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 - – increasing government debt because of Covid-19 spendings, increasing energy prices, wage bills are increasing, technology disruption, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices,
customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, 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 -
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.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Absolut Vodka: The Spirit of a Brand 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.
Innovation driven organization
– Absolut Vodka is one of the most innovative firm in sector. Manager in Absolut Vodka: The Spirit of a Brand Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Ability to lead change in Sales & Marketing field
– Absolut Vodka 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 Absolut Vodka 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
– Absolut Vodka is one of the leading recruiters in the industry. Managers in the Absolut Vodka: The Spirit of a Brand are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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 -
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.
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.
High cash cycle compare to competitors
Absolut Vodka has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Absolut Vodka is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Absolut Vodka needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Absolut Vodka to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Absolut Vodka: The Spirit of a Brand, 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.
Products dominated business model
– Even though Absolut Vodka 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 - Absolut Vodka: The Spirit of a Brand should strive to include more intangible value offerings along with its core products and services.
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.
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.
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 Absolut Vodka supply chain. Even after few cautionary changes mentioned in the HBR case study - Absolut Vodka: The Spirit of a Brand, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Absolut Vodka vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Absolut Vodka: The Spirit of a Brand HBR case study mentions - Absolut Vodka takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
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 -
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.
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.
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Absolut Vodka to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Building a culture of innovation
– managers at Absolut Vodka can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Absolut Vodka can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Absolut Vodka 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.
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.
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.
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 -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Absolut Vodka 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 Absolut Vodka.
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.
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.
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.
Increasing wage structure of Absolut Vodka
– 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 Absolut Vodka.
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.
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 .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Absolut Vodka: The Spirit of a Brand, Absolut Vodka 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 .
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.
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.
Consumer confidence and its impact on Absolut Vodka 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.
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.
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.
