Describes the early stage development of PowerWater Beverages, a company poised to capitalize on the growing U.S. consumer demand for bottled water and, more specifically, for "pure water". The investors successfully negotiated the exclusive rights and interest in a trade secret and industrial design to produce and distribute a pure distilled oxygenated water, secured commitments from independent representatives who comprised the company's national sales force, and signed contracts with co-packers, suppliers, and distributors. As the CEO, Kent Mawhinney, prepares for a board meeting, he must determine whether his CPA's estimated capital requirements are correct, calculate what the pre and post money valuation for the company, analyze the impact of proposed alternatives, reassess the strength of the opportunity to see if it still makes sense to pursue it, and determine whether other opportunities for PowerWater's distilled, oxygenated water product exist beyond the general market that the core product will target. This case is intended for undergraduate and graduate entrepreneurship, entrepreneurial finance, and finance courses. We realize that this presents a wide range of potential applications for the case but believe that the rich data provided in the case provides adequate information for the case to add value to the aforementioned courses. Professors using this case should have already or should intend to provide students with lectures and assigned readings on how to analyze the feasibility of entrepreneurial ventures. This should include the appropriate tools and models for conducting analyses from an entrepreneurial as well as financial valuation perspective. The author has used the work of Jeffry Timmons and Michael Porter as the basis for discussing this case.
Authors :: Jeffrey P. Shay, Bambi Douma, Tony Crawford, Josh Herbold
Swot Analysis of "Powerwater Beverages" written by Jeffrey P. Shay, Bambi Douma, Tony Crawford, Josh Herbold includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Oxygenated Powerwater facing as an external strategic factors. Some of the topics covered in Powerwater Beverages case study are - Strategic Management Strategies, Financial analysis, Financial management and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Powerwater Beverages casestudy better are - – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing government debt because of Covid-19 spendings, wage bills are increasing, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion,
increasing transportation and logistics costs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Powerwater Beverages
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Powerwater Beverages case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Oxygenated Powerwater, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Oxygenated Powerwater 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 Powerwater Beverages can be done for the following purposes –
1. Strategic planning using facts provided in Powerwater Beverages case study
2. Improving business portfolio management of Oxygenated Powerwater
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 Oxygenated Powerwater
Strengths Powerwater Beverages | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Oxygenated Powerwater in Powerwater Beverages Harvard Business Review case study are -
Diverse revenue streams
– Oxygenated Powerwater is present in almost all the verticals within the industry. This has provided firm in Powerwater Beverages 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.
Training and development
– Oxygenated Powerwater has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Powerwater Beverages 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.
Highly skilled collaborators
– Oxygenated Powerwater 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 Powerwater Beverages HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Innovation & Entrepreneurship field
– Oxygenated Powerwater 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 Oxygenated Powerwater in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Powerwater Beverages firm has clearly differentiated products in the market place. This has enabled Oxygenated Powerwater to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Oxygenated Powerwater to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Oxygenated Powerwater 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 Oxygenated Powerwater
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Oxygenated Powerwater does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Oxygenated Powerwater 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 Powerwater Beverages - 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
– Oxygenated Powerwater is one of the most innovative firm in sector. Manager in Powerwater Beverages Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Oxygenated Powerwater is one of the leading recruiters in the industry. Managers in the Powerwater Beverages are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Oxygenated Powerwater in the sector have low bargaining power. Powerwater Beverages has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Oxygenated Powerwater to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Oxygenated Powerwater is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Powerwater Beverages | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Powerwater Beverages are -
Products dominated business model
– Even though Oxygenated Powerwater 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 - Powerwater Beverages should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Oxygenated Powerwater 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. Oxygenated Powerwater 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Oxygenated Powerwater 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Powerwater Beverages, is just above the industry average. Oxygenated Powerwater 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.
No frontier risks strategy
– After analyzing the HBR case study Powerwater Beverages, 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.
Aligning sales with marketing
– It come across in the case study Powerwater Beverages 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 Powerwater Beverages can leverage the sales team experience to cultivate customer relationships as Oxygenated Powerwater is planning to shift buying processes online.
High cash cycle compare to competitors
Oxygenated Powerwater 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 star products
– The top 2 products and services of the firm as mentioned in the Powerwater Beverages 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 Oxygenated Powerwater has relatively successful track record of launching new products.
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 Oxygenated Powerwater supply chain. Even after few cautionary changes mentioned in the HBR case study - Powerwater Beverages, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Oxygenated Powerwater vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Oxygenated Powerwater, firm in the HBR case study Powerwater Beverages needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Powerwater Beverages, it seems that the employees of Oxygenated Powerwater 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.
Opportunities Powerwater Beverages | 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 Powerwater Beverages are -
Creating value in data economy
– The success of analytics program of Oxygenated Powerwater has opened avenues for new revenue streams for the organization in the industry. This can help Oxygenated Powerwater to build a more holistic ecosystem as suggested in the Powerwater Beverages case study. Oxygenated Powerwater can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Oxygenated Powerwater can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Powerwater Beverages 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, Oxygenated Powerwater is facing challenges because of the dominance of functional experts in the organization. Powerwater Beverages 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.
Leveraging digital technologies
– Oxygenated Powerwater 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 Oxygenated Powerwater can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Oxygenated Powerwater 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Oxygenated Powerwater 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.
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. Oxygenated Powerwater 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. Oxygenated Powerwater 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.
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. Oxygenated Powerwater can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Oxygenated Powerwater can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Oxygenated Powerwater in the consumer business. Now Oxygenated Powerwater can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Oxygenated Powerwater 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Oxygenated Powerwater 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, Powerwater Beverages, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Powerwater Beverages External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Powerwater Beverages are -
Shortening product life cycle
– it is one of the major threat that Oxygenated Powerwater is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Oxygenated Powerwater 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.
Consumer confidence and its impact on Oxygenated Powerwater 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Powerwater Beverages, Oxygenated Powerwater may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Oxygenated Powerwater with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Oxygenated Powerwater 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.
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.
Environmental challenges
– Oxygenated Powerwater 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. Oxygenated Powerwater can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Technology acceleration in Forth Industrial Revolution
– Oxygenated Powerwater has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Oxygenated Powerwater 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Oxygenated Powerwater 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 Powerwater Beverages .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Oxygenated Powerwater.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Oxygenated Powerwater will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Oxygenated Powerwater
– 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 Oxygenated Powerwater.
Weighted SWOT Analysis of Powerwater Beverages 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 Powerwater Beverages 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 Powerwater Beverages 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 Powerwater Beverages 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 Powerwater Beverages 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 Oxygenated Powerwater needs to make to build a sustainable competitive advantage.