Heineken-Brewing a Better World SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Heineken-Brewing a Better World
The Dutch company HEINEKEN, one of the leading global brewers known for its brands like Heineken, Amstel, or Desperados and for its award-winning marketing campaigns, seeks to closely integrate its long-term sustainability "Brewing a Better World"-approach into its corporate strategy. HEINEKEN had set itself ambitious 2015 and 2020 sustainability targets in six pillar areas around Energy/CO2, Water, Sustainable Sourcing, Responsible Consumption, Community/Inclusive Growth, and Health & Safety. The case zooms in on HEINEKEN's efforts in the sustainable sourcing pillar, with its work on farming standards and supplier code as well as its support for local sourcing programs in the growing African market. HEINEKEN's management finds that marketing its achievements in these sustainability areas poses new challenges though. For example, its current "mass-balance" sourcing in which sustainable and traditional material got mixed in the supply chain did not allow for effective communication on a given bottle. But was this reason enough to try to move to "segregated" sourcing, if that was even reasonable?
Authors :: Forest Reinhardt, Jose B. Alvarez, Tonia Junker, Daniela Beyersdorfer
Topics :: Strategy & Execution
Tags :: Competitive strategy, International business, Social responsibility, Supply chain, Sustainability, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Heineken-Brewing a Better World" written by Forest Reinhardt, Jose B. Alvarez, Tonia Junker, Daniela Beyersdorfer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Heineken Sourcing facing as an external strategic factors. Some of the topics covered in Heineken-Brewing a Better World case study are - Strategic Management Strategies, Competitive strategy, International business, Social responsibility, Supply chain, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Heineken-Brewing a Better World casestudy better are - – cloud computing is disrupting traditional business models, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, etc
Introduction to SWOT Analysis of Heineken-Brewing a Better World
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Heineken-Brewing a Better World case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Heineken Sourcing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Heineken Sourcing 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 Heineken-Brewing a Better World can be done for the following purposes –
1. Strategic planning using facts provided in Heineken-Brewing a Better World case study
2. Improving business portfolio management of Heineken Sourcing
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Heineken Sourcing
Strengths Heineken-Brewing a Better World | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Heineken Sourcing in Heineken-Brewing a Better World Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Heineken-Brewing a Better World firm has clearly differentiated products in the market place. This has enabled Heineken Sourcing to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Heineken Sourcing to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Heineken Sourcing in the sector have low bargaining power. Heineken-Brewing a Better World has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Heineken Sourcing to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Heineken Sourcing 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 Heineken-Brewing a Better World - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Heineken Sourcing 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.
Highly skilled collaborators
– Heineken Sourcing 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 Heineken-Brewing a Better World HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Heineken Sourcing is one of the most innovative firm in sector. Manager in Heineken-Brewing a Better World 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
– Heineken Sourcing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Heineken-Brewing a Better World 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.
Superior customer experience
– The customer experience strategy of Heineken Sourcing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Heineken Sourcing is present in almost all the verticals within the industry. This has provided firm in Heineken-Brewing a Better World 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.
Strong track record of project management
– Heineken Sourcing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Heineken-Brewing a Better World 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.
Ability to recruit top talent
– Heineken Sourcing is one of the leading recruiters in the industry. Managers in the Heineken-Brewing a Better World are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Heineken-Brewing a Better World | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Heineken-Brewing a Better World are -
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 Heineken Sourcing supply chain. Even after few cautionary changes mentioned in the HBR case study - Heineken-Brewing a Better World, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Heineken Sourcing vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Heineken Sourcing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Heineken-Brewing a Better World can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Heineken-Brewing a Better World, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Need for greater diversity
– Heineken Sourcing 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.
Increasing silos among functional specialists
– The organizational structure of Heineken Sourcing is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Heineken Sourcing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Heineken Sourcing to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Heineken Sourcing 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 - Heineken-Brewing a Better World should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Heineken Sourcing 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.
Interest costs
– Compare to the competition, Heineken Sourcing 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.
Lack of clear differentiation of Heineken Sourcing products
– To increase the profitability and margins on the products, Heineken Sourcing needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Heineken Sourcing 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.
Slow decision making process
– As mentioned earlier in the report, Heineken Sourcing 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. Heineken Sourcing 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.
Opportunities Heineken-Brewing a Better World | 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 Heineken-Brewing a Better World are -
Leveraging digital technologies
– Heineken Sourcing 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Heineken Sourcing 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 Heineken Sourcing to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Heineken Sourcing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Heineken-Brewing a Better World 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Heineken Sourcing is facing challenges because of the dominance of functional experts in the organization. Heineken-Brewing a Better World 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.
Creating value in data economy
– The success of analytics program of Heineken Sourcing has opened avenues for new revenue streams for the organization in the industry. This can help Heineken Sourcing to build a more holistic ecosystem as suggested in the Heineken-Brewing a Better World case study. Heineken Sourcing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Heineken Sourcing can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Heineken Sourcing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Heineken Sourcing 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 Strategy & Execution segment.
Developing new processes and practices
– Heineken Sourcing can develop new processes and procedures in Strategy & Execution 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Heineken Sourcing 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Heineken Sourcing can use these opportunities to build new business models that can help the communities that Heineken Sourcing operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Heineken Sourcing in the consumer business. Now Heineken Sourcing can target international markets with far fewer capital restrictions requirements than the existing system.
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 Heineken Sourcing 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.
Threats Heineken-Brewing a Better World External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Heineken-Brewing a Better World 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 Heineken-Brewing a Better World, Heineken Sourcing may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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. Heineken Sourcing 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.
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 Heineken Sourcing in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Heineken Sourcing
– 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 Heineken Sourcing.
Regulatory challenges
– Heineken Sourcing 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 Strategy & Execution industry regulations.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Heineken Sourcing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Heineken Sourcing 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Heineken Sourcing in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Heineken Sourcing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Heineken Sourcing is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Heineken Sourcing 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 Heineken Sourcing.
Weighted SWOT Analysis of Heineken-Brewing a Better World 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 Heineken-Brewing a Better World 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 Heineken-Brewing a Better World 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 Heineken-Brewing a Better World 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 Heineken-Brewing a Better World 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 Heineken Sourcing needs to make to build a sustainable competitive advantage.