Case Study Description of Advantage Food & Beverage Vending
Advantage Food & Beverage Vending is a decision-based case that highlights four options for the owner and president of the Advantage Food & Beverage (AF&B) snack vending operation. He had been running his business for 16 years and possessed a great deal of knowledge of his company and the vending industry. His dilemma was whether or not to invest in his existing operation and, if so, determining the best use of his resources. The vending industry was stagnant and considered to be declining, which complicated his decision. However, newer technologies became available that could improve AF&B's competitive advantage in the marketplace. Technology options included a system that (a) accepted electronic payments and (b) tracked inventory and transactions. The electronic payment method came in the form of the traditional swiping of a credit card, or in the newer form of Touch-and-Go card readers. These features could be retrofitted to existing machines or come built into new machines. The decision involved which option(s) would likely provide the president with the best return on his investment.
Swot Analysis of "Advantage Food & Beverage Vending" written by Michael A Levin, Bruce C Bailey includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vending Af facing as an external strategic factors. Some of the topics covered in Advantage Food & Beverage Vending case study are - Strategic Management Strategies, Competitive strategy and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Advantage Food & Beverage Vending casestudy better are - – increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, increasing commodity prices, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, etc
Introduction to SWOT Analysis of Advantage Food & Beverage Vending
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Advantage Food & Beverage Vending case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vending Af, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vending Af 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 Advantage Food & Beverage Vending can be done for the following purposes –
1. Strategic planning using facts provided in Advantage Food & Beverage Vending case study
2. Improving business portfolio management of Vending Af
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 Vending Af
Strengths Advantage Food & Beverage Vending | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vending Af in Advantage Food & Beverage Vending Harvard Business Review case study are -
High brand equity
– Vending Af has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vending Af to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Advantage Food & Beverage Vending 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.
Low bargaining power of suppliers
– Suppliers of Vending Af in the sector have low bargaining power. Advantage Food & Beverage Vending has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vending Af to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Vending Af is present in almost all the verticals within the industry. This has provided firm in Advantage Food & Beverage Vending 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.
Training and development
– Vending Af has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Advantage Food & Beverage Vending 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.
Effective Research and Development (R&D)
– Vending Af 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 Advantage Food & Beverage Vending - 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 Vending Af
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vending Af does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Vending Af 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 Vending Af is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Advantage Food & Beverage Vending Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Vending Af digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vending Af 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.
Superior customer experience
– The customer experience strategy of Vending Af 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 Vending Af 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.
Innovation driven organization
– Vending Af is one of the most innovative firm in sector. Manager in Advantage Food & Beverage Vending Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Advantage Food & Beverage Vending | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Advantage Food & Beverage Vending are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Advantage Food & Beverage Vending, is just above the industry average. Vending Af 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.
Slow decision making process
– As mentioned earlier in the report, Vending Af 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. Vending Af 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vending Af is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Advantage Food & Beverage Vending 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Advantage Food & Beverage Vending HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Vending Af has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Vending Af 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Vending Af 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.
Low market penetration in new markets
– Outside its home market of Vending Af, firm in the HBR case study Advantage Food & Beverage Vending needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Vending Af is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Vending Af needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vending Af to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Vending Af 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 Vending Af 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 cash cycle compare to competitors
Vending Af 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.
Opportunities Advantage Food & Beverage Vending | 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 Advantage Food & Beverage Vending are -
Leveraging digital technologies
– Vending Af 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vending Af 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.
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. Vending Af can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vending Af can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Vending Af 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.
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. Vending Af 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. Vending Af 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Vending Af can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Vending Af 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.
Creating value in data economy
– The success of analytics program of Vending Af has opened avenues for new revenue streams for the organization in the industry. This can help Vending Af to build a more holistic ecosystem as suggested in the Advantage Food & Beverage Vending case study. Vending Af can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Vending Af in the consumer business. Now Vending Af can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Vending Af 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.
Loyalty marketing
– Vending Af 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
– Vending Af can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Advantage Food & Beverage Vending 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.
Threats Advantage Food & Beverage Vending External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Advantage Food & Beverage Vending are -
Stagnating economy with rate increase
– Vending Af 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.
Shortening product life cycle
– it is one of the major threat that Vending Af is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Vending Af 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. Vending Af 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vending Af 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 Advantage Food & Beverage Vending .
Increasing wage structure of Vending Af
– 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 Vending Af.
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 Vending Af business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Vending Af 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.
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. Vending Af needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Consumer confidence and its impact on Vending Af 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.
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 Vending Af.
Regulatory challenges
– Vending Af 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.
Weighted SWOT Analysis of Advantage Food & Beverage Vending 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 Advantage Food & Beverage Vending 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 Advantage Food & Beverage Vending 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 Advantage Food & Beverage Vending 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 Advantage Food & Beverage Vending 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 Vending Af needs to make to build a sustainable competitive advantage.
