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, technology disruption, there is backlash against globalization, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, wage bills are increasing, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, 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 -

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.

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.

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.

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.

Organizational Resilience of Nespresso Solidar

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nespresso Solidar does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

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.

Ability to recruit top talent

– Nespresso Solidar is one of the leading recruiters in the industry. Managers in the Nespresso: How to Protect Your Brand from Social Media Attacks are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Operational resilience

– The operational resilience strategy in the Nespresso: How to Protect Your Brand from Social Media Attacks Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

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.

Training and development

– Nespresso Solidar has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nespresso: How to Protect Your Brand from Social Media Attacks Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Successful track record of launching new products

– Nespresso Solidar has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nespresso Solidar 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.

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.

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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 -

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.

Slow to strategic competitive environment developments

– As Nespresso: How to Protect Your Brand from Social Media Attacks HBR case study mentions - Nespresso Solidar 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.

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.

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.

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.

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.

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.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Nespresso: How to Protect Your Brand from Social Media Attacks, is just above the industry average. Nespresso Solidar 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.

Increasing silos among functional specialists

– The organizational structure of Nespresso Solidar is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Nespresso Solidar needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nespresso Solidar to focus more on services rather than just following the product oriented approach.

High cash cycle compare to competitors

Nespresso Solidar 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.

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.

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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 -

Loyalty marketing

– Nespresso Solidar 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.

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.

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.

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.

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.

Developing new processes and practices

– Nespresso Solidar 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.

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.

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.

Learning at scale

– Online learning technologies has now opened space for Nespresso Solidar 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.

Creating value in data economy

– The success of analytics program of Nespresso Solidar has opened avenues for new revenue streams for the organization in the industry. This can help Nespresso Solidar to build a more holistic ecosystem as suggested in the Nespresso: How to Protect Your Brand from Social Media Attacks case study. Nespresso Solidar can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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.

Using analytics as competitive advantage

– Nespresso Solidar 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 Nespresso: How to Protect Your Brand from Social Media Attacks - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nespresso Solidar to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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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 -

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.

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.

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.

Increasing wage structure of Nespresso Solidar

– 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 Nespresso Solidar.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nespresso Solidar with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

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 Nespresso Solidar in the Strategy & Execution sector and impact the bottomline of the organization.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Nespresso Solidar in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

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.

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.

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. Nespresso Solidar needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.

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 .

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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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