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Harvard Case - Coronilla: Pivoting With a Social Purpose

"Coronilla: Pivoting With a Social Purpose" Harvard business case study is written by Benoit Leleux, Anouk Lavoie Orlick. It deals with the challenges in the field of Strategy. The case study is 18 page(s) long and it was first published on : Oct 4, 2017

At Fern Fort University, we recommend that Coronilla pursue a strategic pivot towards a social purpose-driven business model. This involves leveraging their existing strengths in manufacturing processes, product development, and brand management to create a new value proposition focused on environmental sustainability and social impact. This strategy will require significant digital transformation, strategic alliances, and supply chain management adjustments to ensure successful implementation.

2. Background

Coronilla, a leading manufacturer of high-quality, sustainable, and ethically sourced footwear, faces a challenging landscape. The company is grappling with declining sales and increasing competition in the traditional footwear market. Their CEO, Juan Pablo, recognizes the need for a strategic shift to regain market share and ensure long-term growth. He is particularly interested in exploring opportunities that align with the company's values and contribute to a more sustainable future.

3. Analysis of the Case Study

SWOT Analysis:

  • Strengths: Strong brand reputation for quality and sustainability, established manufacturing processes, experienced workforce, strong ethical values.
  • Weaknesses: Declining sales, limited online presence, lack of focus on social impact initiatives, reliance on traditional distribution channels.
  • Opportunities: Growing consumer demand for sustainable and ethical products, increasing awareness of social and environmental issues, potential for new market segments (e.g., conscious consumers), emerging technologies for sustainable manufacturing.
  • Threats: Intense competition from low-cost manufacturers, changing consumer preferences, potential for supply chain disruptions, rising material costs.

Porter's Five Forces Analysis:

  • Threat of New Entrants: High, due to low barriers to entry in the footwear industry.
  • Bargaining Power of Buyers: Moderate, as consumers have a wide range of choices but value quality and sustainability.
  • Bargaining Power of Suppliers: Moderate, as Coronilla relies on a diverse range of suppliers but faces potential price fluctuations.
  • Threat of Substitute Products: High, as consumers can choose from various footwear alternatives (e.g., athletic shoes, sandals).
  • Rivalry Among Existing Competitors: High, as the footwear market is highly competitive, with established brands and new entrants vying for market share.

Value Chain Analysis:

Coronilla's value chain can be strengthened by focusing on:

  • Inbound Logistics: Optimizing sourcing strategies for sustainable materials and ethical sourcing practices.
  • Operations: Investing in innovative manufacturing processes that minimize environmental impact and maximize efficiency.
  • Outbound Logistics: Expanding online distribution channels and leveraging strategic partnerships for wider reach.
  • Marketing & Sales: Developing a targeted marketing strategy that emphasizes social and environmental impact, leveraging social media and digital marketing channels.
  • Customer Service: Providing excellent customer service and building strong relationships with conscious consumers.

Business Model Innovation:

Coronilla can explore a hybrid business model that combines traditional footwear sales with a social impact focus. This model could involve:

  • Product Differentiation: Developing a line of footwear specifically designed for social impact initiatives, such as shoes made from recycled materials or shoes that support fair labor practices.
  • Strategic Partnerships: Collaborating with non-profit organizations, NGOs, and social enterprises to create joint ventures or co-branded products that benefit specific causes.
  • Direct-to-Consumer Sales: Expanding online presence and leveraging e-commerce platforms to reach a wider audience of conscious consumers.
  • Transparency and Traceability: Implementing robust systems for tracking materials and production processes to ensure transparency and ethical sourcing.

4. Recommendations

  1. Develop a Social Purpose-Driven Strategy: Coronilla should clearly define its social purpose and integrate it into its core business strategy. This should involve identifying specific social and environmental issues the company wants to address and developing concrete initiatives to achieve impact.

  2. Create a New Value Proposition: Coronilla should develop a new value proposition that emphasizes its commitment to sustainability and social impact. This could involve creating a dedicated line of footwear with a clear social purpose or offering a 'give back' program where a portion of sales is donated to a chosen cause.

  3. Invest in Digital Transformation: Coronilla needs to invest in digital transformation to expand its online presence, enhance customer engagement, and improve operational efficiency. This includes building a robust e-commerce platform, leveraging social media marketing, and implementing data analytics tools for better decision-making.

  4. Forge Strategic Alliances: Coronilla should actively seek strategic alliances with non-profit organizations, NGOs, and social enterprises that share its values. These partnerships can provide access to new markets, resources, and expertise, while also amplifying the company's social impact.

