NestlA? Ice Cream in Cuba SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of NestlA? Ice Cream in Cuba
In 1996, as the Castro regime began welcoming limited international investment back to Cuba, NestlA? signed a letter of intent with the Cuban government to build an ice cream factory in Havana's El Cotorro neighborhood. The plant, a joint venture between the Cuban government and NestlA?, would produce high-quality ice cream products for tourists and affluent Cubans. Nearly twenty years after this decision to enter the Cuban market, it is not clear how successful the investment has been and what the future might hold for NestlA? on the island. NestlA? has faced important challenges in Cuba-such as supply shortages, entrenched domestic competitors, and risk of government interference-but there has been evidence of some marketing and financial success. The 2015 normalization of diplomatic relations may bring new strategic threats and opportunities as American companies begin to eye the Cuban market and current competitors prepare for market changes. In the case, students will evaluate Nestle's investment and strategy for future growth in the Cuban market and consider the company's market entry strategy, operations, and finances.
Swot Analysis of "NestlA? Ice Cream in Cuba" written by Russell Walker, Kyle Bell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cuban Nestla facing as an external strategic factors. Some of the topics covered in NestlA? Ice Cream in Cuba case study are - Strategic Management Strategies, Globalization, Marketing, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the NestlA? Ice Cream in Cuba casestudy better are - – supply chains are disrupted by pandemic , increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, central banks are concerned over increasing inflation, increasing transportation and logistics costs, there is increasing trade war between United States & China,
increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of NestlA? Ice Cream in Cuba
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in NestlA? Ice Cream in Cuba case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cuban Nestla, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cuban Nestla 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 NestlA? Ice Cream in Cuba can be done for the following purposes –
1. Strategic planning using facts provided in NestlA? Ice Cream in Cuba case study
2. Improving business portfolio management of Cuban Nestla
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 Cuban Nestla
Strengths NestlA? Ice Cream in Cuba | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cuban Nestla in NestlA? Ice Cream in Cuba Harvard Business Review case study are -
Analytics focus
– Cuban Nestla 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 Russell Walker, Kyle Bell 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.
Diverse revenue streams
– Cuban Nestla is present in almost all the verticals within the industry. This has provided firm in NestlA? Ice Cream in Cuba 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.
Learning organization
- Cuban Nestla 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 Cuban Nestla is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in NestlA? Ice Cream in Cuba Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cuban Nestla digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cuban Nestla 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.
Innovation driven organization
– Cuban Nestla is one of the most innovative firm in sector. Manager in NestlA? Ice Cream in Cuba Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Cuban Nestla is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Cuban Nestla 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.
Highly skilled collaborators
– Cuban Nestla 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 NestlA? Ice Cream in Cuba HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Cuban Nestla has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cuban Nestla to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Cuban Nestla is one of the leading recruiters in the industry. Managers in the NestlA? Ice Cream in Cuba are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Cuban Nestla 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.
Successful track record of launching new products
– Cuban Nestla has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cuban Nestla 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.
Weaknesses NestlA? Ice Cream in Cuba | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of NestlA? Ice Cream in Cuba are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the NestlA? Ice Cream in Cuba 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 Cuban Nestla has relatively successful track record of launching new products.
High cash cycle compare to competitors
Cuban Nestla 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.
Aligning sales with marketing
– It come across in the case study NestlA? Ice Cream in Cuba 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 NestlA? Ice Cream in Cuba can leverage the sales team experience to cultivate customer relationships as Cuban Nestla is planning to shift buying processes online.
Interest costs
– Compare to the competition, Cuban Nestla 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 NestlA? Ice Cream in Cuba 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 Cuban Nestla 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study NestlA? Ice Cream in Cuba, it seems that the employees of Cuban Nestla 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.
Slow decision making process
– As mentioned earlier in the report, Cuban Nestla 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. Cuban Nestla 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.
Capital Spending Reduction
– Even during the low interest decade, Cuban Nestla 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.
Slow to strategic competitive environment developments
– As NestlA? Ice Cream in Cuba HBR case study mentions - Cuban Nestla 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.
Lack of clear differentiation of Cuban Nestla products
– To increase the profitability and margins on the products, Cuban Nestla needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Cuban Nestla is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cuban Nestla needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cuban Nestla to focus more on services rather than just following the product oriented approach.
Opportunities NestlA? Ice Cream in Cuba | 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 NestlA? Ice Cream in Cuba are -
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. Cuban Nestla can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cuban Nestla 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 Cuban Nestla to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Cuban Nestla 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.
Buying journey improvements
– Cuban Nestla can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. NestlA? Ice Cream in Cuba 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.
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 Cuban Nestla 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cuban Nestla 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, NestlA? Ice Cream in Cuba, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Cuban Nestla 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. Cuban Nestla 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.
Developing new processes and practices
– Cuban Nestla 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, Cuban Nestla is facing challenges because of the dominance of functional experts in the organization. NestlA? Ice Cream in Cuba 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.
Better consumer reach
– The expansion of the 5G network will help Cuban Nestla to increase its market reach. Cuban Nestla 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.
Manufacturing automation
– Cuban Nestla 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.
Creating value in data economy
– The success of analytics program of Cuban Nestla has opened avenues for new revenue streams for the organization in the industry. This can help Cuban Nestla to build a more holistic ecosystem as suggested in the NestlA? Ice Cream in Cuba case study. Cuban Nestla can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cuban Nestla can use these opportunities to build new business models that can help the communities that Cuban Nestla operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats NestlA? Ice Cream in Cuba External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study NestlA? Ice Cream in Cuba are -
Environmental challenges
– Cuban Nestla 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. Cuban Nestla can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Cuban Nestla in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Cuban Nestla 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cuban Nestla 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 NestlA? Ice Cream in Cuba .
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 Cuban Nestla business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Cuban Nestla 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.
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.
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. Cuban Nestla can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Cuban Nestla is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Cuban Nestla has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cuban Nestla 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.
Increasing wage structure of Cuban Nestla
– 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 Cuban Nestla.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study NestlA? Ice Cream in Cuba, Cuban Nestla 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 .
Regulatory challenges
– Cuban Nestla 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.
Weighted SWOT Analysis of NestlA? Ice Cream in Cuba 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 NestlA? Ice Cream in Cuba 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 NestlA? Ice Cream in Cuba 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 NestlA? Ice Cream in Cuba 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 NestlA? Ice Cream in Cuba 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 Cuban Nestla needs to make to build a sustainable competitive advantage.
