Case Study Description of SPANISH VINES: COLOMBIAN MARKET ENTRY
In 2006, young entrepreneur Josh Hackler started Spanish Vines (SV) to import Spanish wine into the United States. In 2009 SV recorded its first sales, and it has been growing ever since.By the end of 2012, it had secured distribution in eight US states and the District of Columbia (the nation's capital, Washington, DC), with many more states in various stages of development. The company's home market strategy was successful and growing. In 2012, a trade agreement between the European Union (EU) and Colombia (as well as Peru) was announced that would eliminate the value added tax on European wines imported into Colombia. Hackler saw this as an opportunity to be an early mover into Colombia. One of the key strategies SV would have to develop and implement was an effective launch plan. Specifically, how should the company generate awareness of, interest in, willingness to try and brand loyalty for SV products? And what brand, or set of brands, should SV launch in the Colombian market? While there are also important distribution and pricing issues that SV would have to tackle, this case focuses on the product, marketing communication and branding issues necessary to begin "pulling" customers toward the brand(s). The case presents background information on the company, global and Spanish wine industries, and the Colombian economy and wine market. The case concludes with the following questions for students to ponder: Is the Colombian opportunity the right one to begin expanding SV's international footprint? If so, should Hackler launch with house brands, partner brands or both? And what message and media could he use to tell the SV story and make his first venture into Latin America a success? Learning objectives: (1) Foreign market attractiveness, in particular the pursuit of opportunistic growth strategies; (2) Challenges small, entrepreneurial businesses face when building brands, generating consumer awareness and interest and gaining distribution coverage; (3) Strengths and limitations of export-import business models for new market entry; (4) Market comparisons, specifically as they pertain to customer segments, target markets and product positioning strategies; (5) Message and media communications challenges in launching a new brand in a new market on a limited budget.
Swot Analysis of "SPANISH VINES: COLOMBIAN MARKET ENTRY" written by Martin Roth, Dominique Turpin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sv Hackler facing as an external strategic factors. Some of the topics covered in SPANISH VINES: COLOMBIAN MARKET ENTRY case study are - Strategic Management Strategies, Entrepreneurship and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the SPANISH VINES: COLOMBIAN MARKET ENTRY casestudy better are - – talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies,
geopolitical disruptions, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of SPANISH VINES: COLOMBIAN MARKET ENTRY
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SPANISH VINES: COLOMBIAN MARKET ENTRY case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sv Hackler, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY can be done for the following purposes –
1. Strategic planning using facts provided in SPANISH VINES: COLOMBIAN MARKET ENTRY case study
2. Improving business portfolio management of Sv Hackler
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sv Hackler
Strengths SPANISH VINES: COLOMBIAN MARKET ENTRY | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sv Hackler in SPANISH VINES: COLOMBIAN MARKET ENTRY Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Sv Hackler in the sector have low bargaining power. SPANISH VINES: COLOMBIAN MARKET ENTRY has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sv Hackler to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Sv Hackler is one of the most innovative firm in sector. Manager in SPANISH VINES: COLOMBIAN MARKET ENTRY Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Sv Hackler 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.
High switching costs
– The high switching costs that Sv Hackler 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.
Highly skilled collaborators
– Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Sv Hackler is one of the leading recruiters in the industry. Managers in the SPANISH VINES: COLOMBIAN MARKET ENTRY 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 Sv Hackler in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– SPANISH VINES: COLOMBIAN MARKET ENTRY firm has clearly differentiated products in the market place. This has enabled Sv Hackler to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Sv Hackler to invest into research and development (R&D) and innovation.
Training and development
– Sv Hackler has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SPANISH VINES: COLOMBIAN MARKET ENTRY 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.
Ability to lead change in Leadership & Managing People field
– Sv Hackler 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 Sv Hackler in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Sv Hackler 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 Sv Hackler is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in SPANISH VINES: COLOMBIAN MARKET ENTRY Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the SPANISH VINES: COLOMBIAN MARKET ENTRY 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.
Weaknesses SPANISH VINES: COLOMBIAN MARKET ENTRY | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SPANISH VINES: COLOMBIAN MARKET ENTRY are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study SPANISH VINES: COLOMBIAN MARKET ENTRY, it seems that the employees of Sv Hackler 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sv Hackler is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study SPANISH VINES: COLOMBIAN MARKET ENTRY can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study SPANISH VINES: COLOMBIAN MARKET ENTRY 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 Sv Hackler 's lucrative customers.
Interest costs
– Compare to the competition, Sv Hackler 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.
Aligning sales with marketing
– It come across in the case study SPANISH VINES: COLOMBIAN MARKET ENTRY 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 SPANISH VINES: COLOMBIAN MARKET ENTRY can leverage the sales team experience to cultivate customer relationships as Sv Hackler is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY, is just above the industry average. Sv Hackler 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.
Increasing silos among functional specialists
– The organizational structure of Sv Hackler is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Sv Hackler needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sv Hackler to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Martin Roth, Dominique Turpin suggests that, Sv Hackler 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.
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 Sv Hackler supply chain. Even after few cautionary changes mentioned in the HBR case study - SPANISH VINES: COLOMBIAN MARKET ENTRY, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sv Hackler vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Sv Hackler products
– To increase the profitability and margins on the products, Sv Hackler needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities SPANISH VINES: COLOMBIAN MARKET ENTRY | 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 SPANISH VINES: COLOMBIAN MARKET ENTRY are -
Leveraging digital technologies
– Sv Hackler 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.
Developing new processes and practices
– Sv Hackler can develop new processes and procedures in Leadership & Managing People 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sv Hackler 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, SPANISH VINES: COLOMBIAN MARKET ENTRY, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Sv Hackler 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 Leadership & Managing People segment.
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 Sv Hackler in the consumer business. Now Sv Hackler can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sv Hackler to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Sv Hackler to increase its market reach. Sv Hackler 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sv Hackler can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sv Hackler can use these opportunities to build new business models that can help the communities that Sv Hackler operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sv Hackler is facing challenges because of the dominance of functional experts in the organization. SPANISH VINES: COLOMBIAN MARKET ENTRY 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.
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. Sv Hackler can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Sv Hackler has opened avenues for new revenue streams for the organization in the industry. This can help Sv Hackler to build a more holistic ecosystem as suggested in the SPANISH VINES: COLOMBIAN MARKET ENTRY case study. Sv Hackler can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sv Hackler 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 Sv Hackler to hire the very best people irrespective of their geographical location.
Threats SPANISH VINES: COLOMBIAN MARKET ENTRY External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SPANISH VINES: COLOMBIAN MARKET ENTRY are -
Regulatory challenges
– Sv Hackler 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 Leadership & Managing People industry regulations.
High dependence on third party suppliers
– Sv Hackler 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 Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY, Sv Hackler may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Sv Hackler in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Sv Hackler has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Sv Hackler needs to keep up with the evolution of technology in the Leadership & Managing People 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 wage structure of Sv Hackler
– 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 Sv Hackler.
Environmental challenges
– Sv Hackler 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. Sv Hackler can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Stagnating economy with rate increase
– Sv Hackler 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.
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 Sv Hackler business can come under increasing regulations regarding data privacy, data security, etc.
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 Sv Hackler.
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 SPANISH VINES: COLOMBIAN MARKET ENTRY 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 SPANISH VINES: COLOMBIAN MARKET ENTRY 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 SPANISH VINES: COLOMBIAN MARKET ENTRY 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 SPANISH VINES: COLOMBIAN MARKET ENTRY 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 SPANISH VINES: COLOMBIAN MARKET ENTRY 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 Sv Hackler needs to make to build a sustainable competitive advantage.
