Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee
IllycaffA? is a family company, founded in 1933. It grew to become an internationally successful company focusing on the premium coffee market based on an uncompromising quest to provide the perfect cup of coffee. In 2003, the company decided to diversify, and two years later began purchasing small companies that produced premium teas, chocolates, candied fruits, and wine. These companies, as well as illycaffA? were included in the Gruppo illy holding company. The case describes illycaffA?, its products and strategy, as well as the rationale for diversification.
Authors :: Glenn Carroll, Hayagreeva Rao, Victoria Chang, David W. Hoyt
Swot Analysis of "Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee" written by Glenn Carroll, Hayagreeva Rao, Victoria Chang, David W. Hoyt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Illycaffa Gruppo facing as an external strategic factors. Some of the topics covered in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee case study are - Strategic Management Strategies, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee casestudy better are - – increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, there is backlash against globalization, there is increasing trade war between United States & China, increasing household debt because of falling income levels, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Illycaffa Gruppo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Illycaffa Gruppo 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee can be done for the following purposes –
1. Strategic planning using facts provided in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee case study
2. Improving business portfolio management of Illycaffa Gruppo
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 Illycaffa Gruppo
Strengths Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Illycaffa Gruppo in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Illycaffa Gruppo in the sector have low bargaining power. Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Illycaffa Gruppo to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Illycaffa Gruppo has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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.
Highly skilled collaborators
– Illycaffa Gruppo 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Illycaffa Gruppo are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Illycaffa Gruppo 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 Carroll, Hayagreeva Rao, Victoria Chang, David W. Hoyt 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.
High switching costs
– The high switching costs that Illycaffa Gruppo 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.
Organizational Resilience of Illycaffa Gruppo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Illycaffa Gruppo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Strategy & Execution field
– Illycaffa Gruppo 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 Illycaffa Gruppo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Illycaffa Gruppo is one of the most innovative firm in sector. Manager in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Illycaffa Gruppo 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 Illycaffa Gruppo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Illycaffa Gruppo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Illycaffa Gruppo has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee are -
High bargaining power of channel partners
– Because of the regulatory requirements, Glenn Carroll, Hayagreeva Rao, Victoria Chang, David W. Hoyt suggests that, Illycaffa Gruppo 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.
Increasing silos among functional specialists
– The organizational structure of Illycaffa Gruppo is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Illycaffa Gruppo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Illycaffa Gruppo to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Illycaffa Gruppo 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.
Slow to strategic competitive environment developments
– As Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee HBR case study mentions - Illycaffa Gruppo 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.
No frontier risks strategy
– After analyzing the HBR case study Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee, 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.
High cash cycle compare to competitors
Illycaffa Gruppo 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.
Slow decision making process
– As mentioned earlier in the report, Illycaffa Gruppo 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. Illycaffa Gruppo 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Illycaffa Gruppo 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.
Aligning sales with marketing
– It come across in the case study Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee can leverage the sales team experience to cultivate customer relationships as Illycaffa Gruppo is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee, in the dynamic environment Illycaffa Gruppo has struggled to respond to the nimble upstart competition. Illycaffa Gruppo has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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 Illycaffa Gruppo has relatively successful track record of launching new products.
Opportunities Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee | 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee are -
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 Illycaffa Gruppo 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.
Creating value in data economy
– The success of analytics program of Illycaffa Gruppo has opened avenues for new revenue streams for the organization in the industry. This can help Illycaffa Gruppo to build a more holistic ecosystem as suggested in the Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee case study. Illycaffa Gruppo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Illycaffa Gruppo 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Illycaffa Gruppo 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 Illycaffa Gruppo 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. Illycaffa Gruppo 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. Illycaffa Gruppo 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Illycaffa Gruppo 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, Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Illycaffa Gruppo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Illycaffa Gruppo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Illycaffa Gruppo 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Illycaffa Gruppo is facing challenges because of the dominance of functional experts in the organization. Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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.
Building a culture of innovation
– managers at Illycaffa Gruppo 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.
Buying journey improvements
– Illycaffa Gruppo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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.
Loyalty marketing
– Illycaffa Gruppo 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.
Threats Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee are -
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 Illycaffa Gruppo business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Illycaffa Gruppo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Illycaffa Gruppo.
Increasing wage structure of Illycaffa Gruppo
– 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 Illycaffa Gruppo.
Technology acceleration in Forth Industrial Revolution
– Illycaffa Gruppo has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Illycaffa Gruppo 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.
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. Illycaffa Gruppo needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee, Illycaffa Gruppo 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 .
Shortening product life cycle
– it is one of the major threat that Illycaffa Gruppo is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Regulatory challenges
– Illycaffa Gruppo 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.
High dependence on third party suppliers
– Illycaffa Gruppo 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 Illycaffa Gruppo 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.
Weighted SWOT Analysis of Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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 Illycaffe and Gruppo illy (A): Expanding Beyond Gourmet Coffee 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 Illycaffa Gruppo needs to make to build a sustainable competitive advantage.