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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing commodity prices,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, 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 -
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.
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.
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.
Sustainable margins compare to other players in Sales & Marketing industry
– Tchibo Ideas: Leveraging the creativity of customers firm has clearly differentiated products in the market place. This has enabled Tchibo Ideas to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Tchibo Ideas to invest into research and development (R&D) and innovation.
Organizational Resilience of Tchibo Ideas
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tchibo Ideas does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
High brand equity
– Tchibo Ideas has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tchibo Ideas to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
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.
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 -
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tchibo Ideas: Leveraging the creativity of customers, it seems that the employees of Tchibo Ideas don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tchibo Ideas is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Tchibo Ideas: Leveraging the creativity of customers can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Lack of clear differentiation of Tchibo Ideas products
– To increase the profitability and margins on the products, Tchibo Ideas needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
High cash cycle compare to competitors
Tchibo Ideas 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.
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.
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 -
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.
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.
Building a culture of innovation
– managers at Tchibo Ideas 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tchibo Ideas to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Tchibo Ideas to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tchibo Ideas can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Tchibo Ideas can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Tchibo Ideas to increase its market reach. Tchibo Ideas 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.
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. Tchibo Ideas can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Buying journey improvements
– Tchibo Ideas can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tchibo Ideas: Leveraging the creativity of customers 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 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 -
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 .
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 Tchibo Ideas in the Sales & Marketing sector and impact the bottomline of the organization.
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.
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.
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.
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.
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.
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.
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.
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.
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, 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.
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.