Case Study Description of Cocoa Pete's Chocolate Adventures
On Labor Day 2002, Cocoa Pete's Chocolate Adventures launched its small selection of gourmet chocolates at high-end supermarkets in the San Francisco Bay Area. The company's founder, Pete Slosberg, had carved a niche out of the stagnant chocolate industry, where he thought a start-up could thrive. His strategy was in many ways derived from the strategy for his previous entrepreneurial success: Pete's Brewing Co. (makers of Pete's Wicked Ale). Of significance was Cocoa Pete's determination to substitute its own production facilities with the underutilized equipment of a larger chocolatier. Cocoa Pete's gourmet chocolates were positioned as irreverent and fun to capitalize on the changing American palette, where the more staid gourmet brands seemed inaccessible. Throughout the strategic planning and product execution, Slosberg and Cocoa Pete's CEO Scott Barnum were pushing to change an industry.
Swot Analysis of "Cocoa Pete's Chocolate Adventures" written by Glenn R. Carroll, Greg Powell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pete's Cocoa facing as an external strategic factors. Some of the topics covered in Cocoa Pete's Chocolate Adventures case study are - Strategic Management Strategies, Entrepreneurship, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Cocoa Pete's Chocolate Adventures casestudy better are - – talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Cocoa Pete's Chocolate Adventures
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cocoa Pete's Chocolate Adventures case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pete's Cocoa, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pete's Cocoa 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 Cocoa Pete's Chocolate Adventures can be done for the following purposes –
1. Strategic planning using facts provided in Cocoa Pete's Chocolate Adventures case study
2. Improving business portfolio management of Pete's Cocoa
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 Pete's Cocoa
Strengths Cocoa Pete's Chocolate Adventures | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pete's Cocoa in Cocoa Pete's Chocolate Adventures Harvard Business Review case study are -
Strong track record of project management
– Pete's Cocoa is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Pete's Cocoa has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pete's Cocoa 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.
High switching costs
– The high switching costs that Pete's Cocoa has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Pete's Cocoa 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 Cocoa Pete's Chocolate Adventures - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Pete's Cocoa is present in almost all the verticals within the industry. This has provided firm in Cocoa Pete's Chocolate Adventures 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.
Analytics focus
– Pete's Cocoa 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 Glenn R. Carroll, Greg Powell can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Strategy & Execution field
– Pete's Cocoa 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 Pete's Cocoa in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Pete's Cocoa in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Pete's Cocoa
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pete's Cocoa does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Cocoa Pete's Chocolate Adventures Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Pete's Cocoa is one of the most innovative firm in sector. Manager in Cocoa Pete's Chocolate Adventures 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 Strategy & Execution industry
– Cocoa Pete's Chocolate Adventures firm has clearly differentiated products in the market place. This has enabled Pete's Cocoa to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pete's Cocoa to invest into research and development (R&D) and innovation.
Weaknesses Cocoa Pete's Chocolate Adventures | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cocoa Pete's Chocolate Adventures are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cocoa Pete's Chocolate Adventures, it seems that the employees of Pete's Cocoa 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.
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 Pete's Cocoa supply chain. Even after few cautionary changes mentioned in the HBR case study - Cocoa Pete's Chocolate Adventures, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pete's Cocoa vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Pete's Cocoa is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Pete's Cocoa needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pete's Cocoa to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Pete's Cocoa 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.
Need for greater diversity
– Pete's Cocoa 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.
Low market penetration in new markets
– Outside its home market of Pete's Cocoa, firm in the HBR case study Cocoa Pete's Chocolate Adventures needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Pete's Cocoa 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Cocoa Pete's Chocolate Adventures 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 Pete's Cocoa 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cocoa Pete's Chocolate Adventures, is just above the industry average. Pete's Cocoa 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cocoa Pete's Chocolate Adventures, in the dynamic environment Pete's Cocoa has struggled to respond to the nimble upstart competition. Pete's Cocoa has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Pete's Cocoa 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 Cocoa Pete's Chocolate Adventures | 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 Cocoa Pete's Chocolate Adventures are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pete's Cocoa 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 Pete's Cocoa to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pete's Cocoa 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. Pete's Cocoa 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, Pete's Cocoa is facing challenges because of the dominance of functional experts in the organization. Cocoa Pete's Chocolate Adventures 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.
Learning at scale
– Online learning technologies has now opened space for Pete's Cocoa to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Building a culture of innovation
– managers at Pete's Cocoa 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.
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 Pete's Cocoa in the consumer business. Now Pete's Cocoa can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Pete's Cocoa 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 Cocoa Pete's Chocolate Adventures - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pete's Cocoa to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Pete's Cocoa to increase its market reach. Pete's Cocoa 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pete's Cocoa can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Pete's Cocoa 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
– Pete's Cocoa 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pete's Cocoa can use these opportunities to build new business models that can help the communities that Pete's Cocoa operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Creating value in data economy
– The success of analytics program of Pete's Cocoa has opened avenues for new revenue streams for the organization in the industry. This can help Pete's Cocoa to build a more holistic ecosystem as suggested in the Cocoa Pete's Chocolate Adventures case study. Pete's Cocoa can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Cocoa Pete's Chocolate Adventures External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cocoa Pete's Chocolate Adventures are -
Increasing wage structure of Pete's Cocoa
– 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 Pete's Cocoa.
Consumer confidence and its impact on Pete's Cocoa 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.
Environmental challenges
– Pete's Cocoa needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pete's Cocoa can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
Regulatory challenges
– Pete's Cocoa 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pete's Cocoa 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 Cocoa Pete's Chocolate Adventures .
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 Pete's Cocoa.
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. Pete's Cocoa needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pete's Cocoa with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Pete's Cocoa 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.
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. Pete's Cocoa 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 Pete's Cocoa in the Strategy & Execution sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Pete's Cocoa has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Pete's Cocoa needs to keep up with the evolution of technology in the Strategy & Execution 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.
Weighted SWOT Analysis of Cocoa Pete's Chocolate Adventures 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 Cocoa Pete's Chocolate Adventures 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 Cocoa Pete's Chocolate Adventures 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 Cocoa Pete's Chocolate Adventures 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 Cocoa Pete's Chocolate Adventures 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 Pete's Cocoa needs to make to build a sustainable competitive advantage.
