Case Study Description of Sugar & Spice Desserts: Strategic Position Defensibility
Sugar and Spice and Sparkles are two companies in the high-end cupcake market that have chosen two different competitive and operating strategies. Sugar and Spice has configured its operations to emphasize a high level of customization. Sparkles has a strategy that emphasizes a narrower range of products. Based on data collected by Sugar and Spice, the question is whether its position is at risk. The case focuses on Sugar and Spice and the defensibility of its position using its current operating system. The issue requires students to compare the competitive and operating strategies of both companies and to identify and evaluate the sources of cost differences in their operations.
Swot Analysis of "Sugar & Spice Desserts: Strategic Position Defensibility" written by Gad Allon, Stephanie Kahn, Mark Skeba includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Spice Sugar facing as an external strategic factors. Some of the topics covered in Sugar & Spice Desserts: Strategic Position Defensibility case study are - Strategic Management Strategies, Competition, Marketing, Operations management, Productivity and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Sugar & Spice Desserts: Strategic Position Defensibility casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, there is increasing trade war between United States & China, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing transportation and logistics costs,
increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Sugar & Spice Desserts: Strategic Position Defensibility
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sugar & Spice Desserts: Strategic Position Defensibility case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Spice Sugar, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility can be done for the following purposes –
1. Strategic planning using facts provided in Sugar & Spice Desserts: Strategic Position Defensibility case study
2. Improving business portfolio management of Spice Sugar
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 Spice Sugar
Strengths Sugar & Spice Desserts: Strategic Position Defensibility | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Spice Sugar in Sugar & Spice Desserts: Strategic Position Defensibility Harvard Business Review case study are -
Effective Research and Development (R&D)
– Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Spice Sugar 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 Spice Sugar is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sugar & Spice Desserts: Strategic Position Defensibility Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Spice Sugar 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 Spice Sugar in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Spice Sugar is present in almost all the verticals within the industry. This has provided firm in Sugar & Spice Desserts: Strategic Position Defensibility case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Spice Sugar has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Spice Sugar to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Spice Sugar
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Spice Sugar does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Spice Sugar in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Spice Sugar 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
– Spice Sugar 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 Gad Allon, Stephanie Kahn, Mark Skeba can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Spice Sugar is one of the most innovative firm in sector. Manager in Sugar & Spice Desserts: Strategic Position Defensibility Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Spice Sugar digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sugar & Spice Desserts: Strategic Position Defensibility are -
No frontier risks strategy
– After analyzing the HBR case study Sugar & Spice Desserts: Strategic Position Defensibility, 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
Spice Sugar 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, Spice Sugar 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.
Skills based hiring
– The stress on hiring functional specialists at Spice Sugar has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Sugar & Spice Desserts: Strategic Position Defensibility 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 Sugar & Spice Desserts: Strategic Position Defensibility can leverage the sales team experience to cultivate customer relationships as Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility, in the dynamic environment Spice Sugar has struggled to respond to the nimble upstart competition. Spice Sugar has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Gad Allon, Stephanie Kahn, Mark Skeba suggests that, Spice Sugar 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Spice Sugar is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sugar & Spice Desserts: Strategic Position Defensibility can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Spice Sugar 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sugar & Spice Desserts: Strategic Position Defensibility, is just above the industry average. Spice Sugar 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Sugar & Spice Desserts: Strategic Position Defensibility 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 Spice Sugar 's lucrative customers.
Opportunities Sugar & Spice Desserts: Strategic Position Defensibility | 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 Sugar & Spice Desserts: Strategic Position Defensibility are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Spice Sugar 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, Sugar & Spice Desserts: Strategic Position Defensibility, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Spice Sugar 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Spice Sugar can use these opportunities to build new business models that can help the communities that Spice Sugar operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Spice Sugar can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Spice Sugar 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Spice Sugar in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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 Spice Sugar in the consumer business. Now Spice Sugar can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Spice Sugar 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.
Using analytics as competitive advantage
– Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Spice Sugar to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Spice Sugar 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Spice Sugar can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Spice Sugar has opened avenues for new revenue streams for the organization in the industry. This can help Spice Sugar to build a more holistic ecosystem as suggested in the Sugar & Spice Desserts: Strategic Position Defensibility case study. Spice Sugar can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Spice Sugar is facing challenges because of the dominance of functional experts in the organization. Sugar & Spice Desserts: Strategic Position Defensibility 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.
Threats Sugar & Spice Desserts: Strategic Position Defensibility External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sugar & Spice Desserts: Strategic Position Defensibility are -
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. Spice Sugar can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Spice Sugar 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 Sugar & Spice Desserts: Strategic Position Defensibility .
High dependence on third party suppliers
– Spice Sugar high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Spice Sugar 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.
Environmental challenges
– Spice Sugar 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. Spice Sugar can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sugar & Spice Desserts: Strategic Position Defensibility, Spice Sugar 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 .
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.
Consumer confidence and its impact on Spice Sugar demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Spice Sugar
– 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 Spice Sugar.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Spice Sugar with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Spice Sugar needs to understand the core reasons impacting the Strategy & Execution 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.
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 Spice Sugar in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Sugar & Spice Desserts: Strategic Position Defensibility 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 Sugar & Spice Desserts: Strategic Position Defensibility 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 Sugar & Spice Desserts: Strategic Position Defensibility 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 Sugar & Spice Desserts: Strategic Position Defensibility 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 Sugar & Spice Desserts: Strategic Position Defensibility 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 Spice Sugar needs to make to build a sustainable competitive advantage.