KITKAT in Japan (A): Sparking a Cultural Revolution SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of KITKAT in Japan (A): Sparking a Cultural Revolution
In 2008, the marketing manager for NestlA? Japan's confectionery business and his team were struggling to redefine the KITKAT brand within the Japanese market. KITKAT as a brand faced a real threat as the retail environment rapidly shifted toward increasingly powerful convenience store chains and consumer preferences shifted toward more novel consumable products. With more than 200 companies competing within Japan's crowded and relatively stable confectionery market, NestlA? Japan was facing the harsh realities of Japan's famed position as the world's toughest consumer market. To address these challenges, NestlA? Japan worked over 15 years to instill deep meaning in the KITKAT brand and then, based upon this foundation, created a comprehensive product portfolio. How can KITKAT capitalize on its past success as it moves forward? Philip Sugai is affiliated with Doshisha University.
Swot Analysis of "KITKAT in Japan (A): Sparking a Cultural Revolution" written by Philip Sugai, Adrian Sossna includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kitkat Nestla facing as an external strategic factors. Some of the topics covered in KITKAT in Japan (A): Sparking a Cultural Revolution case study are - Strategic Management Strategies, Customers, Growth strategy, Innovation and Sales & Marketing.
Some of the macro environment factors that can be used to understand the KITKAT in Japan (A): Sparking a Cultural Revolution casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, there is backlash against globalization, wage bills are increasing,
cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of KITKAT in Japan (A): Sparking a Cultural Revolution
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in KITKAT in Japan (A): Sparking a Cultural Revolution case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kitkat Nestla, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kitkat Nestla 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 KITKAT in Japan (A): Sparking a Cultural Revolution can be done for the following purposes –
1. Strategic planning using facts provided in KITKAT in Japan (A): Sparking a Cultural Revolution case study
2. Improving business portfolio management of Kitkat Nestla
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kitkat Nestla
Strengths KITKAT in Japan (A): Sparking a Cultural Revolution | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kitkat Nestla in KITKAT in Japan (A): Sparking a Cultural Revolution Harvard Business Review case study are -
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Kitkat Nestla digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kitkat Nestla 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.
Learning organization
- Kitkat Nestla 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 Kitkat Nestla is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in KITKAT in Japan (A): Sparking a Cultural Revolution Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Kitkat Nestla is present in almost all the verticals within the industry. This has provided firm in KITKAT in Japan (A): Sparking a Cultural Revolution 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.
Organizational Resilience of Kitkat Nestla
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kitkat Nestla does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Kitkat Nestla 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 KITKAT in Japan (A): Sparking a Cultural Revolution HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Kitkat Nestla 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 KITKAT in Japan (A): Sparking a Cultural Revolution - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Sales & Marketing field
– Kitkat Nestla 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 Kitkat Nestla in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Kitkat Nestla has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kitkat Nestla to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Kitkat Nestla 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.
Superior customer experience
– The customer experience strategy of Kitkat Nestla in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– KITKAT in Japan (A): Sparking a Cultural Revolution firm has clearly differentiated products in the market place. This has enabled Kitkat Nestla to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Kitkat Nestla to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Kitkat Nestla 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.
Weaknesses KITKAT in Japan (A): Sparking a Cultural Revolution | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of KITKAT in Japan (A): Sparking a Cultural Revolution are -
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 Kitkat Nestla supply chain. Even after few cautionary changes mentioned in the HBR case study - KITKAT in Japan (A): Sparking a Cultural Revolution, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kitkat Nestla vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Kitkat Nestla 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 - KITKAT in Japan (A): Sparking a Cultural Revolution should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Kitkat Nestla 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. Kitkat Nestla 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.
Lack of clear differentiation of Kitkat Nestla products
– To increase the profitability and margins on the products, Kitkat Nestla needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study KITKAT in Japan (A): Sparking a Cultural Revolution, it seems that company is thinking about the frontier risks that can impact Sales & Marketing 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.
Slow to strategic competitive environment developments
– As KITKAT in Japan (A): Sparking a Cultural Revolution HBR case study mentions - Kitkat Nestla 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Kitkat Nestla 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.
Aligning sales with marketing
– It come across in the case study KITKAT in Japan (A): Sparking a Cultural Revolution 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 KITKAT in Japan (A): Sparking a Cultural Revolution can leverage the sales team experience to cultivate customer relationships as Kitkat Nestla is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study KITKAT in Japan (A): Sparking a Cultural Revolution, is just above the industry average. Kitkat Nestla 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.
Low market penetration in new markets
– Outside its home market of Kitkat Nestla, firm in the HBR case study KITKAT in Japan (A): Sparking a Cultural Revolution needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Kitkat Nestla 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.
Opportunities KITKAT in Japan (A): Sparking a Cultural Revolution | 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 KITKAT in Japan (A): Sparking a Cultural Revolution are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kitkat Nestla 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. Kitkat Nestla 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kitkat Nestla 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.
Manufacturing automation
– Kitkat Nestla can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kitkat Nestla in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Kitkat Nestla 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kitkat Nestla can use these opportunities to build new business models that can help the communities that Kitkat Nestla operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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. Kitkat Nestla can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Kitkat Nestla in the consumer business. Now Kitkat Nestla can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Kitkat Nestla to increase its market reach. Kitkat Nestla 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Kitkat Nestla can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kitkat Nestla 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 Kitkat Nestla to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Kitkat Nestla has opened avenues for new revenue streams for the organization in the industry. This can help Kitkat Nestla to build a more holistic ecosystem as suggested in the KITKAT in Japan (A): Sparking a Cultural Revolution case study. Kitkat Nestla can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kitkat Nestla is facing challenges because of the dominance of functional experts in the organization. KITKAT in Japan (A): Sparking a Cultural Revolution 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.
Threats KITKAT in Japan (A): Sparking a Cultural Revolution External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study KITKAT in Japan (A): Sparking a Cultural Revolution are -
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study KITKAT in Japan (A): Sparking a Cultural Revolution, Kitkat Nestla may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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 Kitkat Nestla in the Sales & Marketing sector and impact the bottomline of the organization.
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 Kitkat Nestla.
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. Kitkat Nestla 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.
Technology acceleration in Forth Industrial Revolution
– Kitkat Nestla has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Kitkat Nestla needs to keep up with the evolution of technology in the Sales & Marketing 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.
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 Kitkat Nestla business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kitkat Nestla with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Kitkat Nestla 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. Kitkat Nestla can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Kitkat Nestla
– 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 Kitkat Nestla.
High dependence on third party suppliers
– Kitkat Nestla 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.
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. Kitkat Nestla needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Regulatory challenges
– Kitkat Nestla 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 Sales & Marketing industry regulations.
Weighted SWOT Analysis of KITKAT in Japan (A): Sparking a Cultural Revolution 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 KITKAT in Japan (A): Sparking a Cultural Revolution 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 KITKAT in Japan (A): Sparking a Cultural Revolution 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 KITKAT in Japan (A): Sparking a Cultural Revolution 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 KITKAT in Japan (A): Sparking a Cultural Revolution 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 Kitkat Nestla needs to make to build a sustainable competitive advantage.