Case Study Description of Cate & Levi: Evaluating Options for Growth
Cate & Levi is a specialty gift manufacturer - primarily of children's toys and clothing - based in Toronto, Canada. The founder of Cate & Levi is pondering growth options for his firm, recognizing that the business model so successfully employed to earn the company its first $1 million in revenues is not likely to sustain the company's momentum. Just three years old, the company has grown dramatically in no small part due to its unique business model and design. Looking ahead, however, the founder is concerned that the business is not sustainable - the predominant raw materials used for the products are reclaimed wool sweaters, and each product is cut and sewn by hand both in-house and through contract labour across Canada. The case presents a series of growth alternatives for students to analyze and consider, contrasted against the constraints found in an adolescent business: constrained capital and human resources, limited brand recognition, and an underdeveloped supply chain.
Swot Analysis of "Cate & Levi: Evaluating Options for Growth" written by Brian Anderson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cate Levi facing as an external strategic factors. Some of the topics covered in Cate & Levi: Evaluating Options for Growth case study are - Strategic Management Strategies, Growth strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Cate & Levi: Evaluating Options for Growth casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing energy prices, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, geopolitical disruptions,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of Cate & Levi: Evaluating Options for Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cate & Levi: Evaluating Options for Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cate Levi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cate Levi 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 Cate & Levi: Evaluating Options for Growth can be done for the following purposes –
1. Strategic planning using facts provided in Cate & Levi: Evaluating Options for Growth case study
2. Improving business portfolio management of Cate Levi
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 Cate Levi
Strengths Cate & Levi: Evaluating Options for Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cate Levi in Cate & Levi: Evaluating Options for Growth Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cate Levi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cate Levi 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.
Training and development
– Cate Levi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cate & Levi: Evaluating Options for Growth 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Cate & Levi: Evaluating Options for Growth firm has clearly differentiated products in the market place. This has enabled Cate Levi to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cate Levi to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Cate Levi 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.
Highly skilled collaborators
– Cate Levi 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 Cate & Levi: Evaluating Options for Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Cate Levi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cate Levi 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.
High brand equity
– Cate Levi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cate Levi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Cate Levi 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 Brian Anderson can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Cate Levi is one of the most innovative firm in sector. Manager in Cate & Levi: Evaluating Options for Growth Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Strategy & Execution field
– Cate Levi 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 Cate Levi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Cate Levi is present in almost all the verticals within the industry. This has provided firm in Cate & Levi: Evaluating Options for Growth 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.
Operational resilience
– The operational resilience strategy in the Cate & Levi: Evaluating Options for Growth 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.
Weaknesses Cate & Levi: Evaluating Options for Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cate & Levi: Evaluating Options for Growth are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cate & Levi: Evaluating Options for Growth 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 Cate Levi has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Cate & Levi: Evaluating Options for Growth HBR case study mentions - Cate Levi 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 Cate Levi products
– To increase the profitability and margins on the products, Cate Levi needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Cate Levi, firm in the HBR case study Cate & Levi: Evaluating Options for Growth needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Cate & Levi: Evaluating Options for Growth 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 Cate & Levi: Evaluating Options for Growth can leverage the sales team experience to cultivate customer relationships as Cate Levi is planning to shift buying processes online.
Interest costs
– Compare to the competition, Cate Levi 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 Cate & Levi: Evaluating Options for Growth 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 Cate Levi 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Cate Levi is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cate Levi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cate Levi to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cate Levi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cate & Levi: Evaluating Options for Growth can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cate & Levi: Evaluating Options for Growth, it seems that the employees of Cate Levi 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cate Levi 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.
Opportunities Cate & Levi: Evaluating Options for Growth | 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 Cate & Levi: Evaluating Options for Growth are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cate Levi can use these opportunities to build new business models that can help the communities that Cate Levi operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Developing new processes and practices
– Cate Levi can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cate Levi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cate Levi is facing challenges because of the dominance of functional experts in the organization. Cate & Levi: Evaluating Options for Growth 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 Cate Levi to increase its market reach. Cate Levi 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.
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 Cate Levi 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cate Levi 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 Cate Levi to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Cate Levi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cate & Levi: Evaluating Options for Growth 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.
Manufacturing automation
– Cate Levi 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.
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. Cate Levi 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. Cate Levi 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.
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 Cate Levi in the consumer business. Now Cate Levi can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Cate Levi 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 Cate & Levi: Evaluating Options for Growth - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cate Levi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Cate Levi 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 Cate & Levi: Evaluating Options for Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cate & Levi: Evaluating Options for Growth are -
Shortening product life cycle
– it is one of the major threat that Cate Levi 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
– Cate Levi has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cate Levi 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.
Stagnating economy with rate increase
– Cate Levi 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cate & Levi: Evaluating Options for Growth, Cate Levi 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 .
Consumer confidence and its impact on Cate Levi 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cate Levi 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.
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 Cate Levi 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. Cate Levi 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.
Increasing wage structure of Cate Levi
– 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 Cate Levi.
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
– Cate Levi 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. Cate Levi 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 Cate Levi in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Cate Levi 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 Cate & Levi: Evaluating Options for Growth 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 Cate & Levi: Evaluating Options for Growth 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 Cate & Levi: Evaluating Options for Growth 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 Cate & Levi: Evaluating Options for Growth 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 Cate & Levi: Evaluating Options for Growth 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 Cate Levi needs to make to build a sustainable competitive advantage.
