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 - – wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, geopolitical disruptions, there is backlash against globalization, talent flight as more people leaving formal jobs,
increasing transportation and logistics costs, increasing energy prices, 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 -
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Powerwater Beverages 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.
Learning organization
- Oxygenated Powerwater 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 Oxygenated Powerwater is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Powerwater Beverages Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Oxygenated Powerwater 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.
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.
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.
High brand equity
– Oxygenated Powerwater has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Oxygenated Powerwater to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Oxygenated Powerwater 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 Jeffrey P. Shay, Bambi Douma, Tony Crawford, Josh Herbold 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.
Superior customer experience
– The customer experience strategy of Oxygenated Powerwater in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Oxygenated Powerwater digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Oxygenated Powerwater 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.
Weaknesses Powerwater Beverages | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Powerwater Beverages are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Powerwater Beverages, in the dynamic environment Oxygenated Powerwater has struggled to respond to the nimble upstart competition. Oxygenated Powerwater has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Jeffrey P. Shay, Bambi Douma, Tony Crawford, Josh Herbold suggests that, Oxygenated Powerwater 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.
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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Oxygenated Powerwater 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Oxygenated Powerwater is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Powerwater Beverages can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Oxygenated Powerwater is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Oxygenated Powerwater needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Oxygenated Powerwater to focus more on services rather than just following the product oriented approach.
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 operating costs
– Compare to the competitors, firm in the HBR case study Powerwater Beverages 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 Oxygenated Powerwater 's lucrative customers.
Interest costs
– Compare to the competition, Oxygenated Powerwater 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.
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 -
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.
Developing new processes and practices
– Oxygenated Powerwater 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.
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.
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.
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.
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.
Manufacturing automation
– Oxygenated Powerwater 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Oxygenated Powerwater 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 Oxygenated Powerwater to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Oxygenated Powerwater can use these opportunities to build new business models that can help the communities that Oxygenated Powerwater operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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.
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.
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.
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.
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 -
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 .
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.
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.
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.
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 Oxygenated Powerwater in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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 Oxygenated Powerwater business can come under increasing regulations regarding data privacy, data security, 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Oxygenated Powerwater 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.
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.
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.
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 .
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.
Stagnating economy with rate increase
– Oxygenated Powerwater 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.
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.