The Octopus and the Generals: The United Fruit Company in Guatemala SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Octopus and the Generals: The United Fruit Company in Guatemala
Examines the overthrow of President Jacobo Arbenz of Guatemala in 1954 in a U.S.-backed coup in support of the United Fruit Co. Over the previous half century, United Fruit had built a large vertically integrated tropical fruit business that owned large banana plantations in the "banana republics" of Central America, including Guatemala. Examines the impact and role of United Fruit in the Guatemalan economy, one of the poorest in the world, and the reasons for growing hostility toward the company, culminating in Arbenz's agrarian reform policies aimed at redistributing some of the land held by United Fruit. The United States, which regarded Arbenz as pro-communist, supported United Fruit in the context of the Cold War.
Swot Analysis of "The Octopus and the Generals: The United Fruit Company in Guatemala" written by Geoffrey G. Jones, Marcelo Bucheli includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fruit Guatemala facing as an external strategic factors. Some of the topics covered in The Octopus and the Generals: The United Fruit Company in Guatemala case study are - Strategic Management Strategies, Emerging markets, Policy, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the The Octopus and the Generals: The United Fruit Company in Guatemala casestudy better are - – there is increasing trade war between United States & China, there is backlash against globalization, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, wage bills are increasing, technology disruption,
central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of The Octopus and the Generals: The United Fruit Company in Guatemala
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Octopus and the Generals: The United Fruit Company in Guatemala case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fruit Guatemala, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fruit Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala can be done for the following purposes –
1. Strategic planning using facts provided in The Octopus and the Generals: The United Fruit Company in Guatemala case study
2. Improving business portfolio management of Fruit Guatemala
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fruit Guatemala
Strengths The Octopus and the Generals: The United Fruit Company in Guatemala | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fruit Guatemala in The Octopus and the Generals: The United Fruit Company in Guatemala Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Fruit Guatemala in the sector have low bargaining power. The Octopus and the Generals: The United Fruit Company in Guatemala has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fruit Guatemala to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Fruit Guatemala 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 Fruit Guatemala is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Octopus and the Generals: The United Fruit Company in Guatemala Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Fruit Guatemala is one of the most innovative firm in sector. Manager in The Octopus and the Generals: The United Fruit Company in Guatemala Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Fruit Guatemala has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Octopus and the Generals: The United Fruit Company in Guatemala 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.
Strong track record of project management
– Fruit Guatemala is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Fruit Guatemala is present in almost all the verticals within the industry. This has provided firm in The Octopus and the Generals: The United Fruit Company in Guatemala 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.
Ability to recruit top talent
– Fruit Guatemala is one of the leading recruiters in the industry. Managers in the The Octopus and the Generals: The United Fruit Company in Guatemala are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Fruit Guatemala has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fruit Guatemala to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the The Octopus and the Generals: The United Fruit Company in Guatemala 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.
High switching costs
– The high switching costs that Fruit Guatemala 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.
Organizational Resilience of Fruit Guatemala
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fruit Guatemala does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Global Business industry
– The Octopus and the Generals: The United Fruit Company in Guatemala firm has clearly differentiated products in the market place. This has enabled Fruit Guatemala to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Fruit Guatemala to invest into research and development (R&D) and innovation.
Weaknesses The Octopus and the Generals: The United Fruit Company in Guatemala | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Octopus and the Generals: The United Fruit Company in Guatemala are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Octopus and the Generals: The United Fruit Company in Guatemala, is just above the industry average. Fruit Guatemala 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.
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 Fruit Guatemala supply chain. Even after few cautionary changes mentioned in the HBR case study - The Octopus and the Generals: The United Fruit Company in Guatemala, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fruit Guatemala vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Octopus and the Generals: The United Fruit Company in Guatemala 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 Fruit Guatemala has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Fruit Guatemala 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fruit Guatemala is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Octopus and the Generals: The United Fruit Company in Guatemala can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Fruit Guatemala has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Aligning sales with marketing
– It come across in the case study The Octopus and the Generals: The United Fruit Company in Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala can leverage the sales team experience to cultivate customer relationships as Fruit Guatemala is planning to shift buying processes online.
High cash cycle compare to competitors
Fruit Guatemala 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.
Increasing silos among functional specialists
– The organizational structure of Fruit Guatemala is dominated by functional specialists. It is not different from other players in the Global Business segment. Fruit Guatemala needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fruit Guatemala to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Fruit Guatemala 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Octopus and the Generals: The United Fruit Company in Guatemala, in the dynamic environment Fruit Guatemala has struggled to respond to the nimble upstart competition. Fruit Guatemala has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities The Octopus and the Generals: The United Fruit Company in Guatemala | 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 The Octopus and the Generals: The United Fruit Company in Guatemala are -
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 Fruit Guatemala in the consumer business. Now Fruit Guatemala can target international markets with far fewer capital restrictions requirements than the existing system.
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 Fruit Guatemala 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.
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. Fruit Guatemala can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Fruit Guatemala 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.
Buying journey improvements
– Fruit Guatemala can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Octopus and the Generals: The United Fruit Company in Guatemala 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fruit Guatemala 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 Fruit Guatemala to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Fruit Guatemala 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 Global Business segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fruit Guatemala in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Fruit Guatemala can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fruit Guatemala 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.
Better consumer reach
– The expansion of the 5G network will help Fruit Guatemala to increase its market reach. Fruit Guatemala 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.
Learning at scale
– Online learning technologies has now opened space for Fruit Guatemala 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fruit Guatemala 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, The Octopus and the Generals: The United Fruit Company in Guatemala, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats The Octopus and the Generals: The United Fruit Company in Guatemala External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Octopus and the Generals: The United Fruit Company in Guatemala are -
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 Fruit Guatemala business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fruit Guatemala can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Fruit Guatemala in the Global Business 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 Fruit Guatemala.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fruit Guatemala with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Fruit Guatemala 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.
Shortening product life cycle
– it is one of the major threat that Fruit Guatemala is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Fruit Guatemala 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 Global Business industry regulations.
Stagnating economy with rate increase
– Fruit Guatemala 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.
High dependence on third party suppliers
– Fruit Guatemala 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fruit Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala .
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. Fruit Guatemala needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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. Fruit Guatemala 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.
Weighted SWOT Analysis of The Octopus and the Generals: The United Fruit Company in Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala 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 The Octopus and the Generals: The United Fruit Company in Guatemala 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 Fruit Guatemala needs to make to build a sustainable competitive advantage.
