Case Study Description of Liquid Gold: Calambra Olive Oil (A)
The Liquid Gold cases (see also the B case, UV3851) are an adaptation of the earlier Calambra Olive Oil cases (UV3774 and UV3777). This version supports a modified classroom experience. The cases describe the start-up of Calambra, a company built to sell a premier brand of olive oil. Frank Lockfeld, the founder, has to determine how much olive oil to make for the second year's production. Unfortunately, he has to make this decision before learning the results of the first year's sales. Thus, there is enormous uncertainty around the decision. The A case tells the start-up story and presents enough information for students to do a sensitivity analysis to decide which of the many uncertainties are most important, which leads to a discussion of tornado diagrams. The B case provides information on those critical uncertainties, which leads to a discussion of spreadsheet modeling and simulation modeling, searching for an optimal order quantity, adjusting for risk, etc. It also affords a discussion of a key general business issue: the difference between make-to-order and make-to-inventory businesses and the fundamental flaw in most business plans that leads to gross overestimates of potential profitability. Student spreadsheet files are available.
Authors :: Phillip E. Pfeifer, Dana Clyman, Laura Kornish, Jim Smith
Swot Analysis of "Liquid Gold: Calambra Olive Oil (A)" written by Phillip E. Pfeifer, Dana Clyman, Laura Kornish, Jim Smith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Olive Calambra facing as an external strategic factors. Some of the topics covered in Liquid Gold: Calambra Olive Oil (A) case study are - Strategic Management Strategies, Decision making and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Liquid Gold: Calambra Olive Oil (A) casestudy better are - – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, increasing commodity prices, there is backlash against globalization, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic ,
competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Liquid Gold: Calambra Olive Oil (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Liquid Gold: Calambra Olive Oil (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Olive Calambra, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Olive Calambra 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 Liquid Gold: Calambra Olive Oil (A) can be done for the following purposes –
1. Strategic planning using facts provided in Liquid Gold: Calambra Olive Oil (A) case study
2. Improving business portfolio management of Olive Calambra
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 Olive Calambra
Strengths Liquid Gold: Calambra Olive Oil (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Olive Calambra in Liquid Gold: Calambra Olive Oil (A) Harvard Business Review case study are -
Successful track record of launching new products
– Olive Calambra has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Olive Calambra 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.
High switching costs
– The high switching costs that Olive Calambra 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.
Superior customer experience
– The customer experience strategy of Olive Calambra in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Liquid Gold: Calambra Olive Oil (A) 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.
Low bargaining power of suppliers
– Suppliers of Olive Calambra in the sector have low bargaining power. Liquid Gold: Calambra Olive Oil (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Olive Calambra to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Innovation & Entrepreneurship field
– Olive Calambra 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 Olive Calambra in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Olive Calambra is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Olive Calambra is one of the leading recruiters in the industry. Managers in the Liquid Gold: Calambra Olive Oil (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Olive Calambra digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Olive Calambra has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Olive Calambra 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 Liquid Gold: Calambra Olive Oil (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Olive Calambra is present in almost all the verticals within the industry. This has provided firm in Liquid Gold: Calambra Olive Oil (A) 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.
Learning organization
- Olive Calambra 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 Olive Calambra is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Liquid Gold: Calambra Olive Oil (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Liquid Gold: Calambra Olive Oil (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Liquid Gold: Calambra Olive Oil (A) are -
High bargaining power of channel partners
– Because of the regulatory requirements, Phillip E. Pfeifer, Dana Clyman, Laura Kornish, Jim Smith suggests that, Olive Calambra 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.
Lack of clear differentiation of Olive Calambra products
– To increase the profitability and margins on the products, Olive Calambra needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Olive Calambra is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Olive Calambra needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Olive Calambra to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Olive Calambra, firm in the HBR case study Liquid Gold: Calambra Olive Oil (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Olive Calambra 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 Liquid Gold: Calambra Olive Oil (A) HBR case study mentions - Olive Calambra 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.
Interest costs
– Compare to the competition, Olive Calambra 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 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 Olive Calambra supply chain. Even after few cautionary changes mentioned in the HBR case study - Liquid Gold: Calambra Olive Oil (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Olive Calambra vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Olive Calambra 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.
Skills based hiring
– The stress on hiring functional specialists at Olive Calambra 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.
Aligning sales with marketing
– It come across in the case study Liquid Gold: Calambra Olive Oil (A) 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 Liquid Gold: Calambra Olive Oil (A) can leverage the sales team experience to cultivate customer relationships as Olive Calambra is planning to shift buying processes online.
Opportunities Liquid Gold: Calambra Olive Oil (A) | 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 Liquid Gold: Calambra Olive Oil (A) are -
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. Olive Calambra 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. Olive Calambra 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 Olive Calambra has opened avenues for new revenue streams for the organization in the industry. This can help Olive Calambra to build a more holistic ecosystem as suggested in the Liquid Gold: Calambra Olive Oil (A) case study. Olive Calambra can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Olive Calambra can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Olive Calambra 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, Liquid Gold: Calambra Olive Oil (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Olive Calambra 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.
Loyalty marketing
– Olive Calambra 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.
Learning at scale
– Online learning technologies has now opened space for Olive Calambra 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, Olive Calambra 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 Olive Calambra 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.
Using analytics as competitive advantage
– Olive Calambra 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 Liquid Gold: Calambra Olive Oil (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Olive Calambra to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Olive Calambra can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Olive Calambra 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.
Developing new processes and practices
– Olive Calambra 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.
Threats Liquid Gold: Calambra Olive Oil (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Liquid Gold: Calambra Olive Oil (A) are -
Increasing wage structure of Olive Calambra
– 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 Olive Calambra.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Olive Calambra 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Olive Calambra 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 Liquid Gold: Calambra Olive Oil (A) .
Stagnating economy with rate increase
– Olive Calambra 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Liquid Gold: Calambra Olive Oil (A), Olive Calambra 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 .
Regulatory challenges
– Olive Calambra 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.
Shortening product life cycle
– it is one of the major threat that Olive Calambra is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Olive Calambra business can come under increasing regulations regarding data privacy, data security, etc.
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 Olive Calambra in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Environmental challenges
– Olive Calambra 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. Olive Calambra can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Olive Calambra with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 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.
Weighted SWOT Analysis of Liquid Gold: Calambra Olive Oil (A) 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 Liquid Gold: Calambra Olive Oil (A) 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 Liquid Gold: Calambra Olive Oil (A) 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 Liquid Gold: Calambra Olive Oil (A) 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 Liquid Gold: Calambra Olive Oil (A) 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 Olive Calambra needs to make to build a sustainable competitive advantage.
