Harvard Case - The Red Hen Controversy
"The Red Hen Controversy" Harvard business case study is written by Jana Seijts, Benjamin Bigio. It deals with the challenges in the field of Strategy. The case study is 10 page(s) long and it was first published on : Aug 20, 2019
At Fern Fort University, we recommend that The Red Hen restaurant adopt a strategic approach to managing its public image and customer relations in light of the controversy surrounding the refusal of service to Sarah Huckabee Sanders. This approach should prioritize building a strong brand identity rooted in core values, implementing robust social media strategies, and fostering a culture of inclusivity and open dialogue.
2. Background
The Red Hen, a popular restaurant in Lexington, Virginia, became the center of a national controversy in 2018 when its owner, Stephanie Wilkinson, asked White House Press Secretary Sarah Huckabee Sanders to leave the establishment. Wilkinson's decision was based on her disapproval of Sanders' role in the Trump administration's policies, particularly its family separation policy at the US-Mexico border. This incident sparked a wave of public debate, with supporters praising Wilkinson's stance as a courageous act of resistance, while critics condemned it as discriminatory and politically motivated.
The case study focuses on the impact of this controversy on The Red Hen's business, its brand image, and its future prospects.
3. Analysis of the Case Study
The Red Hen controversy presents a complex scenario with multiple facets to analyze. We can use a combination of frameworks to understand the situation better:
SWOT Analysis:
- Strengths: Strong brand reputation, loyal customer base, positive reviews, unique menu and atmosphere.
- Weaknesses: Lack of clear brand identity, potential for backlash from customers with opposing political views, limited resources for managing public relations.
- Opportunities: Leverage the controversy to promote a strong social conscience, attract new customers who support its values, expand its reach through social media.
- Threats: Boycotts from supporters of the Trump administration, negative media coverage, reputational damage.
Porter's Five Forces:
- Threat of New Entrants: High, as the restaurant industry is relatively easy to enter.
- Bargaining Power of Buyers: Moderate, as customers have many dining options available.
- Bargaining Power of Suppliers: Low, as the restaurant industry relies on a wide range of suppliers.
- Threat of Substitutes: High, as customers can choose to eat at home or at other restaurants.
- Competitive Rivalry: High, as the restaurant industry is highly competitive.
Value Chain Analysis:
- Inbound Logistics: Sourcing of ingredients, ensuring quality and sustainability.
- Operations: Food preparation, service, and customer experience.
- Outbound Logistics: Delivery of food to customers, managing reservations and seating.
- Marketing and Sales: Building brand awareness, attracting customers, managing online presence.
- Customer Service: Providing a positive dining experience, resolving customer issues.
Business Model Innovation: The Red Hen could explore new business models, such as offering online ordering and delivery, expanding its menu to cater to a wider range of dietary preferences, or creating a loyalty program to incentivize repeat customers.
Corporate Governance: The controversy highlights the importance of clear corporate governance policies and procedures for managing public relations, addressing ethical dilemmas, and ensuring consistency in decision-making.
Strategic Planning: The Red Hen needs to develop a comprehensive strategic plan that addresses the current situation, outlines its future goals, and defines its target market.
Market Segmentation: The Red Hen can segment its market based on demographics, psychographics, and behavioral factors to tailor its marketing efforts and messaging.
Blue Ocean Strategy: The Red Hen can explore a 'blue ocean' strategy by creating a new market space and differentiating itself from competitors through its social conscience and commitment to inclusivity.
Disruptive Innovation: The Red Hen can leverage technology and innovation to disrupt the traditional restaurant industry, such as implementing online ordering systems, integrating AI for personalized service, or offering unique dining experiences.
Balanced Scorecard: The Red Hen can use a balanced scorecard to track its progress towards its strategic goals, considering financial, customer, internal process, and learning and growth perspectives.
Core Competencies: The Red Hen needs to identify and leverage its core competencies, such as its culinary expertise, its commitment to quality ingredients, and its unique atmosphere.
Diversification: The Red Hen could consider diversifying its business by opening new restaurants in different locations or launching a catering service.
Vertical Integration: The Red Hen could consider vertical integration by acquiring or partnering with suppliers to control its supply chain and ensure consistent quality.
Horizontal Integration: The Red Hen could consider horizontal integration by acquiring or merging with similar businesses to expand its market share and reach.
Strategic Alliances: The Red Hen could form strategic alliances with other businesses, such as local farms, food suppliers, or community organizations, to enhance its brand image and reach a wider audience.
