Zotter - Living by Chocolate SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zotter - Living by Chocolate
To maximize their effectiveness, color cases should be printed in color.This case is about a boutique chocolate manufacturer's decision to grow. Zotter, an Austrian company that was a pioneer in the organic and Fairtrade chocolate movement, uses the traditional confit technique to make premium hand-scooped chocolates in unusual and innovative flavor combinations. Having done many novel things to educate the market about the value of premium, organic and Fairtrade chocolate, Zotter consolidated its market position within the premium segment of the Austrian market for chocolate. The company only recently started to sell its product outside Austria. However, the time- and labor-intensive manufacturing process and the high prices of Zotter chocolates limit the scalability of the company, even though the founder desires to grow. While the founder has many ideas for the firm, it is not clear which path would be optimal for the kind of growth he desires. The case provides students an opportunity to discuss how entrepreneurs create markets for novel products, and how they can consolidate their position. To demonstrate to students how entrepreneurs create markets for novel products, and how they can consolidate their position.
Authors :: Mukti Khaire, Stefan Aichinger, Monika Hoffman, Maximilian Schnoedl
Swot Analysis of "Zotter - Living by Chocolate" written by Mukti Khaire, Stefan Aichinger, Monika Hoffman, Maximilian Schnoedl includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zotter Chocolate facing as an external strategic factors. Some of the topics covered in Zotter - Living by Chocolate case study are - Strategic Management Strategies, Innovation, International business and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Zotter - Living by Chocolate casestudy better are - – wage bills are increasing, geopolitical disruptions, increasing government debt because of Covid-19 spendings, technology disruption, there is backlash against globalization, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
central banks are concerned over increasing inflation, increasing energy prices, etc
Introduction to SWOT Analysis of Zotter - Living by Chocolate
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zotter - Living by Chocolate case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zotter Chocolate, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zotter Chocolate 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 Zotter - Living by Chocolate can be done for the following purposes –
1. Strategic planning using facts provided in Zotter - Living by Chocolate case study
2. Improving business portfolio management of Zotter Chocolate
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 Zotter Chocolate
Strengths Zotter - Living by Chocolate | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zotter Chocolate in Zotter - Living by Chocolate Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Zotter - Living by Chocolate 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.
Analytics focus
– Zotter Chocolate 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 Mukti Khaire, Stefan Aichinger, Monika Hoffman, Maximilian Schnoedl 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.
Innovation driven organization
– Zotter Chocolate is one of the most innovative firm in sector. Manager in Zotter - Living by Chocolate Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Zotter Chocolate in the sector have low bargaining power. Zotter - Living by Chocolate has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Zotter Chocolate to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Zotter Chocolate has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zotter Chocolate to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Zotter - Living by Chocolate firm has clearly differentiated products in the market place. This has enabled Zotter Chocolate to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Zotter Chocolate to invest into research and development (R&D) and innovation.
Training and development
– Zotter Chocolate has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zotter - Living by Chocolate 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.
Cross disciplinary teams
– Horizontal connected teams at the Zotter Chocolate 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.
Diverse revenue streams
– Zotter Chocolate is present in almost all the verticals within the industry. This has provided firm in Zotter - Living by Chocolate 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.
Highly skilled collaborators
– Zotter Chocolate 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 Zotter - Living by Chocolate HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Zotter Chocolate 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 Zotter - Living by Chocolate - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Zotter Chocolate is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Zotter - Living by Chocolate | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zotter - Living by Chocolate are -
Lack of clear differentiation of Zotter Chocolate products
– To increase the profitability and margins on the products, Zotter Chocolate needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Zotter - Living by Chocolate 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 Zotter - Living by Chocolate can leverage the sales team experience to cultivate customer relationships as Zotter Chocolate is planning to shift buying processes online.
Interest costs
– Compare to the competition, Zotter Chocolate 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.
Need for greater diversity
– Zotter Chocolate 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.
Increasing silos among functional specialists
– The organizational structure of Zotter Chocolate is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Zotter Chocolate needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Zotter Chocolate to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Zotter - Living by Chocolate 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 Zotter Chocolate has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Zotter Chocolate 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.
High cash cycle compare to competitors
Zotter Chocolate 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Zotter - Living by Chocolate 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 Zotter Chocolate 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Zotter Chocolate 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.
Slow decision making process
– As mentioned earlier in the report, Zotter Chocolate 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. Zotter Chocolate 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.
Opportunities Zotter - Living by Chocolate | 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 Zotter - Living by Chocolate are -
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. Zotter Chocolate can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Zotter Chocolate can use these opportunities to build new business models that can help the communities that Zotter Chocolate operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Manufacturing automation
– Zotter Chocolate 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.
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 Zotter Chocolate 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.
Creating value in data economy
– The success of analytics program of Zotter Chocolate has opened avenues for new revenue streams for the organization in the industry. This can help Zotter Chocolate to build a more holistic ecosystem as suggested in the Zotter - Living by Chocolate case study. Zotter Chocolate can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zotter Chocolate can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Zotter Chocolate 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 Zotter Chocolate to hire the very best people irrespective of their geographical location.
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. Zotter Chocolate can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Zotter Chocolate 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. Zotter Chocolate 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.
Building a culture of innovation
– managers at Zotter Chocolate 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 Innovation & Entrepreneurship segment.
Better consumer reach
– The expansion of the 5G network will help Zotter Chocolate to increase its market reach. Zotter Chocolate 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zotter Chocolate is facing challenges because of the dominance of functional experts in the organization. Zotter - Living by Chocolate 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zotter Chocolate in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Threats Zotter - Living by Chocolate External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zotter - Living by Chocolate are -
Stagnating economy with rate increase
– Zotter Chocolate 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zotter Chocolate 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 Zotter - Living by Chocolate .
Increasing wage structure of Zotter Chocolate
– 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 Zotter Chocolate.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zotter - Living by Chocolate, Zotter Chocolate 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
– Zotter Chocolate 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zotter Chocolate with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Zotter Chocolate is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Zotter Chocolate 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 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. Zotter Chocolate needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Consumer confidence and its impact on Zotter Chocolate 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.
Technology acceleration in Forth Industrial Revolution
– Zotter Chocolate has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Zotter Chocolate 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.
Environmental challenges
– Zotter Chocolate 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. Zotter Chocolate can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Regulatory challenges
– Zotter Chocolate 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 Innovation & Entrepreneurship industry regulations.
Weighted SWOT Analysis of Zotter - Living by Chocolate 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 Zotter - Living by Chocolate 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 Zotter - Living by Chocolate 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 Zotter - Living by Chocolate 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 Zotter - Living by Chocolate 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 Zotter Chocolate needs to make to build a sustainable competitive advantage.
