TLDR A mid-size craft beer manufacturer faced a 20% decrease in market share due to competition and inefficiencies in production and supply chain management. By adopting advanced technologies and optimizing operations, the company reduced costs, increased online sales by 20%, and regained 5% market share, demonstrating the importance of Strategic Planning and Innovation in addressing market challenges.
TABLE OF CONTENTS
1. Background 2. Industry Analysis 3. Internal Assessment 4. Strategic Initiatives 5. McKinsey 3 Horizons Model Implementation KPIs 6. Stakeholder Management 7. McKinsey 3 Horizons Model Deliverables 8. McKinsey 3 Horizons Model Best Practices 9. Adopt Advanced Brewing Technologies 10. Optimize Supply Chain Management 11. Expand Direct-to-Consumer Channels 12. Enhance Sustainability Practices 13. Launch Experiential Marketing Campaigns 14. Innovation Pipeline (McKinsey 3 Horizons Model) 15. Additional Resources 16. Key Findings and Results
Consider this scenario: A mid-size craft beer manufacturer in North America faces strategic challenges outlined by the McKinsey 3 Horizons Model.
The company grapples with a 20% decrease in market share due to increased competition from both established brands and new entrants. Internally, the organization is hindered by outdated production technology and inefficiencies in supply chain management, resulting in 15% higher operational costs compared to industry benchmarks. The primary strategic objective is to regain market share and improve operational efficiency.
This organization is a mid-size craft beer manufacturer experiencing stagnation and decline in market performance. Market competition has intensified, leading to a 20% erosion in market share. Additionally, outdated production technologies and supply chain inefficiencies are driving up operational costs. The root causes of these challenges seem to be the slow adoption of newer brewing technologies and a lack of robust supply chain management protocols.
We begin our analysis by analyzing the primary forces driving the industry:
Emergent trends in the industry include a shift towards sustainable and organic brewing practices.
PEST analysis reveals regulatory changes favoring smaller breweries, economic factors showing rising disposable incomes, social trends towards localism, and technological advancements in brewing.
For a deeper analysis, take a look at these Industry Analysis best practices:
Benchmarking Analysis shows the company lags behind competitors in operational efficiency, with 15% higher costs. Competitors have adopted advanced brewing technologies and optimized logistics, resulting in better margins and market responsiveness.
Distinctive Capabilities Analysis reveals the company excels in unique flavor profiles and strong community engagement. However, it lacks the advanced production capabilities and streamlined supply chain management seen in top industry players.
Value Chain Analysis highlights strengths in marketing and customer engagement but inefficiencies in production and logistics. Raw material procurement is costlier, and there are delays in order fulfillment, affecting overall competitiveness.
KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.
Insights from these KPIs will help in monitoring the success of strategic initiatives and making necessary adjustments.
For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.
Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard
Stakeholder Groups | R | A | C | I |
---|---|---|---|---|
Employees | ⬤ | |||
Technology Partners | ⬤ | ⬤ | ||
Suppliers | ⬤ | |||
Marketing Team | ⬤ | |||
Local Communities | ⬤ | |||
Investors | ⬤ |
We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.
Learn more about Stakeholder Management Change Management Focus Interviewing Workshops Supplier Management
Explore more McKinsey 3 Horizons Model deliverables
To improve the effectiveness of implementation, we can leverage best practice documents in McKinsey 3 Horizons Model. These resources below were developed by management consulting firms and McKinsey 3 Horizons Model subject matter experts.
The team also applied the Resource-Based View (RBV) framework to identify and leverage internal resources that could provide a competitive advantage through the new technology. RBV emphasizes the importance of valuable, rare, inimitable, and non-substitutable resources. The team executed the following steps:
The implementation of these frameworks resulted in a 10% reduction in production costs and improved overall efficiency. The organization saw a significant improvement in product quality and consistency, leading to increased customer satisfaction and market share.
Additionally, the team used the Theory of Constraints (TOC) to identify and address the most critical bottlenecks in the supply chain. TOC focuses on identifying the weakest link in a process and improving it to enhance overall performance. The team followed these steps:
The application of these frameworks resulted in a 12% reduction in logistics costs and a more streamlined supply chain. The organization experienced faster order fulfillment times and improved overall operational efficiency.
The team also applied the Jobs-to-be-Done (JTBD) framework to better understand customer needs and develop targeted solutions. JTBD focuses on understanding the underlying jobs that customers are trying to accomplish and designing products and services to meet those needs. The team followed these steps:
The implementation of these frameworks resulted in a 20% increase in online sales and improved customer satisfaction. The organization was able to build stronger relationships with its customers and increase overall revenue through direct-to-consumer channels.
The team also applied the Circular Economy framework to create a more sustainable and efficient production process. The Circular Economy focuses on designing out waste and keeping products and materials in use for as long as possible. The team implemented the framework by following these steps:
The application of these frameworks resulted in a 5% increase in market share due to the growing demand for sustainable products. The organization also saw a reduction in waste and energy consumption, leading to cost savings and improved environmental performance.
The team also applied the Brand Experience framework to create a cohesive and immersive brand experience. The Brand Experience framework focuses on creating meaningful and memorable interactions between customers and a brand. The team implemented the framework by following these steps:
The implementation of these frameworks resulted in a 7% increase in local market share and stronger brand loyalty. The organization was able to create memorable and engaging experiences that resonated with customers, leading to increased brand awareness and customer retention.
The team also applied the Lean Startup methodology to foster a culture of experimentation and rapid iteration. Lean Startup emphasizes building and testing minimum viable products (MVPs) to quickly learn and adapt. The team implemented the methodology by following these steps:
The implementation of these frameworks resulted in the successful development of new product lines and brewing techniques. The organization was able to innovate more effectively and bring new products to market faster, driving long-term growth and profitability.
Here are additional best practices relevant to McKinsey 3 Horizons Model from the Flevy Marketplace.
Here is a summary of the key results of this case study:
The overall results of the initiative indicate a successful implementation of the strategic objectives. The reduction in production and logistics costs has significantly improved operational efficiency, aligning the company closer to industry benchmarks. The 20% increase in online sales and the 5% market share gain from sustainability initiatives highlight the effectiveness of the direct-to-consumer strategy and the growing consumer demand for eco-friendly products. However, some areas did not meet expectations. For instance, while the experiential marketing campaigns did boost local market share, the anticipated 7% increase suggests room for further optimization. Additionally, the significant capital expenditure required for technology upgrades and sustainability practices posed financial challenges. Alternative strategies could include phased technology adoption to spread out capital costs and leveraging partnerships for sustainability initiatives to mitigate financial strain.
For the next steps, it is recommended to continue monitoring and optimizing the implemented strategies. Specifically, focus on further refining the experiential marketing campaigns to maximize local market share gains. Additionally, explore partnerships and collaborations to enhance sustainability practices without incurring excessive costs. It is also crucial to maintain the momentum in innovation by continuously feeding the pipeline with new ideas and ensuring a structured approach to their development and commercialization. Finally, consider incremental technology upgrades to manage capital expenditure more effectively while still reaping the benefits of advanced brewing technologies.
Source: Transformation Strategy for Mid-size Beverage Manufacturer in Craft Beer Market, Flevy Management Insights, 2024
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