Outsourcing: The Red Hen could consider outsourcing certain functions, such as marketing, accounting, or customer service, to focus on its core competencies.
Globalization Strategies: The Red Hen could explore globalization strategies, such as opening restaurants in other countries or partnering with international food suppliers.
Product Differentiation: The Red Hen can differentiate its products and services through its unique menu, its commitment to sustainable practices, and its inclusive atmosphere.
Cost Leadership: The Red Hen can focus on cost leadership by optimizing its operations, negotiating favorable supplier contracts, and implementing cost-saving measures.
Market Penetration: The Red Hen can focus on market penetration by increasing its market share within its existing target market through promotions, loyalty programs, and improved customer service.
Market Development: The Red Hen can focus on market development by expanding its reach to new customer segments through targeted marketing campaigns and strategic partnerships.
Product Development: The Red Hen can focus on product development by introducing new menu items, expanding its catering services, or offering unique dining experiences.
Resource-Based View: The Red Hen can leverage its resources, such as its brand reputation, its loyal customer base, and its culinary expertise, to create a sustainable competitive advantage.
Dynamic Capabilities: The Red Hen needs to develop dynamic capabilities, such as its ability to adapt to changing market conditions, innovate its products and services, and manage its public image effectively.
Scenario Planning: The Red Hen can use scenario planning to anticipate future uncertainties, such as changes in consumer preferences, economic downturns, or political instability, and develop contingency plans to mitigate potential risks.
Stakeholder Analysis: The Red Hen needs to identify and understand the interests of its stakeholders, including customers, employees, investors, suppliers, and the community, and develop strategies to manage their expectations.
Strategic Positioning: The Red Hen needs to define its strategic positioning in the market, considering its target market, its value proposition, and its competitive advantage.
Business Ecosystem: The Red Hen can leverage its business ecosystem, including its suppliers, distributors, customers, and competitors, to create value and achieve its strategic goals.
Game Theory in Strategy: The Red Hen can use game theory to analyze the strategic interactions between its competitors and develop optimal strategies to maximize its own profits.
Strategic Leadership: The Red Hen needs strong strategic leadership to set the vision, develop the strategy, and execute the plan effectively.
Change Management: The Red Hen needs to implement effective change management processes to adapt to changing market conditions, implement new strategies, and manage the impact of the controversy on its employees and customers.
Organizational Culture: The Red Hen needs to foster a culture of inclusivity, open dialogue, and customer-centricity to address the controversy and build a strong brand image.
Strategic Implementation: The Red Hen needs to develop a robust strategic implementation plan that outlines the specific actions, timelines, and resources required to achieve its strategic goals.
Benchmarking: The Red Hen can benchmark its performance against its competitors to identify areas for improvement and enhance its competitive advantage.
Strategic Control: The Red Hen needs to establish a system of strategic control to monitor its progress towards its goals, identify potential deviations, and make necessary adjustments.
PESTEL Analysis: The Red Hen can use a PESTEL analysis to identify the political, economic, social, technological, environmental, and legal factors that could impact its business.
Industry Lifecycle: The Red Hen needs to understand the stage of the restaurant industry lifecycle to develop appropriate strategies for growth and sustainability.
Strategic Groups: The Red Hen can identify its strategic group within the restaurant industry to understand its competitive landscape and develop appropriate strategies.
Value Proposition: The Red Hen needs to define its value proposition, which is the unique set of benefits it offers to its customers, to attract and retain customers.
Business Portfolio Analysis: The Red Hen can use a business portfolio analysis, such as the BCG matrix, to assess the performance of its different products and services and allocate resources accordingly.
Ansoff Matrix: The Red Hen can use the Ansoff matrix to identify growth opportunities through market penetration, market development, product development, or diversification.
Strategic Intent: The Red Hen needs to develop a clear strategic intent, which is a long-term aspiration that guides its strategic decisions.
Sustainable Competitive Advantage: The Red Hen needs to develop a sustainable competitive advantage, which is a long-term advantage that is difficult for competitors to imitate.
Strategic Flexibility: The Red Hen needs to maintain strategic flexibility, which is the ability to adapt to changing market conditions and seize new opportunities.
Corporate Social Responsibility: The Red Hen can enhance its brand image and attract customers by demonstrating its commitment to corporate social responsibility, such as supporting local communities, promoting sustainable practices, or advocating for social justice.
Digital Transformation Strategy: The Red Hen needs to develop a digital transformation strategy to leverage technology to improve its operations, enhance its customer experience, and expand its reach.
