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 - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, technology disruption, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%,
customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Sv Hackler digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sv Hackler 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.
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.
Effective Research and Development (R&D)
– Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY - 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
– 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.
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.
Strong track record of project management
– Sv Hackler is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
High brand equity
– Sv Hackler has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sv Hackler to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
Diverse revenue streams
– Sv Hackler is present in almost all the verticals within the industry. This has provided firm in SPANISH VINES: COLOMBIAN MARKET ENTRY 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.
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 -
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.
High cash cycle compare to competitors
Sv Hackler 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 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.
No frontier risks strategy
– After analyzing the HBR case study SPANISH VINES: COLOMBIAN MARKET ENTRY, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Slow decision making process
– As mentioned earlier in the report, Sv Hackler 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. Sv Hackler 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 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Sv Hackler 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.
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.
Slow to strategic competitive environment developments
– As SPANISH VINES: COLOMBIAN MARKET ENTRY HBR case study mentions - Sv Hackler 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.
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.
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 -
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.
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.
Manufacturing automation
– Sv Hackler can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Sv Hackler can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sv Hackler 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. Sv Hackler 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sv Hackler 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.
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.
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.
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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Sv Hackler to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
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 -
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sv Hackler in the Leadership & Managing People industry. The Leadership & Managing People 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.
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 .
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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sv Hackler can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sv Hackler with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Sv Hackler 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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sv Hackler 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 SPANISH VINES: COLOMBIAN MARKET ENTRY .
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.