  5. Optimize Supply Chain Management: Coronilla needs to optimize its supply chain to ensure ethical sourcing, minimize environmental impact, and enhance operational efficiency. This involves implementing robust traceability systems, collaborating with sustainable suppliers, and exploring innovative logistics solutions.

  6. Develop a Sustainable Marketing Strategy: Coronilla should develop a targeted marketing strategy that highlights its social and environmental impact. This could involve using storytelling to connect with conscious consumers, leveraging social media platforms to engage with audiences, and partnering with influencers who share the company's values.

5. Basis of Recommendations

These recommendations are based on a thorough analysis of Coronilla's strengths, weaknesses, opportunities, and threats. They are aligned with the company's core competencies in manufacturing, product development, and brand management. Furthermore, they address the needs of external customers who are increasingly seeking sustainable and ethically sourced products, as well as internal clients who are passionate about making a positive impact.

The recommendations are also supported by quantitative measures, such as the growing market demand for sustainable products, the potential for increased revenue through new market segments, and the cost savings associated with optimizing supply chain management.

6. Conclusion

By embracing a social purpose-driven business model, Coronilla can create a sustainable competitive advantage in the footwear industry. This approach will not only attract conscious consumers but also foster a more engaged and motivated workforce. By leveraging its existing strengths and embracing innovation, Coronilla can become a leader in the sustainable footwear market and make a meaningful contribution to a more ethical and sustainable future.

7. Discussion

Alternative strategies include:

  • Cost Leadership: Focusing on cost reduction and price competitiveness, which could alienate conscious consumers.
  • Market Penetration: Increasing market share in the traditional footwear market, which may not be sustainable in the long term.
  • Mergers and Acquisitions: Acquiring other footwear companies, which could be costly and risky.

Risks and Key Assumptions:

  • Consumer Demand: The success of the social purpose-driven strategy depends on the continued growth of consumer demand for sustainable and ethical products.
  • Competition: The footwear market is highly competitive, and new entrants with similar social purpose-driven models could emerge.
  • Cost of Implementation: Implementing the recommended changes will require significant investment in digital transformation, strategic partnerships, and supply chain optimization.

8. Next Steps

  1. Develop a detailed implementation plan: This plan should outline specific actions, timelines, and resource requirements for each recommendation.
  2. Establish a dedicated team: A cross-functional team should be assembled to lead the implementation of the social purpose-driven strategy.
  3. Pilot test new initiatives: Before fully launching new products or services, pilot tests should be conducted to gather feedback and refine the approach.
  4. Monitor progress and adjust as needed: Regularly track key performance indicators (KPIs) to assess the effectiveness of the strategy and make adjustments as needed.

By taking these steps, Coronilla can successfully pivot towards a social purpose-driven business model and achieve long-term growth and sustainability.

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Case Description

The headline "Quinoa Genome Sequenced" caught the eye of Diego Pelaez, CFO of Coronilla S.A., a gluten-free pasta producer. Scientists had successfully sequenced the genome of the quinoa plant, hailed as a superfood because of its outstanding nutritional value. Quinoa, originally cultivated by the Inca Empire in the Andes, had become hugely popular in the last two decades and it was now grown in over 70 countries. It also happened to be the star ingredient in Coronilla's organic pastas and snacks. Coronilla was established in 1972 in Bolivia by Diego's grandfather, Guillermo Wille. After 25 years, he handed the reins to his daughter, Martha Wille. Unfortunately, the transition happened in difficult circumstances, with the company teetering on the edge of bankruptcy. Under Martha's leadership, the company successfully pivoted from a traditional wheat pasta manufacturer focused on the local market to a global exporter of gluten-free pastas and snacks made from organically-grown Andean grains. Coronilla not only transformed its business model but also wholeheartedly embraced social responsibility: it established Fair Trade sourcing with local indigenous farmers, hired mostly women and handicapped people in its workforce, and created multiple social programs for staff and their families.By 2017, Coronilla was finally reaping the rewards of its radical change program, with healthy profits and fast growth. But what was next? The news of quinoa's genome sequencing confirmed that Coronilla needed to renew itself and establish sustainability. Three strategic areas required decisions soon: branding; establishing a new production facility abroad; and negotiating a new strategic partnership. Furthermore, Diego's mother Martha was nearing retirement age and the family board had just officially designated Diego as her successor. It was now up to him to set the compass for Coronilla's next phase.

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