Sherry Noonan, a senior business student, is considering purchasing Cavendish Cove Cottages, a complex of 19 cottage rental units marketed to visitors. The property is located in the heart of Cavendish, a very popular tourist destination on Prince Edward Island (PEI), Canada. Sherry must analyze this opportunity as a going concern. This case presents a unique situation: the opportunity to apply business valuation concepts in a small business environment, and from the perspective of a college-age entrepreneur. This case provides the opportunity to utilize the planning, analytical, and decision-making techniques of a prospective entrepreneur who is considering acquiring an existing business. This is complicated by the fact that the business is seasonal and only open a portion of the year. Also affecting the analysis is the deteriorating economic environment that existed at the time of the case (early 2009), leading to the possibility of declining tourist numbers and spending on PEI. While her family may provide some of the financing to purchase the business, the task of raising the additional funds required could prove difficult given Sherry's young age and the very tight credit markets. A thorough analysis of the business's financial situation must be completed, strengths and weaknesses uncovered, and areas for improvement discussed. Yearly sales, expenses, and cash operating earnings must then be forecast, and the value of the business estimated. A recommendation, based on the various tools used to analyze the case information, must then be made. The Instructor's Manual suggests the types of courses the case is suited for, offers a range of discussion questions and teaching formats, and provides a thorough financial analysis of the business opportunity.
Swot Analysis of "Cavendish Cove Cottages" written by Sean M Hennessey includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cavendish Cove facing as an external strategic factors. Some of the topics covered in Cavendish Cove Cottages case study are - Strategic Management Strategies, Financial analysis, Forecasting and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Cavendish Cove Cottages casestudy better are - – cloud computing is disrupting traditional business models, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings,
there is backlash against globalization, wage bills are increasing, etc
Introduction to SWOT Analysis of Cavendish Cove Cottages
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cavendish Cove Cottages case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cavendish Cove, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cavendish Cove 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 Cavendish Cove Cottages can be done for the following purposes –
1. Strategic planning using facts provided in Cavendish Cove Cottages case study
2. Improving business portfolio management of Cavendish Cove
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 Cavendish Cove
Strengths Cavendish Cove Cottages | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cavendish Cove in Cavendish Cove Cottages Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Cavendish Cove 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 Cavendish Cove in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Cavendish Cove 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 Cavendish Cove Cottages HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Cavendish Cove has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cavendish Cove has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Cavendish Cove 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.
Effective Research and Development (R&D)
– Cavendish Cove 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 Cavendish Cove Cottages - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Cavendish Cove 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 Sean M Hennessey 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Cavendish Cove Cottages firm has clearly differentiated products in the market place. This has enabled Cavendish Cove to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Cavendish Cove to invest into research and development (R&D) and innovation.
Training and development
– Cavendish Cove has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cavendish Cove Cottages 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.
Learning organization
- Cavendish Cove 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 Cavendish Cove is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cavendish Cove Cottages Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Cavendish Cove is one of the leading recruiters in the industry. Managers in the Cavendish Cove Cottages are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Cavendish Cove is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Cavendish Cove Cottages 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 Cavendish Cove Cottages | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cavendish Cove Cottages are -
Products dominated business model
– Even though Cavendish Cove 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 - Cavendish Cove Cottages should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Cavendish Cove 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.
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 Cavendish Cove supply chain. Even after few cautionary changes mentioned in the HBR case study - Cavendish Cove Cottages, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cavendish Cove vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Cavendish Cove Cottages, 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.
Need for greater diversity
– Cavendish Cove has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cavendish Cove Cottages 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 Cavendish Cove has relatively successful track record of launching new products.
Lack of clear differentiation of Cavendish Cove products
– To increase the profitability and margins on the products, Cavendish Cove needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Cavendish Cove 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.
Low market penetration in new markets
– Outside its home market of Cavendish Cove, firm in the HBR case study Cavendish Cove Cottages needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Cavendish Cove is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Cavendish Cove needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cavendish Cove to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cavendish Cove is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cavendish Cove Cottages can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Cavendish Cove Cottages | 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 Cavendish Cove Cottages are -
Using analytics as competitive advantage
– Cavendish Cove 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 Cavendish Cove Cottages - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cavendish Cove 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 Cavendish Cove to increase its market reach. Cavendish Cove 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.
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. Cavendish Cove can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cavendish Cove 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, Cavendish Cove Cottages, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cavendish Cove can use these opportunities to build new business models that can help the communities that Cavendish Cove operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Loyalty marketing
– Cavendish Cove has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cavendish Cove can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Cavendish Cove has opened avenues for new revenue streams for the organization in the industry. This can help Cavendish Cove to build a more holistic ecosystem as suggested in the Cavendish Cove Cottages case study. Cavendish Cove 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 Cavendish Cove 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 Cavendish Cove to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cavendish Cove in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Cavendish Cove 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.
Buying journey improvements
– Cavendish Cove can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cavendish Cove Cottages 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cavendish Cove 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.
Threats Cavendish Cove Cottages External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cavendish Cove Cottages are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cavendish Cove 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 Cavendish Cove Cottages .
High dependence on third party suppliers
– Cavendish Cove 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. Cavendish Cove 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.
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. Cavendish Cove needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Cavendish Cove has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Cavendish Cove 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.
Stagnating economy with rate increase
– Cavendish Cove 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.
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 Cavendish Cove.
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 Cavendish Cove business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Cavendish Cove is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing wage structure of Cavendish Cove
– 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 Cavendish Cove.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cavendish Cove Cottages, Cavendish Cove 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 .
Weighted SWOT Analysis of Cavendish Cove Cottages 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 Cavendish Cove Cottages 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 Cavendish Cove Cottages 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 Cavendish Cove Cottages 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 Cavendish Cove Cottages 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 Cavendish Cove needs to make to build a sustainable competitive advantage.