Nespresso: How to Protect Your Brand from Social Media Attacks SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Nespresso: How to Protect Your Brand from Social Media Attacks

Solidar Switzerland a Non-Government Organisation, originally created in 1936 under the name of Swiss Labour Assistance SLA launched in September 2011 a campaign against NestlA? Nespresso. A viral video, named "Fair Trade - What else?" (https://www.youtube.com/watch?v=2G8QljHVn_A), was initially launched on their web page with the objective to raise awareness of social inequality of coffee farmers in South America and to raise awareness of Fair Trade and influence the buying behaviour of the Swiss population. Solidar asked their supporters to boost their campaign against Nespresso through a viral effect. This case explains what happened after, how Nespresso protected their brand and why Solidar chose Nespresso as a target. A fast reacting crisis management was key for Nespresso to gain control of the situation. The power of social media should never be underestimated and part of this case provides ideas and insight on how to respond on social media attacks. Further, this case explains the sustainability journey of Nespresso and share the learning of the organization which is also partly driven by this incident. This paper also contains a role play which helps to strengthen the crisis management and leadership skills. Learning objective: The case could be discussed as an example for: crisis management, management of reputational risk, leadership - negotiation, sustainability, brand management in particular social media management and communication strategy.

Authors :: Stefan Michel, Anne Irigoyen, Karsten Ranitzsch, Philipp Lehner

Topics :: Strategy & Execution

Tags :: Corporate governance, Crisis management, International business, Leadership, Social platforms, Sustainability, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Nespresso: How to Protect Your Brand from Social Media Attacks" written by Stefan Michel, Anne Irigoyen, Karsten Ranitzsch, Philipp Lehner includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nespresso Solidar facing as an external strategic factors. Some of the topics covered in Nespresso: How to Protect Your Brand from Social Media Attacks case study are - Strategic Management Strategies, Corporate governance, Crisis management, International business, Leadership, Social platforms, Sustainability and Strategy & Execution.

Some of the macro environment factors that can be used to understand the Nespresso: How to Protect Your Brand from Social Media Attacks casestudy better are - – increasing commodity prices, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, there is backlash against globalization, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, technology disruption, etc

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Introduction to SWOT Analysis of Nespresso: How to Protect Your Brand from Social Media Attacks

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nespresso: How to Protect Your Brand from Social Media Attacks case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nespresso Solidar, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nespresso Solidar 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Nespresso: How to Protect Your Brand from Social Media Attacks can be done for the following purposes –
1. Strategic planning using facts provided in Nespresso: How to Protect Your Brand from Social Media Attacks case study
2. Improving business portfolio management of Nespresso Solidar
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 Nespresso Solidar

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Strengths Nespresso: How to Protect Your Brand from Social Media Attacks | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Nespresso Solidar in Nespresso: How to Protect Your Brand from Social Media Attacks Harvard Business Review case study are -

Innovation driven organization

– Nespresso Solidar is one of the most innovative firm in sector. Manager in Nespresso: How to Protect Your Brand from Social Media Attacks Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Diverse revenue streams

– Nespresso Solidar is present in almost all the verticals within the industry. This has provided firm in Nespresso: How to Protect Your Brand from Social Media Attacks 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.

Superior customer experience

– The customer experience strategy of Nespresso Solidar in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Sustainable margins compare to other players in Strategy & Execution industry

– Nespresso: How to Protect Your Brand from Social Media Attacks firm has clearly differentiated products in the market place. This has enabled Nespresso Solidar to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Nespresso Solidar to invest into research and development (R&D) and innovation.

Learning organization

- Nespresso Solidar 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 Nespresso Solidar is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nespresso: How to Protect Your Brand from Social Media Attacks Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Strong track record of project management

– Nespresso Solidar is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Effective Research and Development (R&D)

– Nespresso Solidar 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 Nespresso: How to Protect Your Brand from Social Media Attacks - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Highly skilled collaborators

– Nespresso Solidar 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 Nespresso: How to Protect Your Brand from Social Media Attacks HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Low bargaining power of suppliers

– Suppliers of Nespresso Solidar in the sector have low bargaining power. Nespresso: How to Protect Your Brand from Social Media Attacks has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nespresso Solidar to manage not only supply disruptions but also source products at highly competitive prices.

Cross disciplinary teams

– Horizontal connected teams at the Nespresso Solidar 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.

