Trying to Create a Stir: Opening a Coffee Shop in Korea SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Trying to Create a Stir: Opening a Coffee Shop in Korea
A critical question for entrepreneurs starting a business, particularly in a foreign country, is choosing whether or not franchising is the appropriate mode of entry. Franchising offers the entrepreneur instant brand recognition, established business processes and supply chains, regulatory and tax guidance as well as a ready supply of assistance in the early months; however, it deprives the entrepreneur of what many of them crave - the ability to create and grow a business from one's imagination. The two entrepreneurs in this case had regular salaries, but wanted to try their hands at opening a coffee shop - or a chain of coffee shops - in South Korea, which already had many brands with multiple outlets.This case is appropriate for use in entrepreneurship, management strategy or international marketing and business courses to introduce mode of entry selection and product/service differentiation. It provides a practical example for students to understand how a mode of entry decision impacts competitiveness in a mature market segment in a mature geographic market. The case can help achieve these objectives as it 1) Encourages students to explore the unique challenges that entrepreneurs face in market selection, mode of entry, product/service offering and brand differentiation strategies; 2) Demonstrates that these critical decisions - market selection, mode of entry, differentiation, etc. - are not linear decisions to be made one after another, but rather pieces of an integrated strategy that have an impact on each other; 3) Allows students to be creative in looking for ways to differentiate a product or service that is a late entrant into a mature market.
Swot Analysis of "Trying to Create a Stir: Opening a Coffee Shop in Korea" written by Allen H. Kupetz, Gyewan Moon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mode Entry facing as an external strategic factors. Some of the topics covered in Trying to Create a Stir: Opening a Coffee Shop in Korea case study are - Strategic Management Strategies, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Trying to Create a Stir: Opening a Coffee Shop in Korea casestudy better are - – talent flight as more people leaving formal jobs, increasing commodity prices, there is backlash against globalization, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, etc
Introduction to SWOT Analysis of Trying to Create a Stir: Opening a Coffee Shop in Korea
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Trying to Create a Stir: Opening a Coffee Shop in Korea case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mode Entry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mode Entry 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 Trying to Create a Stir: Opening a Coffee Shop in Korea can be done for the following purposes –
1. Strategic planning using facts provided in Trying to Create a Stir: Opening a Coffee Shop in Korea case study
2. Improving business portfolio management of Mode Entry
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 Mode Entry
Strengths Trying to Create a Stir: Opening a Coffee Shop in Korea | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mode Entry in Trying to Create a Stir: Opening a Coffee Shop in Korea Harvard Business Review case study are -
Effective Research and Development (R&D)
– Mode Entry 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 Trying to Create a Stir: Opening a Coffee Shop in Korea - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Mode Entry 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 Trying to Create a Stir: Opening a Coffee Shop in Korea HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Mode Entry is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Mode Entry 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.
Successful track record of launching new products
– Mode Entry has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mode Entry 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.
Low bargaining power of suppliers
– Suppliers of Mode Entry in the sector have low bargaining power. Trying to Create a Stir: Opening a Coffee Shop in Korea has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Mode Entry to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Innovation & Entrepreneurship field
– Mode Entry 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 Mode Entry in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Mode Entry has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Trying to Create a Stir: Opening a Coffee Shop in Korea 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.
Ability to recruit top talent
– Mode Entry is one of the leading recruiters in the industry. Managers in the Trying to Create a Stir: Opening a Coffee Shop in Korea are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Mode Entry is one of the most innovative firm in sector. Manager in Trying to Create a Stir: Opening a Coffee Shop in Korea Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Trying to Create a Stir: Opening a Coffee Shop in Korea 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.
Cross disciplinary teams
– Horizontal connected teams at the Mode Entry 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.
Weaknesses Trying to Create a Stir: Opening a Coffee Shop in Korea | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Trying to Create a Stir: Opening a Coffee Shop in Korea are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Trying to Create a Stir: Opening a Coffee Shop in Korea, in the dynamic environment Mode Entry has struggled to respond to the nimble upstart competition. Mode Entry has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Trying to Create a Stir: Opening a Coffee Shop in Korea 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 Trying to Create a Stir: Opening a Coffee Shop in Korea can leverage the sales team experience to cultivate customer relationships as Mode Entry is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Mode Entry 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mode Entry is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Trying to Create a Stir: Opening a Coffee Shop in Korea can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Mode Entry 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 - Trying to Create a Stir: Opening a Coffee Shop in Korea should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Mode Entry 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.
High cash cycle compare to competitors
Mode Entry 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.
Slow decision making process
– As mentioned earlier in the report, Mode Entry 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. Mode Entry 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.
Skills based hiring
– The stress on hiring functional specialists at Mode Entry has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, Mode Entry 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Trying to Create a Stir: Opening a Coffee Shop in Korea, is just above the industry average. Mode Entry 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.
Opportunities Trying to Create a Stir: Opening a Coffee Shop in Korea | 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 Trying to Create a Stir: Opening a Coffee Shop in Korea are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mode Entry 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.
Learning at scale
– Online learning technologies has now opened space for Mode Entry to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mode Entry can use these opportunities to build new business models that can help the communities that Mode Entry operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mode Entry 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.
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. Mode Entry 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. Mode Entry 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.
Creating value in data economy
– The success of analytics program of Mode Entry has opened avenues for new revenue streams for the organization in the industry. This can help Mode Entry to build a more holistic ecosystem as suggested in the Trying to Create a Stir: Opening a Coffee Shop in Korea case study. Mode Entry can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Mode Entry 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.
Manufacturing automation
– Mode Entry 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.
Building a culture of innovation
– managers at Mode Entry 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mode Entry 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, Trying to Create a Stir: Opening a Coffee Shop in Korea, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Mode Entry 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.
Using analytics as competitive advantage
– Mode Entry has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Trying to Create a Stir: Opening a Coffee Shop in Korea - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Mode Entry to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Mode Entry 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.
Threats Trying to Create a Stir: Opening a Coffee Shop in Korea External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Trying to Create a Stir: Opening a Coffee Shop in Korea are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mode Entry in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
High dependence on third party suppliers
– Mode Entry 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.
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 Mode Entry in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Mode Entry has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Mode Entry 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Trying to Create a Stir: Opening a Coffee Shop in Korea, Mode Entry 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mode Entry with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Consumer confidence and its impact on Mode Entry 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.
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 Mode Entry business can come under increasing regulations regarding data privacy, data security, etc.
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 Mode Entry.
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. Mode Entry needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Regulatory challenges
– Mode Entry 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 Trying to Create a Stir: Opening a Coffee Shop in Korea 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 Trying to Create a Stir: Opening a Coffee Shop in Korea 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 Trying to Create a Stir: Opening a Coffee Shop in Korea 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 Trying to Create a Stir: Opening a Coffee Shop in Korea 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 Trying to Create a Stir: Opening a Coffee Shop in Korea 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 Mode Entry needs to make to build a sustainable competitive advantage.
