In 2009, Parle Products Pvt. Limited (Parle), a leading Indian biscuit manufacturer, had the distinction of producing the largest selling glucose biscuit brand by volume in the world, the Parle-G. Parle-G biscuits sold for approximately US$1 per kilogram and as very few processed and ready-to-eat foods were available at this price point, Parle-G was strongly associated with offering value for money (VFM). A looming problem in this brand category for Parle was that the input prices of two major raw materials for the Parle-G biscuits (which together accounted for 55 per cent of their input costs) had risen enough in the past 18 months to decrease margins from 15 per cent to less than 10 per cent. Pressure to restore margins led Parle to consider a price increase yet a previous attempt had caused dramatic reduction in sales. Parle subsequently addressed rising input costs by reducing the weight of the package, franchising production, reducing supply chain costs and reducing packaging costs. Parle could not ignore the deeply entrenched perception of VFM when devising both short- and long-term marketing plans to retain Parle-G's success in the marketplace. These plans needed to address segmentation, positioning and changing Indian demographics when considering a potential price increase for Parle-G biscuits.
Authors :: Chandra Sekhar Ramasastry, Miranda Goode
Swot Analysis of "Parle-G" written by Chandra Sekhar Ramasastry, Miranda Goode includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Parle Biscuits facing as an external strategic factors. Some of the topics covered in Parle-G case study are - Strategic Management Strategies, Pricing and Global Business.
Some of the macro environment factors that can be used to understand the Parle-G casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, geopolitical disruptions, wage bills are increasing, increasing commodity prices, central banks are concerned over increasing inflation, increasing transportation and logistics costs,
there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Parle-G case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Parle Biscuits, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Parle Biscuits 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 Parle-G can be done for the following purposes –
1. Strategic planning using facts provided in Parle-G case study
2. Improving business portfolio management of Parle Biscuits
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 Parle Biscuits
Strengths Parle-G | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Parle Biscuits in Parle-G Harvard Business Review case study are -
Strong track record of project management
– Parle Biscuits is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Parle Biscuits 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.
Training and development
– Parle Biscuits has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Parle-G 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.
Successful track record of launching new products
– Parle Biscuits has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Parle Biscuits 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.
Innovation driven organization
– Parle Biscuits is one of the most innovative firm in sector. Manager in Parle-G Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Parle Biscuits in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Parle Biscuits 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 Parle-G HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Parle Biscuits 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 Parle Biscuits is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Parle-G Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Parle Biscuits
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Parle Biscuits does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Parle Biscuits 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 Chandra Sekhar Ramasastry, Miranda Goode 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.
Effective Research and Development (R&D)
– Parle Biscuits 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 Parle-G - 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 Global Business segment
- digital transformation varies from industry to industry. For Parle Biscuits digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Parle Biscuits 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 Parle-G | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Parle-G are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Parle-G, is just above the industry average. Parle Biscuits 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.
Products dominated business model
– Even though Parle Biscuits 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 - Parle-G should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Parle Biscuits 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Parle Biscuits 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 Parle-G 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 Parle-G can leverage the sales team experience to cultivate customer relationships as Parle Biscuits is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Parle-G HBR case study mentions - Parle Biscuits 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.
Low market penetration in new markets
– Outside its home market of Parle Biscuits, firm in the HBR case study Parle-G needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Parle Biscuits is dominated by functional specialists. It is not different from other players in the Global Business segment. Parle Biscuits needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Parle Biscuits to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Parle Biscuits 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Parle-G, it seems that the employees of Parle Biscuits don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Parle-G has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Parle Biscuits 's lucrative customers.
Opportunities Parle-G | 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 Parle-G are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Parle Biscuits is facing challenges because of the dominance of functional experts in the organization. Parle-G 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.
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 Parle Biscuits in the consumer business. Now Parle Biscuits can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Parle Biscuits has opened avenues for new revenue streams for the organization in the industry. This can help Parle Biscuits to build a more holistic ecosystem as suggested in the Parle-G case study. Parle Biscuits can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Parle Biscuits to increase its market reach. Parle Biscuits 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.
Leveraging digital technologies
– Parle Biscuits 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Parle Biscuits can use these opportunities to build new business models that can help the communities that Parle Biscuits operates in. Secondly it can use opportunities from government spending in Global Business sector.
Buying journey improvements
– Parle Biscuits can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Parle-G 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.
Developing new processes and practices
– Parle Biscuits can develop new processes and procedures in Global Business 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.
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. Parle Biscuits can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Parle Biscuits 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.
Loyalty marketing
– Parle Biscuits 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Parle Biscuits 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Parle Biscuits 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.
Threats Parle-G External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Parle-G 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.
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 Parle Biscuits business can come under increasing regulations regarding data privacy, data security, etc.
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 Parle Biscuits in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Parle Biscuits 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.
Shortening product life cycle
– it is one of the major threat that Parle Biscuits is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Parle Biscuits 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. Parle Biscuits can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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. Parle Biscuits can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Parle-G, Parle Biscuits may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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. Parle Biscuits 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.
High dependence on third party suppliers
– Parle Biscuits 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, Parle Biscuits 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 Parle-G .
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. Parle Biscuits needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Parle Biscuits with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Parle-G 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 Parle-G 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 Parle-G 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 Parle-G 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 Parle-G 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 Parle Biscuits needs to make to build a sustainable competitive advantage.
