Theo Chocolate: How Far Should Fair Trade Go? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Theo Chocolate: How Far Should Fair Trade Go?
Joe Whinney, founder and CEO of Seattle, Washington-based Theo Chocolate, has spent his entire professional career bringing sustainably harvested chocolate to developed nations. His company created the first organic, fair-trade, GMO-free chocolate bar in the U.S., and prides itself on the ethical sourcing of beans from growers mainly located in the Democratic Republic of Congo, Peru, and Panama. Whinney, however, faces questions at home in his Seattle factory after media reports allege the company engaged in "emotional blackmail" as well as "manipulation, guilt, (and) intimidation" in an attempt to convince employees not to unionize. Students are asked to put themselves in the shoes of the protagonist and find solutions to address employee and shareholder concerns in the wake of the media firestorm.
Swot Analysis of "Theo Chocolate: How Far Should Fair Trade Go?" written by Andrew Hoffman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chocolate Theo facing as an external strategic factors. Some of the topics covered in Theo Chocolate: How Far Should Fair Trade Go? case study are - Strategic Management Strategies, Emerging markets, Labor, Social responsibility, Supply chain and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Theo Chocolate: How Far Should Fair Trade Go? casestudy better are - – digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
technology disruption, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Theo Chocolate: How Far Should Fair Trade Go?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Theo Chocolate: How Far Should Fair Trade Go? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chocolate Theo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chocolate Theo 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 Theo Chocolate: How Far Should Fair Trade Go? can be done for the following purposes –
1. Strategic planning using facts provided in Theo Chocolate: How Far Should Fair Trade Go? case study
2. Improving business portfolio management of Chocolate Theo
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Chocolate Theo
Strengths Theo Chocolate: How Far Should Fair Trade Go? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chocolate Theo in Theo Chocolate: How Far Should Fair Trade Go? Harvard Business Review case study are -
Ability to recruit top talent
– Chocolate Theo is one of the leading recruiters in the industry. Managers in the Theo Chocolate: How Far Should Fair Trade Go? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Chocolate Theo 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 Theo Chocolate: How Far Should Fair Trade Go? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Theo Chocolate: How Far Should Fair Trade Go? firm has clearly differentiated products in the market place. This has enabled Chocolate Theo to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Chocolate Theo to invest into research and development (R&D) and innovation.
High brand equity
– Chocolate Theo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chocolate Theo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Chocolate Theo is present in almost all the verticals within the industry. This has provided firm in Theo Chocolate: How Far Should Fair Trade Go? 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.
Low bargaining power of suppliers
– Suppliers of Chocolate Theo in the sector have low bargaining power. Theo Chocolate: How Far Should Fair Trade Go? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chocolate Theo to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Innovation & Entrepreneurship field
– Chocolate Theo 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 Chocolate Theo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Chocolate Theo is one of the most innovative firm in sector. Manager in Theo Chocolate: How Far Should Fair Trade Go? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Chocolate Theo 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 Theo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Theo Chocolate: How Far Should Fair Trade Go? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Chocolate Theo 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.
Strong track record of project management
– Chocolate Theo 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 Theo 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 Andrew Hoffman 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.
Weaknesses Theo Chocolate: How Far Should Fair Trade Go? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Theo Chocolate: How Far Should Fair Trade Go? are -
Need for greater diversity
– Chocolate Theo 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.
Capital Spending Reduction
– Even during the low interest decade, Chocolate Theo 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.
Increasing silos among functional specialists
– The organizational structure of Chocolate Theo is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Chocolate Theo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chocolate Theo to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Chocolate Theo 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.
High cash cycle compare to competitors
Chocolate Theo 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.
Low market penetration in new markets
– Outside its home market of Chocolate Theo, firm in the HBR case study Theo Chocolate: How Far Should Fair Trade Go? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Theo Chocolate: How Far Should Fair Trade Go? 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 Chocolate Theo 's lucrative customers.
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 Theo supply chain. Even after few cautionary changes mentioned in the HBR case study - Theo Chocolate: How Far Should Fair Trade Go?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chocolate Theo vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew Hoffman suggests that, Chocolate Theo is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to strategic competitive environment developments
– As Theo Chocolate: How Far Should Fair Trade Go? HBR case study mentions - Chocolate Theo 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, Chocolate Theo 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.
Opportunities Theo Chocolate: How Far Should Fair Trade Go? | 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 Theo Chocolate: How Far Should Fair Trade Go? are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Chocolate Theo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Chocolate Theo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Theo Chocolate: How Far Should Fair Trade Go? 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chocolate Theo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Chocolate Theo 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.
Developing new processes and practices
– Chocolate Theo can develop new processes and procedures in Innovation & Entrepreneurship 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.
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 Chocolate Theo in the consumer business. Now Chocolate Theo 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 Chocolate Theo has opened avenues for new revenue streams for the organization in the industry. This can help Chocolate Theo to build a more holistic ecosystem as suggested in the Theo Chocolate: How Far Should Fair Trade Go? case study. Chocolate Theo 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 Chocolate Theo to increase its market reach. Chocolate Theo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chocolate Theo can use these opportunities to build new business models that can help the communities that Chocolate Theo operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Manufacturing automation
– Chocolate Theo can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Chocolate Theo 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 Theo 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.
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 Theo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chocolate Theo 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, Theo Chocolate: How Far Should Fair Trade Go?, 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 Theo Chocolate: How Far Should Fair Trade Go? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Theo Chocolate: How Far Should Fair Trade Go? are -
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. Chocolate Theo needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Chocolate Theo has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Chocolate Theo needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Stagnating economy with rate increase
– Chocolate Theo 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.
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 Theo business can come under increasing regulations regarding data privacy, data security, etc.
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. Chocolate Theo 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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Chocolate Theo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Chocolate Theo is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chocolate Theo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Chocolate Theo 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 Theo Chocolate: How Far Should Fair Trade Go? .
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 Theo in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Theo Chocolate: How Far Should Fair Trade Go?, Chocolate Theo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
High dependence on third party suppliers
– Chocolate Theo 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.
Weighted SWOT Analysis of Theo Chocolate: How Far Should Fair Trade Go? 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 Theo Chocolate: How Far Should Fair Trade Go? 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 Theo Chocolate: How Far Should Fair Trade Go? 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 Theo Chocolate: How Far Should Fair Trade Go? 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 Theo Chocolate: How Far Should Fair Trade Go? 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 Theo needs to make to build a sustainable competitive advantage.