Strategic Foresight: The Red Hen needs to develop strategic foresight, which is the ability to anticipate future trends and develop strategies to capitalize on emerging opportunities.
4. Recommendations
Develop a Clear Brand Identity: The Red Hen needs to develop a clear brand identity that reflects its core values and its commitment to social justice. This identity should be communicated consistently across all channels, including its website, social media, and marketing materials.
Implement a Robust Social Media Strategy: The Red Hen should leverage social media to engage with its customers, build a community, and manage its public image. This strategy should include regular content updates, proactive engagement with customers, and a clear response plan for managing negative feedback.
Foster a Culture of Inclusivity and Open Dialogue: The Red Hen should create a culture of inclusivity and open dialogue within its organization and with its customers. This culture should be reflected in its hiring practices, its employee training, and its customer service policies.
Develop a Comprehensive Crisis Management Plan: The Red Hen should develop a comprehensive crisis management plan to address future controversies and manage its public image effectively. This plan should include clear communication protocols, designated spokespersons, and a process for responding to media inquiries.
Engage with Community Organizations: The Red Hen should engage with community organizations that share its values to build relationships, promote its brand, and demonstrate its commitment to social justice.
Leverage Technology and Innovation: The Red Hen should leverage technology and innovation to improve its operations, enhance its customer experience, and expand its reach. This could include implementing online ordering systems, integrating AI for personalized service, or offering unique dining experiences.
Monitor and Evaluate its Performance: The Red Hen should regularly monitor and evaluate its performance against its strategic goals. This includes tracking its financial performance, its customer satisfaction, its employee engagement, and its brand image.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of the Red Hen's situation, considering its strengths, weaknesses, opportunities, and threats. They are also aligned with its core competencies, its commitment to social justice, and its desire to build a strong brand image.
The recommendations are designed to address the challenges posed by the controversy, enhance its competitive advantage, and ensure its long-term sustainability. They are also consistent with best practices in brand management, crisis management, and social responsibility.
6. Conclusion
The Red Hen controversy presents a significant challenge for the restaurant, but it also presents an opportunity to build a stronger brand identity, enhance its customer relationships, and demonstrate its commitment to social justice. By implementing the recommendations outlined above, The Red Hen can effectively manage the controversy, mitigate potential risks, and emerge as a stronger and more resilient business.
7. Discussion
Alternative options include:
- Ignoring the controversy: This would likely result in negative publicity and boycotts from customers who support the restaurant's stance.
- Apologizing for the incident: This could be perceived as a sign of weakness and could alienate customers who support the restaurant's decision.
- Focusing solely on business operations: This would likely ignore the public relations aspect of the situation and could lead to further negative publicity.
The recommendations outlined above are the most strategic and comprehensive approach to addressing the controversy and building a stronger brand image. They are also the most likely to achieve the desired outcomes, such as mitigating potential risks, enhancing customer relationships, and demonstrating the restaurant's commitment to social justice.
Key assumptions include:
- The Red Hen is committed to its core values and its commitment to social justice.
- The Red Hen is willing to invest in the necessary resources to implement the recommendations.
- The Red Hen's customers are receptive to its brand identity and its commitment to social justice.
8. Next Steps
- Develop a clear brand identity and communication strategy: (Timeline: 1 month)
- Implement a robust social media strategy: (Timeline: 1 month)
- Develop a comprehensive crisis management plan: (Timeline: 2 months)
- Engage with community organizations: (Timeline: 3 months)
- Implement technology and innovation initiatives: (Timeline: 6 months)
- Monitor and evaluate performance regularly: (Timeline: Ongoing)
By implementing these recommendations and taking the necessary steps, The Red Hen can navigate the challenges of the controversy and emerge as a stronger and more resilient business.
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Case Description
On June 22, 2018, Stephanie Wilkinson, co-founder of the Red Hen, a small farm-to-table restaurant in rural Virginia, was caught off guard when a frantic call from her chef told her that the White House press secretary, Sarah Huckabee Sanders, had just sat down to eat at Wilkinson's restaurant. Staff at the Red Hen were tense because they fundamentally disagreed with Sanders's support of the Trump administration on issues such as immigration and transgender rights. Wilkinson was equally concerned because she had kept politics off the menu at the Red Hen for over 10 years in a politically charged city. Now, Wilkinson had to decide whether to side with her employees and her own moral values and ask Sanders to leave, or permit Sanders to stay at the restaurant. Either way, Wilkinson knew that there would be consequences and that the media would be knocking at her door.
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