Pancho's Burritos is a high-end fast-food restaurant located in Charlottesville, Virginia. Due to a recent surge in customers, the lines at the restaurant during peak hours are becoming very long and causing excessive customer waiting. To improve current customer wait times and plan for future growth requirements, Francisco "Pancho" Escoba, the proprietor, wants to get a better understanding of the current operational capacity. The key decision Escoba must make is how to redesign his burrito-making process to increase the capacity and reduce customer wait time. Suitable for an undergraduate or MBA course, the case can be used in an introductory operations course to teach capacity analysis and queuing. The case provides a relatable and understandable setting for students without an operations background to gain a better grasp of basic course concepts and illustrates how interactions between capacity and queuing affect one another. As an exam or review case it works well because it contains standard process calculations that all students should know how to perform.
Swot Analysis of "Pancho's Burritos" written by Tim Kraft, Daniel Dorronsoro includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Escoba Burritos facing as an external strategic factors. Some of the topics covered in Pancho's Burritos case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Pancho's Burritos casestudy better are - – increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, increasing energy prices, increasing government debt because of Covid-19 spendings,
there is backlash against globalization, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Pancho's Burritos
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pancho's Burritos case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Escoba Burritos, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Escoba Burritos 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 Pancho's Burritos can be done for the following purposes –
1. Strategic planning using facts provided in Pancho's Burritos case study
2. Improving business portfolio management of Escoba Burritos
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 Escoba Burritos
Strengths Pancho's Burritos | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Escoba Burritos in Pancho's Burritos Harvard Business Review case study are -
Learning organization
- Escoba Burritos 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 Escoba Burritos is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Pancho's Burritos Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Escoba Burritos has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Escoba Burritos 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Pancho's Burritos firm has clearly differentiated products in the market place. This has enabled Escoba Burritos to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Escoba Burritos to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Pancho's Burritos 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.
High brand equity
– Escoba Burritos has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Escoba Burritos to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Escoba Burritos is one of the leading recruiters in the industry. Managers in the Pancho's Burritos are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Escoba Burritos is present in almost all the verticals within the industry. This has provided firm in Pancho's Burritos 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.
Analytics focus
– Escoba Burritos 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 Tim Kraft, Daniel Dorronsoro 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.
Training and development
– Escoba Burritos has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pancho's Burritos 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.
Effective Research and Development (R&D)
– Escoba Burritos 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 Pancho's Burritos - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Escoba Burritos in the sector have low bargaining power. Pancho's Burritos has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Escoba Burritos to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Escoba Burritos
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Escoba Burritos does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Pancho's Burritos | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pancho's Burritos are -
Lack of clear differentiation of Escoba Burritos products
– To increase the profitability and margins on the products, Escoba Burritos needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pancho's Burritos, in the dynamic environment Escoba Burritos has struggled to respond to the nimble upstart competition. Escoba Burritos has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Escoba Burritos, firm in the HBR case study Pancho's Burritos needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Pancho's Burritos, is just above the industry average. Escoba Burritos 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.
No frontier risks strategy
– After analyzing the HBR case study Pancho's Burritos, 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Escoba Burritos 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.
Increasing silos among functional specialists
– The organizational structure of Escoba Burritos is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Escoba Burritos needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Escoba Burritos to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Escoba Burritos 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 Escoba Burritos supply chain. Even after few cautionary changes mentioned in the HBR case study - Pancho's Burritos, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Escoba Burritos vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Tim Kraft, Daniel Dorronsoro suggests that, Escoba Burritos 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 star products
– The top 2 products and services of the firm as mentioned in the Pancho's Burritos 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 Escoba Burritos has relatively successful track record of launching new products.
Opportunities Pancho's Burritos | 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 Pancho's Burritos are -
Better consumer reach
– The expansion of the 5G network will help Escoba Burritos to increase its market reach. Escoba Burritos 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.
Creating value in data economy
– The success of analytics program of Escoba Burritos has opened avenues for new revenue streams for the organization in the industry. This can help Escoba Burritos to build a more holistic ecosystem as suggested in the Pancho's Burritos case study. Escoba Burritos can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Escoba Burritos can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Escoba Burritos 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.
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. Escoba Burritos can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Escoba Burritos is facing challenges because of the dominance of functional experts in the organization. Pancho's Burritos 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.
Using analytics as competitive advantage
– Escoba Burritos 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 Pancho's Burritos - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Escoba Burritos to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Escoba Burritos 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 Escoba Burritos to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Escoba Burritos can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Pancho's Burritos suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Escoba Burritos 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Escoba Burritos 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Escoba Burritos 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, Pancho's Burritos, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Escoba Burritos 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 Pancho's Burritos External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pancho's Burritos are -
Regulatory challenges
– Escoba Burritos 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.
Stagnating economy with rate increase
– Escoba Burritos 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.
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 Escoba Burritos in the Leadership & Managing People sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Escoba Burritos is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Escoba Burritos business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Escoba Burritos with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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. Escoba Burritos needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Consumer confidence and its impact on Escoba Burritos 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.
High dependence on third party suppliers
– Escoba Burritos 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Escoba Burritos 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 Pancho's Burritos, Escoba Burritos 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 Pancho's Burritos 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 Pancho's Burritos 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 Pancho's Burritos 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 Pancho's Burritos 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 Pancho's Burritos 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 Escoba Burritos needs to make to build a sustainable competitive advantage.
