Caffebene: Master Brewer of Growth and Global Ambition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Caffebene: Master Brewer of Growth and Global Ambition
This case was a finalist for NACRA's Curtis E. Tate Award for the best case published in the Case Research Journal in 2013. CaffA?bene founder Sun Kwon Kim has achieved phenomenal success in a highly competitive South Korean coffee industry dominated by American and conglomerate-founded brands. The case illustrates Kim's strong entrepreneurial orientation and describes the unusual decisions he has made to differentiate CaffA?bene and achieve rapid growth. Kim's success in South Korea continues to fuel his global ambition and causes him and his management team to consider entering either China or the U.S. as its next target market. The case introduces a wide range of topics relevant to entrepreneurship as well as franchising, including developing a new retail concept, creating and sustaining competitive advantage, managing rapid growth, and new market entry strategies. Kim is faced with a difficult stay-the-course vs. abandon decision when he experiences a major slipup with CaffA?bene's flagship store in the U.S. The discussion should raise fundamental questions about what made CaffA?bene successful in the first place, if those success factors are transferable to the U.S., and how Kim's strong entrepreneurial orientation affects his decision making process. Unique aspects of the case include(1) presents a rare story of an entrepreneurial service concept of Asian origin attempting to expand internationally and enter the U.S. (most cases of this sort are about companies going the opposite direction); (2) describes the process of developing and refining a new retail concept in a highly competitive market; (3) explains strategies for stimulating and managing remarkable growth in a short period of time; and (4) exposes students to CaffA?bene management's unorthodox thought process in the company's international expansion strategy.
Authors :: David Y. Choi, Byungoh Kang, Fred Kieser
Swot Analysis of "Caffebene: Master Brewer of Growth and Global Ambition" written by David Y. Choi, Byungoh Kang, Fred Kieser includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Caffa Bene facing as an external strategic factors. Some of the topics covered in Caffebene: Master Brewer of Growth and Global Ambition case study are - Strategic Management Strategies, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Caffebene: Master Brewer of Growth and Global Ambition casestudy better are - – increasing energy prices, increasing transportation and logistics costs, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, wage bills are increasing,
increasing government debt because of Covid-19 spendings, increasing commodity prices, etc
Introduction to SWOT Analysis of Caffebene: Master Brewer of Growth and Global Ambition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Caffebene: Master Brewer of Growth and Global Ambition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Caffa Bene, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition can be done for the following purposes –
1. Strategic planning using facts provided in Caffebene: Master Brewer of Growth and Global Ambition case study
2. Improving business portfolio management of Caffa Bene
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 Caffa Bene
Strengths Caffebene: Master Brewer of Growth and Global Ambition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Caffa Bene in Caffebene: Master Brewer of Growth and Global Ambition Harvard Business Review case study are -
Organizational Resilience of Caffa Bene
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Caffa Bene does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Caffa Bene in the sector have low bargaining power. Caffebene: Master Brewer of Growth and Global Ambition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Caffa Bene to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Caffa Bene 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.
Highly skilled collaborators
– Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Caffa Bene has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Caffa Bene 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.
Learning organization
- Caffa Bene 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 Caffa Bene is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Caffebene: Master Brewer of Growth and Global Ambition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Caffa Bene has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Caffebene: Master Brewer of Growth and Global Ambition Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Caffa Bene 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 Caffa Bene 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.
Effective Research and Development (R&D)
– Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Caffebene: Master Brewer of Growth and Global Ambition firm has clearly differentiated products in the market place. This has enabled Caffa Bene to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Caffa Bene to invest into research and development (R&D) and innovation.
Analytics focus
– Caffa Bene 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 David Y. Choi, Byungoh Kang, Fred Kieser 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 Caffebene: Master Brewer of Growth and Global Ambition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Caffebene: Master Brewer of Growth and Global Ambition are -
High operating costs
– Compare to the competitors, firm in the HBR case study Caffebene: Master Brewer of Growth and Global Ambition 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 Caffa Bene 's lucrative customers.
Interest costs
– Compare to the competition, Caffa Bene 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Caffebene: Master Brewer of Growth and Global Ambition 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 Caffa Bene has relatively successful track record of launching new products.
High cash cycle compare to competitors
Caffa Bene 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Caffebene: Master Brewer of Growth and Global Ambition, is just above the industry average. Caffa Bene needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Caffa Bene supply chain. Even after few cautionary changes mentioned in the HBR case study - Caffebene: Master Brewer of Growth and Global Ambition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Caffa Bene vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition 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 Caffebene: Master Brewer of Growth and Global Ambition can leverage the sales team experience to cultivate customer relationships as Caffa Bene is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Caffebene: Master Brewer of Growth and Global Ambition HBR case study mentions - Caffa Bene 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Caffa Bene is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Caffebene: Master Brewer of Growth and Global Ambition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Caffebene: Master Brewer of Growth and Global Ambition, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Caffebene: Master Brewer of Growth and Global Ambition | 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 Caffebene: Master Brewer of Growth and Global Ambition are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Caffa Bene can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Caffa Bene can use these opportunities to build new business models that can help the communities that Caffa Bene operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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. Caffa Bene 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. Caffa Bene 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.
Using analytics as competitive advantage
– Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Caffa Bene to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Caffa Bene has opened avenues for new revenue streams for the organization in the industry. This can help Caffa Bene to build a more holistic ecosystem as suggested in the Caffebene: Master Brewer of Growth and Global Ambition case study. Caffa Bene 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 Caffa Bene to increase its market reach. Caffa Bene 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.
Manufacturing automation
– Caffa Bene 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Caffa Bene 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 Caffa Bene 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.
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. Caffa Bene can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Caffa Bene can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Caffebene: Master Brewer of Growth and Global Ambition 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Caffa Bene 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.
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 Caffa Bene in the consumer business. Now Caffa Bene can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Caffebene: Master Brewer of Growth and Global Ambition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Caffebene: Master Brewer of Growth and Global Ambition are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Caffa Bene with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Caffa Bene business can come under increasing regulations regarding data privacy, data security, etc.
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. Caffa Bene needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Caffa Bene 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, Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition .
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 Caffa Bene in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Regulatory challenges
– Caffa Bene 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Caffebene: Master Brewer of Growth and Global Ambition, Caffa Bene 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 .
Technology acceleration in Forth Industrial Revolution
– Caffa Bene has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Caffa Bene 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.
Increasing wage structure of Caffa Bene
– 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 Caffa Bene.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Caffa Bene 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.
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.
High dependence on third party suppliers
– Caffa Bene 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 Caffebene: Master Brewer of Growth and Global Ambition 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 Caffebene: Master Brewer of Growth and Global Ambition 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 Caffebene: Master Brewer of Growth and Global Ambition 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 Caffebene: Master Brewer of Growth and Global Ambition 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 Caffebene: Master Brewer of Growth and Global Ambition 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 Caffa Bene needs to make to build a sustainable competitive advantage.
