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 - – competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, wage bills are increasing, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic ,
customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, 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 -
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.
Strong track record of project management
– Spice Sugar is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
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.
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.
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.
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.
Ability to recruit top talent
– Spice Sugar is one of the leading recruiters in the industry. Managers in the Sugar & Spice Desserts: Strategic Position Defensibility are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Sugar & Spice Desserts: Strategic Position Defensibility firm has clearly differentiated products in the market place. This has enabled Spice Sugar to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Spice Sugar to invest into research and development (R&D) and innovation.
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 -
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.
Low market penetration in new markets
– Outside its home market of Spice Sugar, firm in the HBR case study Sugar & Spice Desserts: Strategic Position Defensibility needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sugar & Spice Desserts: Strategic Position Defensibility, it seems that the employees of Spice Sugar 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 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sugar & Spice Desserts: Strategic Position Defensibility 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 Spice Sugar has relatively successful track record of launching new products.
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.
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.
Lack of clear differentiation of Spice Sugar products
– To increase the profitability and margins on the products, Spice Sugar needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Slow decision making process
– As mentioned earlier in the report, Spice Sugar 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. Spice Sugar 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.
Products dominated business model
– Even though Spice Sugar 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 - Sugar & Spice Desserts: Strategic Position Defensibility should strive to include more intangible value offerings along with its core products and services.
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 -
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.
Better consumer reach
– The expansion of the 5G network will help Spice Sugar to increase its market reach. Spice Sugar 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.
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.
Loyalty marketing
– Spice Sugar 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.
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.
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.
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.
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.
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.
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. Spice Sugar can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Spice Sugar 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.
Leveraging digital technologies
– Spice Sugar 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.
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 -
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Spice Sugar has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Spice Sugar 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.
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 Spice Sugar business can come under increasing regulations regarding data privacy, data security, 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
– Spice Sugar 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.
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.
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.
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 Spice Sugar.
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.
Shortening product life cycle
– it is one of the major threat that Spice Sugar is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.