Case Study Description of Habitual Chocolate: Expansion Opportunities
The owner and chocolatier of a small, chocolate manufacturing and retailing company in London, Ontario, was considering an expansion opportunity within Southwestern Ontario. The company's current production facility was sufficient for handling immediate demand; however, there was limited space for expansion in the same building, and the building's administration had plans to prohibit manufacturing activities within the next five to 10 years. The owner wondered whether the time was right to purchase a new storefront and production facility in a small nearby city. Alternatively, should he continue operations in the present location while looking for other opportunities to expand? He planned to create projected financial statements and conduct internal and external analyses to inform his decision-making process.
Authors :: Elizabeth M.A. Grasby, Richie Bloomfield
Swot Analysis of "Habitual Chocolate: Expansion Opportunities" written by Elizabeth M.A. Grasby, Richie Bloomfield includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chocolate Expansion facing as an external strategic factors. Some of the topics covered in Habitual Chocolate: Expansion Opportunities case study are - Strategic Management Strategies, Decision making and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Habitual Chocolate: Expansion Opportunities casestudy better are - – increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, there is increasing trade war between United States & China,
supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Habitual Chocolate: Expansion Opportunities
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Habitual Chocolate: Expansion Opportunities case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chocolate Expansion, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chocolate Expansion 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 Habitual Chocolate: Expansion Opportunities can be done for the following purposes –
1. Strategic planning using facts provided in Habitual Chocolate: Expansion Opportunities case study
2. Improving business portfolio management of Chocolate Expansion
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Chocolate Expansion
Strengths Habitual Chocolate: Expansion Opportunities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chocolate Expansion in Habitual Chocolate: Expansion Opportunities Harvard Business Review case study are -
Strong track record of project management
– Chocolate Expansion is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Chocolate Expansion 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 Elizabeth M.A. Grasby, Richie Bloomfield 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Habitual Chocolate: Expansion Opportunities firm has clearly differentiated products in the market place. This has enabled Chocolate Expansion to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Chocolate Expansion to invest into research and development (R&D) and innovation.
Learning organization
- Chocolate Expansion 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 Chocolate Expansion is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Habitual Chocolate: Expansion Opportunities Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Chocolate Expansion 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 Habitual Chocolate: Expansion Opportunities - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Chocolate Expansion digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chocolate Expansion 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.
Low bargaining power of suppliers
– Suppliers of Chocolate Expansion in the sector have low bargaining power. Habitual Chocolate: Expansion Opportunities has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chocolate Expansion to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Habitual Chocolate: Expansion Opportunities 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.
Cross disciplinary teams
– Horizontal connected teams at the Chocolate Expansion 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.
Innovation driven organization
– Chocolate Expansion is one of the most innovative firm in sector. Manager in Habitual Chocolate: Expansion Opportunities Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Chocolate Expansion has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Chocolate Expansion 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.
Training and development
– Chocolate Expansion has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Habitual Chocolate: Expansion Opportunities 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.
Weaknesses Habitual Chocolate: Expansion Opportunities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Habitual Chocolate: Expansion Opportunities are -
Aligning sales with marketing
– It come across in the case study Habitual Chocolate: Expansion Opportunities 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 Habitual Chocolate: Expansion Opportunities can leverage the sales team experience to cultivate customer relationships as Chocolate Expansion is planning to shift buying processes online.
Products dominated business model
– Even though Chocolate Expansion 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 - Habitual Chocolate: Expansion Opportunities should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Chocolate Expansion is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Chocolate Expansion needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chocolate Expansion to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Habitual Chocolate: Expansion Opportunities, in the dynamic environment Chocolate Expansion has struggled to respond to the nimble upstart competition. Chocolate Expansion has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Chocolate Expansion 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, Chocolate Expansion 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 Chocolate Expansion supply chain. Even after few cautionary changes mentioned in the HBR case study - Habitual Chocolate: Expansion Opportunities, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chocolate Expansion vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Habitual Chocolate: Expansion Opportunities HBR case study mentions - Chocolate Expansion 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.
Slow decision making process
– As mentioned earlier in the report, Chocolate Expansion has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Chocolate Expansion even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Capital Spending Reduction
– Even during the low interest decade, Chocolate Expansion 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.
Interest costs
– Compare to the competition, Chocolate Expansion 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 Habitual Chocolate: Expansion Opportunities | 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 Habitual Chocolate: Expansion Opportunities are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chocolate Expansion can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Chocolate Expansion in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chocolate Expansion 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.
Using analytics as competitive advantage
– Chocolate Expansion 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 Habitual Chocolate: Expansion Opportunities - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chocolate Expansion 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. Chocolate Expansion can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Chocolate Expansion can develop new processes and procedures in Finance & Accounting 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Chocolate Expansion can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Chocolate Expansion 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Chocolate Expansion 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. Chocolate Expansion 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Chocolate Expansion is facing challenges because of the dominance of functional experts in the organization. Habitual Chocolate: Expansion Opportunities 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.
Manufacturing automation
– Chocolate Expansion can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chocolate Expansion 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, Habitual Chocolate: Expansion Opportunities, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Chocolate Expansion 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 Finance & Accounting segment.
Threats Habitual Chocolate: Expansion Opportunities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Habitual Chocolate: Expansion Opportunities are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chocolate Expansion in the Finance & Accounting industry. The Finance & Accounting 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.
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 Chocolate Expansion.
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.
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 Chocolate Expansion 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, Chocolate Expansion 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 Habitual Chocolate: Expansion Opportunities .
Consumer confidence and its impact on Chocolate Expansion 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.
Increasing wage structure of Chocolate Expansion
– 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 Chocolate Expansion.
Technology acceleration in Forth Industrial Revolution
– Chocolate Expansion has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Chocolate Expansion needs to keep up with the evolution of technology in the Finance & Accounting 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.
Shortening product life cycle
– it is one of the major threat that Chocolate Expansion is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Chocolate Expansion 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 Finance & Accounting industry regulations.
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 Chocolate Expansion in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chocolate Expansion with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Habitual Chocolate: Expansion Opportunities, Chocolate Expansion may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Weighted SWOT Analysis of Habitual Chocolate: Expansion Opportunities 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 Habitual Chocolate: Expansion Opportunities 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 Habitual Chocolate: Expansion Opportunities 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 Habitual Chocolate: Expansion Opportunities 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 Habitual Chocolate: Expansion Opportunities 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 Chocolate Expansion needs to make to build a sustainable competitive advantage.
