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Harvard Case - Crisis at Away (A)

"Crisis at Away (A)" Harvard business case study is written by Yo-Jud Cheng, Jared D. Harris, Noelle Surprise. It deals with the challenges in the field of Strategy. The case study is 16 page(s) long and it was first published on : Oct 23, 2022

At Fern Fort University, we recommend that Away implement a comprehensive strategic plan to address the current crisis, focusing on restoring customer trust, strengthening its brand image, and achieving sustainable growth. This plan should involve a multi-pronged approach encompassing operational improvements, marketing initiatives, and a renewed focus on corporate social responsibility.

2. Background

Away, a direct-to-consumer luggage brand, experienced rapid growth fueled by its innovative and stylish products, strong social media presence, and a focus on customer experience. However, the company faced a crisis in 2019 due to a series of negative events, including product defects, manufacturing issues, and allegations of poor employee treatment. These issues significantly damaged Away's reputation and led to a decline in sales and customer loyalty.

The case study focuses on the challenges faced by Away's CEO, Jen Rubio, who needs to navigate this crisis and develop a strategy to regain customer trust and achieve sustainable growth.

3. Analysis of the Case Study

SWOT Analysis:

Strengths:

  • Strong brand recognition and a loyal customer base.
  • Innovative product design and focus on customer experience.
  • Strong online presence and social media marketing capabilities.
  • Direct-to-consumer business model allows for greater control over pricing and customer interactions.

Weaknesses:

  • Dependence on a single product category (luggage).
  • Lack of transparency and communication during the crisis.
  • Issues with manufacturing quality and customer service.
  • Negative media coverage and public perception.

Opportunities:

  • Expanding into new product categories and markets.
  • Leveraging technology and analytics for personalized customer experiences.
  • Building strategic partnerships and collaborations.
  • Embracing sustainability and corporate social responsibility initiatives.

Threats:

  • Intense competition from established luggage brands and new entrants.
  • Economic downturns and changes in consumer spending patterns.
  • Negative media attention and social media backlash.
  • Potential for further manufacturing and quality issues.

Porter's Five Forces:

  • Threat of new entrants: High, due to the relatively low barriers to entry in the luggage market.
  • Bargaining power of buyers: Moderate, as customers have numerous choices and can easily compare prices and reviews online.
  • Bargaining power of suppliers: Moderate, as Away relies on a network of suppliers for materials and manufacturing.
  • Threat of substitute products: High, as there are many alternative travel accessories and luggage brands available.
  • Rivalry among existing competitors: High, as the luggage market is crowded with established brands and new entrants.

Value Chain Analysis:

Away's value chain consists of the following activities:

  • Inbound logistics: Sourcing materials and manufacturing luggage.
  • Operations: Production and quality control.
  • Outbound logistics: Shipping and delivery to customers.
  • Marketing and sales: Online and offline marketing, customer service, and brand building.
  • Service: Warranty and repair services.

The crisis highlighted weaknesses in Away's value chain, particularly in operations and customer service.

4. Recommendations

1. Restore Customer Trust and Rebuild Brand Image:

  • Transparency and Communication: Be open and honest with customers about the issues faced and the steps taken to address them.
  • Customer Service Improvements: Implement robust customer service processes, including faster response times, proactive communication, and a focus on resolving customer issues.
  • Product Quality Assurance: Implement rigorous quality control measures at all stages of production to ensure product reliability.
  • Public Relations and Media Management: Engage with media outlets and influencers to rebuild trust and share the company's commitment to improvement.
  • Social Media Engagement: Actively engage with customers on social media, address concerns, and share positive customer stories.

2. Achieve Sustainable Growth:

  • Product Diversification: Expand into new product categories related to travel and lifestyle, such as travel accessories, backpacks, and personal care items.
  • Market Expansion: Explore new international markets with high growth potential, leveraging global partnerships and distribution channels.
  • Technology and Analytics: Implement advanced data analytics to optimize marketing campaigns, personalize customer experiences, and identify new growth opportunities.
  • Strategic Alliances: Collaborate with complementary brands and businesses to offer bundled products and services, expand reach, and enhance customer value.
  • Sustainability and Corporate Social Responsibility: Implement sustainable practices throughout the value chain, prioritize ethical sourcing, and support social causes aligned with the company's values.

