Case Study Description of Taco Bell, Inc.--1983-94
Details the actions of John Martin, newly named CEO, as he leads Taco Bell through a decade of incremental and radical changes. By the end of the case, total system sales within Taco Bell, a Mexican style fast-food restaurant chain and a division of PepsiCo, have grown from $700 million in 1983 to $3.9 billion in 1994, and the company is managing over 10,000 eat-in restaurants and a wide variety of other retail sites around the world.
Authors :: Lynda M. Applegate, Leonard A. Schlesinger, David Delong
Swot Analysis of "Taco Bell, Inc.--1983-94" written by Lynda M. Applegate, Leonard A. Schlesinger, David Delong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Taco Bell facing as an external strategic factors. Some of the topics covered in Taco Bell, Inc.--1983-94 case study are - Strategic Management Strategies, Developing employees, Economy, Growth strategy, Internet, IT, Leadership, Organizational structure, Strategy execution, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Taco Bell, Inc.--1983-94 casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, there is backlash against globalization, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing energy prices,
increasing household debt because of falling income levels, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Taco Bell, Inc.--1983-94
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Taco Bell, Inc.--1983-94 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Taco Bell, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Taco Bell 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 Taco Bell, Inc.--1983-94 can be done for the following purposes –
1. Strategic planning using facts provided in Taco Bell, Inc.--1983-94 case study
2. Improving business portfolio management of Taco Bell
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Taco Bell
Strengths Taco Bell, Inc.--1983-94 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Taco Bell in Taco Bell, Inc.--1983-94 Harvard Business Review case study are -
Organizational Resilience of Taco Bell
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Taco Bell does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Taco Bell 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 Taco Bell, Inc.--1983-94 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Taco Bell is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Taco Bell in the sector have low bargaining power. Taco Bell, Inc.--1983-94 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Taco Bell to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Taco Bell is one of the most innovative firm in sector. Manager in Taco Bell, Inc.--1983-94 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
– Taco Bell is present in almost all the verticals within the industry. This has provided firm in Taco Bell, Inc.--1983-94 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 Taco Bell in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Taco Bell has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Taco Bell to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Taco Bell 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 Taco Bell is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Taco Bell, Inc.--1983-94 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Technology & Operations field
– Taco Bell 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 Taco Bell in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Taco Bell 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 Technology & Operations segment
- digital transformation varies from industry to industry. For Taco Bell digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Taco Bell 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.
Weaknesses Taco Bell, Inc.--1983-94 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taco Bell, Inc.--1983-94 are -
Aligning sales with marketing
– It come across in the case study Taco Bell, Inc.--1983-94 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 Taco Bell, Inc.--1983-94 can leverage the sales team experience to cultivate customer relationships as Taco Bell is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Taco Bell, Inc.--1983-94, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Lynda M. Applegate, Leonard A. Schlesinger, David Delong suggests that, Taco Bell 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.
High cash cycle compare to competitors
Taco Bell 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Taco Bell 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.
Increasing silos among functional specialists
– The organizational structure of Taco Bell is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Taco Bell needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Taco Bell to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Taco Bell products
– To increase the profitability and margins on the products, Taco Bell 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 Taco Bell, firm in the HBR case study Taco Bell, Inc.--1983-94 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Taco Bell 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.
Skills based hiring
– The stress on hiring functional specialists at Taco Bell 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.
Interest costs
– Compare to the competition, Taco Bell 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.
Opportunities Taco Bell, Inc.--1983-94 | 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 Taco Bell, Inc.--1983-94 are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Taco Bell can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Taco Bell 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Taco Bell can use these opportunities to build new business models that can help the communities that Taco Bell operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Using analytics as competitive advantage
– Taco Bell 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 Taco Bell, Inc.--1983-94 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Taco Bell to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Taco Bell can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Taco Bell 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, Taco Bell, Inc.--1983-94, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Taco Bell 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.
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 Taco Bell in the consumer business. Now Taco Bell can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Taco Bell can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Taco Bell, Inc.--1983-94 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Taco Bell is facing challenges because of the dominance of functional experts in the organization. Taco Bell, Inc.--1983-94 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 Taco Bell 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 Taco Bell to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Taco Bell 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Taco Bell in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats Taco Bell, Inc.--1983-94 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Taco Bell, Inc.--1983-94 are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Taco Bell, Inc.--1983-94, Taco Bell may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Consumer confidence and its impact on Taco Bell 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.
Regulatory challenges
– Taco Bell 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 Technology & Operations industry regulations.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Taco Bell can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Shortening product life cycle
– it is one of the major threat that Taco Bell is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Taco Bell.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Taco Bell with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Taco Bell 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. Taco Bell can take advantage of this fund but it will also bring new competitors in the Technology & Operations 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 Taco Bell in the Technology & Operations sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Taco Bell 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.
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 Taco Bell business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Taco Bell 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 Taco Bell, Inc.--1983-94 .
Weighted SWOT Analysis of Taco Bell, Inc.--1983-94 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 Taco Bell, Inc.--1983-94 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 Taco Bell, Inc.--1983-94 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 Taco Bell, Inc.--1983-94 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 Taco Bell, Inc.--1983-94 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 Taco Bell needs to make to build a sustainable competitive advantage.