Tchibo Ideas: Leveraging the creativity of customers SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tchibo Ideas: Leveraging the creativity of customers
In 2008, the German coffee and consumer goods corporation Tchibo has launched Tchibo Ideas, an internet platform where customers can share their product/design ideas with the company. The tension in the case emerges from the uncertainty regarding Tchibo's intentions for Tchibo Ideas. While some people perceive this move as a genuine attempt by the company to establish closer interactions with customers, some people see it simply as a marketing gimmick. The case describes the challenges and potential benefits that Tchibo Ideas is encountering, to foster a discussion on the value of a co-creation strategy.
Authors :: Sven Petersen, Francine Espinoza Petersen, Luc Wathieu
Swot Analysis of "Tchibo Ideas: Leveraging the creativity of customers" written by Sven Petersen, Francine Espinoza Petersen, Luc Wathieu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tchibo Ideas facing as an external strategic factors. Some of the topics covered in Tchibo Ideas: Leveraging the creativity of customers case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Tchibo Ideas: Leveraging the creativity of customers casestudy better are - – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, there is increasing trade war between United States & China, technology disruption, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%,
increasing household debt because of falling income levels, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Tchibo Ideas: Leveraging the creativity of customers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tchibo Ideas: Leveraging the creativity of customers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tchibo Ideas, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tchibo Ideas 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 Tchibo Ideas: Leveraging the creativity of customers can be done for the following purposes –
1. Strategic planning using facts provided in Tchibo Ideas: Leveraging the creativity of customers case study
2. Improving business portfolio management of Tchibo Ideas
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 Tchibo Ideas
Strengths Tchibo Ideas: Leveraging the creativity of customers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tchibo Ideas in Tchibo Ideas: Leveraging the creativity of customers Harvard Business Review case study are -
Successful track record of launching new products
– Tchibo Ideas has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tchibo Ideas has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Highly skilled collaborators
– Tchibo Ideas 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 Tchibo Ideas: Leveraging the creativity of customers HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Tchibo Ideas is present in almost all the verticals within the industry. This has provided firm in Tchibo Ideas: Leveraging the creativity of customers 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.
High switching costs
– The high switching costs that Tchibo Ideas 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
– Tchibo Ideas is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Sales & Marketing field
– Tchibo Ideas 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 Tchibo Ideas in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Tchibo Ideas 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 Sven Petersen, Francine Espinoza Petersen, Luc Wathieu 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.
Innovation driven organization
– Tchibo Ideas is one of the most innovative firm in sector. Manager in Tchibo Ideas: Leveraging the creativity of customers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Tchibo Ideas has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tchibo Ideas: Leveraging the creativity of customers 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.
Learning organization
- Tchibo Ideas 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 Tchibo Ideas is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tchibo Ideas: Leveraging the creativity of customers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Tchibo Ideas is one of the leading recruiters in the industry. Managers in the Tchibo Ideas: Leveraging the creativity of customers are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Tchibo Ideas in the sector have low bargaining power. Tchibo Ideas: Leveraging the creativity of customers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tchibo Ideas to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Tchibo Ideas: Leveraging the creativity of customers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tchibo Ideas: Leveraging the creativity of customers are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Tchibo Ideas: Leveraging the creativity of customers HBR case study mentions - Tchibo Ideas 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.
Need for greater diversity
– Tchibo Ideas 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tchibo Ideas: Leveraging the creativity of customers, is just above the industry average. Tchibo Ideas 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.
Capital Spending Reduction
– Even during the low interest decade, Tchibo Ideas 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.
Increasing silos among functional specialists
– The organizational structure of Tchibo Ideas is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Tchibo Ideas needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tchibo Ideas to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Tchibo Ideas 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. Tchibo Ideas 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.
Products dominated business model
– Even though Tchibo Ideas 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 - Tchibo Ideas: Leveraging the creativity of customers should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas 's lucrative customers.
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 Tchibo Ideas supply chain. Even after few cautionary changes mentioned in the HBR case study - Tchibo Ideas: Leveraging the creativity of customers, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tchibo Ideas vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Sven Petersen, Francine Espinoza Petersen, Luc Wathieu suggests that, Tchibo Ideas 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.
Opportunities Tchibo Ideas: Leveraging the creativity of customers | 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 Tchibo Ideas: Leveraging the creativity of customers are -
Creating value in data economy
– The success of analytics program of Tchibo Ideas has opened avenues for new revenue streams for the organization in the industry. This can help Tchibo Ideas to build a more holistic ecosystem as suggested in the Tchibo Ideas: Leveraging the creativity of customers case study. Tchibo Ideas can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Tchibo Ideas 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. Tchibo Ideas 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tchibo Ideas is facing challenges because of the dominance of functional experts in the organization. Tchibo Ideas: Leveraging the creativity of customers case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tchibo Ideas can use these opportunities to build new business models that can help the communities that Tchibo Ideas operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tchibo Ideas 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.
Leveraging digital technologies
– Tchibo Ideas 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.
Manufacturing automation
– Tchibo Ideas 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.
Learning at scale
– Online learning technologies has now opened space for Tchibo Ideas 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.
Using analytics as competitive advantage
– Tchibo Ideas 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 Tchibo Ideas: Leveraging the creativity of customers - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tchibo Ideas to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Tchibo Ideas 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.
Loyalty marketing
– Tchibo Ideas 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tchibo Ideas 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, Tchibo Ideas: Leveraging the creativity of customers, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Tchibo Ideas in the consumer business. Now Tchibo Ideas can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Tchibo Ideas: Leveraging the creativity of customers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tchibo Ideas: Leveraging the creativity of customers are -
Consumer confidence and its impact on Tchibo Ideas 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.
Increasing wage structure of Tchibo Ideas
– 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 Tchibo Ideas.
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 Tchibo Ideas.
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.
Stagnating economy with rate increase
– Tchibo Ideas 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tchibo Ideas 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 Tchibo Ideas: Leveraging the creativity of customers .
Regulatory challenges
– Tchibo Ideas 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.
Technology acceleration in Forth Industrial Revolution
– Tchibo Ideas has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Tchibo Ideas 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.
High dependence on third party suppliers
– Tchibo Ideas 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.
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. Tchibo Ideas will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Tchibo Ideas business can come under increasing regulations regarding data privacy, data security, etc.
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. Tchibo Ideas needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tchibo Ideas: Leveraging the creativity of customers, Tchibo Ideas 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 .
Weighted SWOT Analysis of Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas: Leveraging the creativity of customers 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 Tchibo Ideas needs to make to build a sustainable competitive advantage.