3. Operational Improvements:

  • Manufacturing Process Optimization: Streamline manufacturing processes, implement lean principles, and invest in automation to improve efficiency and reduce costs.
  • Supply Chain Management: Strengthen supply chain relationships, diversify suppliers, and implement robust inventory management systems to ensure timely delivery and product availability.
  • IT Management: Invest in robust IT infrastructure and systems to support business growth, improve data security, and enhance customer experience.

4. Organizational Culture and Leadership:

  • Employee Empowerment and Engagement: Create a culture of transparency, accountability, and respect, empowering employees to contribute to the company's success.
  • Leadership Development: Invest in leadership development programs to equip managers with the skills and knowledge to navigate challenges and drive positive change.
  • Diversity and Inclusion: Promote diversity and inclusion within the organization, fostering a welcoming and supportive work environment for all employees.

5. Basis of Recommendations

These recommendations are based on a comprehensive analysis of Away's strengths, weaknesses, opportunities, and threats, considering the competitive landscape, customer needs, and industry trends. They are designed to address the core issues identified in the case study, including:

  • Restoring customer trust: By addressing product quality issues, improving customer service, and being transparent with customers, Away can rebuild trust and regain lost loyalty.
  • Strengthening brand image: By focusing on corporate social responsibility, sustainability, and ethical practices, Away can enhance its brand image and appeal to a wider audience.
  • Achieving sustainable growth: By diversifying its product offerings, expanding into new markets, and leveraging technology and strategic partnerships, Away can achieve long-term growth and profitability.

6. Conclusion

The crisis at Away presents a significant challenge, but it also presents an opportunity for the company to emerge stronger and more resilient. By implementing the recommended strategies, Away can restore customer trust, rebuild its brand image, and achieve sustainable growth.

7. Discussion

Alternatives:

  • Liquidation: This would be a drastic measure and would result in significant job losses.
  • Selling the company: This would be a quick solution, but it would likely result in a loss of control and potentially a change in the company's values.
  • Status quo: This would likely lead to further decline in sales and customer loyalty.

Risks and Key Assumptions:

  • Implementation challenges: Implementing the recommended strategies will require significant resources and effort.
  • Competition: The luggage market is highly competitive, and new entrants may pose a threat to Away's market share.
  • Consumer sentiment: Consumer sentiment can be volatile, and negative media coverage could continue to impact Away's reputation.

Assumptions:

  • Away has the financial resources to implement the recommended strategies.
  • The company's leadership is committed to change and improvement.
  • Customers are willing to forgive Away and give the company a second chance.

8. Next Steps

  • Form a task force: Assemble a cross-functional team to develop and implement the strategic plan.
  • Develop a communication plan: Communicate the company's plans and progress to customers, employees, and stakeholders.
  • Set clear goals and metrics: Establish measurable goals and track progress against key performance indicators.
  • Invest in resources: Allocate sufficient resources to support the implementation of the recommended strategies.
  • Monitor and adapt: Continuously monitor the company's performance and adjust the strategy as needed.

By taking these steps, Away can overcome the current crisis and emerge as a stronger and more sustainable company.

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Case Description

When should a board of directors push for a CEO change? This case explores the experiences of the board of directors of a popular and successful lifestyle-brand start-up as it grapples with a public-relations crisis after a young female CEO makes serious missteps in a public forum. This case allows for a discussion of the role and responsibilities of a board of a start-up backed by venture capital (VC), when and how to remove a CEO, and the evolution of executive leadership as a company rapidly scales up and approaches a potential IPO. Through the case discussion, students take the perspective of the board of directors to come to a decision about whether (and how) to implement a CEO transition amid an unexpected crisis. A supplemental B case (UVA-S-0362) presents what the board chose to do next and provides an opportunity to discuss the longer-term leadership challenges that followed the initial crisis.

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