Case Study Description of Advertising Experiments at RestaurantGrades
This exercise provides students with a data set consisting of results from a hypothetical experiment, and asks students to make recommendations based on the data. Through this process, the exercise teaches students to analyze, design, and interpret experiments. The context is an experiment in a hypothetical restaurant review company called RestaurantGrades (RG) whose main source of revenue comes from advertising. Like Yelp and TripAdvisor, RG advertisements are shown above the organic search results when someone searches on the page. RG is trying to understand whether its current advertising package is effective in practice. To do this, RG has run an experiment with two treatment arms and a control group of restaurants. The control group has no advertising, the first treatment arm consists of giving restaurants RG's current advertising package, and the second treatment arm is an alternative package that RG designed with a different approach to consumer targeting. Students are given the data to analyze, and asked to make a recommendation about which, if either, advertising package is effective.
Swot Analysis of "Advertising Experiments at RestaurantGrades" written by Michael Luca, Weijia Dai, Hyunjin Kim includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Rg Advertising facing as an external strategic factors. Some of the topics covered in Advertising Experiments at RestaurantGrades case study are - Strategic Management Strategies, Marketing, Negotiations, Social platforms and Communication.
Some of the macro environment factors that can be used to understand the Advertising Experiments at RestaurantGrades casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing commodity prices, geopolitical disruptions, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing transportation and logistics costs,
supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Advertising Experiments at RestaurantGrades
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Advertising Experiments at RestaurantGrades case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Rg Advertising, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Rg Advertising 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 Advertising Experiments at RestaurantGrades can be done for the following purposes –
1. Strategic planning using facts provided in Advertising Experiments at RestaurantGrades case study
2. Improving business portfolio management of Rg Advertising
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Rg Advertising
Strengths Advertising Experiments at RestaurantGrades | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Rg Advertising in Advertising Experiments at RestaurantGrades Harvard Business Review case study are -
Organizational Resilience of Rg Advertising
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Rg Advertising does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Rg Advertising 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 Advertising Experiments at RestaurantGrades - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Rg Advertising has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Advertising Experiments at RestaurantGrades 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.
Innovation driven organization
– Rg Advertising is one of the most innovative firm in sector. Manager in Advertising Experiments at RestaurantGrades Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Rg Advertising is present in almost all the verticals within the industry. This has provided firm in Advertising Experiments at RestaurantGrades 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.
Operational resilience
– The operational resilience strategy in the Advertising Experiments at RestaurantGrades 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.
Analytics focus
– Rg Advertising 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 Michael Luca, Weijia Dai, Hyunjin Kim 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.
High brand equity
– Rg Advertising has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Rg Advertising to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Rg Advertising is one of the leading recruiters in the industry. Managers in the Advertising Experiments at RestaurantGrades are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Rg Advertising in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Rg Advertising 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 Rg Advertising is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Advertising Experiments at RestaurantGrades Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Communication field
– Rg Advertising 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 Rg Advertising in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Advertising Experiments at RestaurantGrades | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Advertising Experiments at RestaurantGrades are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Advertising Experiments at RestaurantGrades, is just above the industry average. Rg Advertising 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.
Low market penetration in new markets
– Outside its home market of Rg Advertising, firm in the HBR case study Advertising Experiments at RestaurantGrades needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Rg Advertising products
– To increase the profitability and margins on the products, Rg Advertising needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Advertising Experiments at RestaurantGrades 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 Advertising Experiments at RestaurantGrades can leverage the sales team experience to cultivate customer relationships as Rg Advertising is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Rg Advertising 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. Rg Advertising 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Luca, Weijia Dai, Hyunjin Kim suggests that, Rg Advertising is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to strategic competitive environment developments
– As Advertising Experiments at RestaurantGrades HBR case study mentions - Rg Advertising 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Advertising Experiments at RestaurantGrades 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 Rg Advertising has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Advertising Experiments at RestaurantGrades, it seems that the employees of Rg Advertising 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 Advertising Experiments at RestaurantGrades, in the dynamic environment Rg Advertising has struggled to respond to the nimble upstart competition. Rg Advertising has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Rg Advertising 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.
Opportunities Advertising Experiments at RestaurantGrades | 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 Advertising Experiments at RestaurantGrades are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Rg Advertising is facing challenges because of the dominance of functional experts in the organization. Advertising Experiments at RestaurantGrades 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.
Buying journey improvements
– Rg Advertising can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Advertising Experiments at RestaurantGrades 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.
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 Rg Advertising in the consumer business. Now Rg Advertising can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Rg Advertising to increase its market reach. Rg Advertising 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Rg Advertising 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Communication industry, but it has also influenced the consumer preferences. Rg Advertising can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Rg Advertising can use the latest technology developments to improve its manufacturing and designing process in Communication 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Rg Advertising 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, Advertising Experiments at RestaurantGrades, 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 Rg Advertising has opened avenues for new revenue streams for the organization in the industry. This can help Rg Advertising to build a more holistic ecosystem as suggested in the Advertising Experiments at RestaurantGrades case study. Rg Advertising can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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, Rg Advertising can use these opportunities to build new business models that can help the communities that Rg Advertising operates in. Secondly it can use opportunities from government spending in Communication sector.
Developing new processes and practices
– Rg Advertising can develop new processes and procedures in Communication 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.
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. Rg Advertising can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Rg Advertising 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.
Threats Advertising Experiments at RestaurantGrades External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Advertising Experiments at RestaurantGrades are -
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Rg Advertising with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Rg Advertising in the Communication industry. The Communication 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.
High dependence on third party suppliers
– Rg Advertising 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.
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. Rg Advertising 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.
Technology acceleration in Forth Industrial Revolution
– Rg Advertising has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Rg Advertising needs to keep up with the evolution of technology in the Communication 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.
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 Rg Advertising 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.
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 Rg Advertising.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Advertising Experiments at RestaurantGrades, Rg Advertising may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Communication .
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 Rg Advertising in the Communication sector and impact the bottomline of the organization.
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. Rg Advertising needs to understand the core reasons impacting the Communication industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Communication field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Rg Advertising can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Advertising Experiments at RestaurantGrades 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 Advertising Experiments at RestaurantGrades 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 Advertising Experiments at RestaurantGrades 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 Advertising Experiments at RestaurantGrades 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 Advertising Experiments at RestaurantGrades 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 Rg Advertising needs to make to build a sustainable competitive advantage.
