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 - – digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, increasing energy prices, geopolitical disruptions,
banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, 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 -
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.
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.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Caffebene: Master Brewer of Growth and Global Ambition 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.
Ability to lead change in Innovation & Entrepreneurship field
– Caffa Bene 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 Caffa Bene in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Caffa Bene is present in almost all the verticals within the industry. This has provided firm in Caffebene: Master Brewer of Growth and Global Ambition 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 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.
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.
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.
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.
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 -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Caffebene: Master Brewer of Growth and Global Ambition, in the dynamic environment Caffa Bene has struggled to respond to the nimble upstart competition. Caffa Bene has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Caffa Bene 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 - Caffebene: Master Brewer of Growth and Global Ambition should strive to include more intangible value offerings along with its core products and services.
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.
Need for greater diversity
– Caffa Bene 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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Caffa Bene 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.
Slow decision making process
– As mentioned earlier in the report, Caffa Bene 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. Caffa Bene 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.
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 bargaining power of channel partners
– Because of the regulatory requirements, David Y. Choi, Byungoh Kang, Fred Kieser suggests that, Caffa Bene 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 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.
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 -
Leveraging digital technologies
– Caffa Bene 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
– 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Caffa Bene is facing challenges because of the dominance of functional experts in the organization. Caffebene: Master Brewer of Growth and Global Ambition 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Caffa Bene 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 Caffa Bene to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Caffa Bene 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Caffa Bene 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, Caffebene: Master Brewer of Growth and Global Ambition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Caffa Bene can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Caffa Bene 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.
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.
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.
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.
Building a culture of innovation
– managers at Caffa Bene 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.
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 -
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 .
Consumer confidence and its impact on Caffa Bene 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.
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. Caffa Bene can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
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 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.
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.
Shortening product life cycle
– it is one of the major threat that Caffa Bene is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.