Case Study Description of Spreading Happiness: Warm Fuzz Cards
This is part of the subset of Ivey cases and technical notes written for Introductory-Level courses.In December 2008, Erica Mills and her husband, Craig, were making plans. They had recently decided to start a family within the next 12 months and were now making decisions about how to manage their careers as they were about to take this momentous step. Erica had started Warm Fuzz Cards, a Toronto-based greeting card company, just over two years ago in 2006. The business was growing slowly but profitably. Craig was employed as a human resources executive at a large company. He was very supportive of Erica's business. In fact, he believed that the business could grow much more quickly. Erica, on the other hand, liked her slow growth strategy. However, she was not sure that she could manage the business as it was currently structured and raise a family at the same time. They were going to have to decide what to do soon. They would need time to decide how fast to grow, develop a plan, raise money, and possibly hire staff, all before they started their family. This case provides students with an example of an entrepreneurial start-up and an understanding of: 1) the decision of how fast to grow 2) the decision of how much and where to invest in a growing business 3) how management skills, knowledge and preferences can impact decision-making in entrepreneurial/family business ventures 4) how important cash management is in the early stage of growth 5) how various stages in the development of a new venture will dictate the need for the detailed financial tracking and management of a business. This case is appropriate for a 75-minute introductory entrepreneurship class.
Swot Analysis of "Spreading Happiness: Warm Fuzz Cards" written by Colleen Sharen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Erica Fuzz facing as an external strategic factors. Some of the topics covered in Spreading Happiness: Warm Fuzz Cards case study are - Strategic Management Strategies, Entrepreneurial management, Informal leadership, Organizational culture and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Spreading Happiness: Warm Fuzz Cards casestudy better are - – supply chains are disrupted by pandemic , technology disruption, wage bills are increasing, there is backlash against globalization, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, etc
Introduction to SWOT Analysis of Spreading Happiness: Warm Fuzz Cards
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Spreading Happiness: Warm Fuzz Cards case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Erica Fuzz, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards can be done for the following purposes –
1. Strategic planning using facts provided in Spreading Happiness: Warm Fuzz Cards case study
2. Improving business portfolio management of Erica Fuzz
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 Erica Fuzz
Strengths Spreading Happiness: Warm Fuzz Cards | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Erica Fuzz in Spreading Happiness: Warm Fuzz Cards Harvard Business Review case study are -
Highly skilled collaborators
– Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Erica Fuzz in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Erica Fuzz 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 Erica Fuzz is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Spreading Happiness: Warm Fuzz Cards Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Erica Fuzz 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.
Organizational Resilience of Erica Fuzz
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Erica Fuzz does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Innovation & Entrepreneurship field
– Erica Fuzz 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 Erica Fuzz in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Erica Fuzz is one of the most innovative firm in sector. Manager in Spreading Happiness: Warm Fuzz Cards 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 Erica Fuzz in the sector have low bargaining power. Spreading Happiness: Warm Fuzz Cards has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Erica Fuzz to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Erica Fuzz is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Erica Fuzz has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Spreading Happiness: Warm Fuzz Cards 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Spreading Happiness: Warm Fuzz Cards firm has clearly differentiated products in the market place. This has enabled Erica Fuzz to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Erica Fuzz to invest into research and development (R&D) and innovation.
Weaknesses Spreading Happiness: Warm Fuzz Cards | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Spreading Happiness: Warm Fuzz Cards are -
Capital Spending Reduction
– Even during the low interest decade, Erica Fuzz 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 operating costs
– Compare to the competitors, firm in the HBR case study Spreading Happiness: Warm Fuzz Cards 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 Erica Fuzz 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Erica Fuzz is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Erica Fuzz needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards 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 Erica Fuzz has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Spreading Happiness: Warm Fuzz Cards HBR case study mentions - Erica Fuzz 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Spreading Happiness: Warm Fuzz Cards, is just above the industry average. Erica Fuzz 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Spreading Happiness: Warm Fuzz Cards, it seems that the employees of Erica Fuzz don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Spreading Happiness: Warm Fuzz Cards, in the dynamic environment Erica Fuzz has struggled to respond to the nimble upstart competition. Erica Fuzz has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Erica Fuzz 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 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 Erica Fuzz supply chain. Even after few cautionary changes mentioned in the HBR case study - Spreading Happiness: Warm Fuzz Cards, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Erica Fuzz vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Erica Fuzz 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. Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards | 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 Spreading Happiness: Warm Fuzz Cards are -
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 Erica Fuzz in the consumer business. Now Erica Fuzz can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Erica Fuzz 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 Erica Fuzz to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Erica Fuzz to increase its market reach. Erica Fuzz 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Erica Fuzz 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, Spreading Happiness: Warm Fuzz Cards, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Erica Fuzz 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.
Leveraging digital technologies
– Erica Fuzz 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Erica Fuzz can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Erica Fuzz to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Erica Fuzz can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Spreading Happiness: Warm Fuzz Cards 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Erica Fuzz is facing challenges because of the dominance of functional experts in the organization. Spreading Happiness: Warm Fuzz Cards 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Erica Fuzz can use these opportunities to build new business models that can help the communities that Erica Fuzz operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Developing new processes and practices
– Erica Fuzz 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.
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 Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Spreading Happiness: Warm Fuzz Cards are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Erica Fuzz needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Erica Fuzz with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Erica Fuzz in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Regulatory challenges
– Erica Fuzz 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.
Environmental challenges
– Erica Fuzz 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. Erica Fuzz can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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
– Erica Fuzz 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.
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 Erica Fuzz business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Erica Fuzz 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 wage structure of Erica Fuzz
– 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 Erica Fuzz.
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. Erica Fuzz can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Erica Fuzz 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
– Erica Fuzz has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Erica Fuzz 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 Spreading Happiness: Warm Fuzz Cards 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 Spreading Happiness: Warm Fuzz Cards 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 Spreading Happiness: Warm Fuzz Cards 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 Spreading Happiness: Warm Fuzz Cards 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 Spreading Happiness: Warm Fuzz Cards 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 Erica Fuzz needs to make to build a sustainable competitive advantage.
