka: The Spirit of a Brand
Soon after Pernod Ricard acquires Absolut vodka and other brands, the economic downturn results in changes in purchasing behavior away from premium to standard products. Brand managers consider whether to introduce a "basic" Absolut, promote a lower-priced alternative, or rebrand other vodkas under the Absolut brand to trade on its considerable brand equity.
Authors :: Rajkumar Venkatesan, Randle D. Raggio, Katherine Noel
Swot Analysis of "Absolut Vodka: The Spirit of a Brand" written by Rajkumar Venkatesan, Randle D. Raggio, Katherine Noel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Absolut Vodka facing as an external strategic factors. Some of the topics covered in Absolut Vodka: The Spirit of a Brand case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Absolut Vodka: The Spirit of a Brand casestudy better are - – there is backlash against globalization, wage bills are increasing, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing energy prices, there is increasing trade war between United States & China,
increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Absolut Vodka: The Spirit of a Brand
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Absolut Vodka: The Spirit of a Brand case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Absolut Vodka, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Absolut Vodka 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 Absolut Vodka: The Spirit of a Brand can be done for the following purposes –
1. Strategic planning using facts provided in Absolut Vodka: The Spirit of a Brand case study
2. Improving business portfolio management of Absolut Vodka
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 Absolut Vodka
Strengths Absolut Vodka: The Spirit of a Brand | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Absolut Vodka in Absolut Vodka: The Spirit of a Brand Harvard Business Review case study are -
Analytics focus
– Absolut Vodka 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 Rajkumar Venkatesan, Randle D. Raggio, Katherine Noel 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.
Organizational Resilience of Absolut Vodka
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Absolut Vodka does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Absolut Vodka 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 Absolut Vodka: The Spirit of a Brand - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Absolut Vodka has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Absolut Vodka 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.
High switching costs
– The high switching costs that Absolut Vodka 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.
Strong track record of project management
– Absolut Vodka is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Absolut Vodka 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 Absolut Vodka: The Spirit of a Brand HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Absolut Vodka in the sector have low bargaining power. Absolut Vodka: The Spirit of a Brand has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Absolut Vodka to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Absolut Vodka in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Absolut Vodka 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.
High brand equity
– Absolut Vodka has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Absolut Vodka to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Absolut Vodka: The Spirit of a Brand | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Absolut Vodka: The Spirit of a Brand are -
Skills based hiring
– The stress on hiring functional specialists at Absolut Vodka 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.
Slow decision making process
– As mentioned earlier in the report, Absolut Vodka 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. Absolut Vodka 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Absolut Vodka 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Absolut Vodka: The Spirit of a Brand, is just above the industry average. Absolut Vodka 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.
Low market penetration in new markets
– Outside its home market of Absolut Vodka, firm in the HBR case study Absolut Vodka: The Spirit of a Brand needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Absolut Vodka 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Absolut Vodka is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Absolut Vodka: The Spirit of a Brand can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Absolut Vodka: The Spirit of a Brand has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Absolut Vodka 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Absolut Vodka: The Spirit of a Brand, in the dynamic environment Absolut Vodka has struggled to respond to the nimble upstart competition. Absolut Vodka has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Absolut Vodka 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.
Aligning sales with marketing
– It come across in the case study Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka: The Spirit of a Brand can leverage the sales team experience to cultivate customer relationships as Absolut Vodka is planning to shift buying processes online.
Opportunities Absolut Vodka: The Spirit of a Brand | 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 Absolut Vodka: The Spirit of a Brand are -
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. Absolut Vodka 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. Absolut Vodka 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.
Buying journey improvements
– Absolut Vodka can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Absolut Vodka: The Spirit of a Brand 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Absolut Vodka 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, Absolut Vodka: The Spirit of a Brand, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Absolut Vodka 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.
Manufacturing automation
– Absolut Vodka 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Absolut Vodka can use these opportunities to build new business models that can help the communities that Absolut Vodka operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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. Absolut Vodka can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Absolut Vodka to increase its market reach. Absolut Vodka 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.
Creating value in data economy
– The success of analytics program of Absolut Vodka has opened avenues for new revenue streams for the organization in the industry. This can help Absolut Vodka to build a more holistic ecosystem as suggested in the Absolut Vodka: The Spirit of a Brand case study. Absolut Vodka can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Absolut Vodka 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.
Using analytics as competitive advantage
– Absolut Vodka 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 Absolut Vodka: The Spirit of a Brand - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Absolut Vodka to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Absolut Vodka in the consumer business. Now Absolut Vodka can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Absolut Vodka can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Absolut Vodka: The Spirit of a Brand External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Absolut Vodka: The Spirit of a Brand are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Absolut Vodka 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 Absolut Vodka: The Spirit of a Brand .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Absolut Vodka 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.
High dependence on third party suppliers
– Absolut Vodka 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.
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 Absolut Vodka business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Absolut Vodka.
Stagnating economy with rate increase
– Absolut Vodka 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.
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. Absolut Vodka can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Absolut Vodka 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.
Regulatory challenges
– Absolut Vodka 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.
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 Absolut Vodka in the Sales & Marketing sector and impact the bottomline of the organization.
Environmental challenges
– Absolut Vodka 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. Absolut Vodka 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. Absolut Vodka needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka: The Spirit of a Brand 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 Absolut Vodka needs to make to build a sustainable competitive advantage.