Digital Transformation in Strategy & Execution segment

- digital transformation varies from industry to industry. For Nespresso Solidar digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nespresso Solidar 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.

Analytics focus

– Nespresso Solidar 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 Stefan Michel, Anne Irigoyen, Karsten Ranitzsch, Philipp Lehner 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.

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Weaknesses Nespresso: How to Protect Your Brand from Social Media Attacks | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Nespresso: How to Protect Your Brand from Social Media Attacks are -

Need for greater diversity

– Nespresso Solidar has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Skills based hiring

– The stress on hiring functional specialists at Nespresso Solidar 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.

Capital Spending Reduction

– Even during the low interest decade, Nespresso Solidar 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.

Products dominated business model

– Even though Nespresso Solidar 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 - Nespresso: How to Protect Your Brand from Social Media Attacks should strive to include more intangible value offerings along with its core products and services.

Workers concerns about automation

– As automation is fast increasing in the segment, Nespresso Solidar 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.

High dependence on existing supply chain

– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Nespresso Solidar supply chain. Even after few cautionary changes mentioned in the HBR case study - Nespresso: How to Protect Your Brand from Social Media Attacks, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nespresso Solidar vulnerable to further global disruptions in South East Asia.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Nespresso: How to Protect Your Brand from Social Media Attacks, it seems that the employees of Nespresso Solidar 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.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Nespresso: How to Protect Your Brand from Social Media Attacks, in the dynamic environment Nespresso Solidar has struggled to respond to the nimble upstart competition. Nespresso Solidar has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Low market penetration in new markets

– Outside its home market of Nespresso Solidar, firm in the HBR case study Nespresso: How to Protect Your Brand from Social Media Attacks needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Interest costs

– Compare to the competition, Nespresso Solidar 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 bargaining power of channel partners

– Because of the regulatory requirements, Stefan Michel, Anne Irigoyen, Karsten Ranitzsch, Philipp Lehner suggests that, Nespresso Solidar 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.

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Opportunities Nespresso: How to Protect Your Brand from Social Media Attacks | 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 Nespresso: How to Protect Your Brand from Social Media Attacks are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for Nespresso Solidar 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.

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 Nespresso Solidar 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.

Building a culture of innovation

– managers at Nespresso Solidar 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nespresso Solidar 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 Nespresso Solidar to hire the very best people irrespective of their geographical location.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Nespresso Solidar can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Low interest rates

– Even though inflation is raising its head in most developed economies, Nespresso Solidar 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Nespresso Solidar is facing challenges because of the dominance of functional experts in the organization. Nespresso: How to Protect Your Brand from Social Media Attacks 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.

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. Nespresso Solidar can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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. Nespresso Solidar can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Buying journey improvements

– Nespresso Solidar can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nespresso: How to Protect Your Brand from Social Media Attacks 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.

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. Nespresso Solidar 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. Nespresso Solidar 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.

Leveraging digital technologies

– Nespresso Solidar can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Manufacturing automation

– Nespresso Solidar 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.

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Threats Nespresso: How to Protect Your Brand from Social Media Attacks External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Nespresso: How to Protect Your Brand from Social Media Attacks are -

Technology acceleration in Forth Industrial Revolution

– Nespresso Solidar has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Nespresso Solidar 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.

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 Nespresso Solidar.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Nespresso Solidar 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 Nespresso: How to Protect Your Brand from Social Media Attacks .

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 Nespresso Solidar business can come under increasing regulations regarding data privacy, data security, etc.

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. Nespresso Solidar 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

– Nespresso Solidar 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. Nespresso Solidar can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.

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. Nespresso Solidar can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

High dependence on third party suppliers

– Nespresso Solidar 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.

Regulatory challenges

– Nespresso Solidar 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.

Shortening product life cycle

– it is one of the major threat that Nespresso Solidar is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Consumer confidence and its impact on Nespresso Solidar 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Nespresso: How to Protect Your Brand from Social Media Attacks, Nespresso Solidar 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 .

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.

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Weighted SWOT Analysis of Nespresso: How to Protect Your Brand from Social Media Attacks 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 Nespresso: How to Protect Your Brand from Social Media Attacks 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 Nespresso: How to Protect Your Brand from Social Media Attacks 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 Nespresso: How to Protect Your Brand from Social Media Attacks 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 Nespresso: How to Protect Your Brand from Social Media Attacks 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 Nespresso Solidar needs to make to build a sustainable competitive advantage.

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