Growing Honest Tea

Week 2 Discussion

 

“Growing Honest Tea”  Please respond to the following:

Review the following documents:

Honest Tea’s business plan for 1999 (PDF).

A strengths, weaknesses, opportunities, and threats (SWOT) analysis based on Honest Teas’ business plan (PDF).

Suppose Honest Tea has hired you as a consultant to evaluate the completeness of their strategy for future growth. Base your evaluation on the provided SWOT analysis. Provide a rationale for your response.

Solution 1:

 Suppose Honest Tea has hired you as a consultant to evaluate the completeness of their strategy for future growth. Base your evaluation on the provided SWOT analysis. Provide a rational for your response.

The Honest Tea business plan and SWOT analysis showed some strong decisions by leadership for market share growth. However, also showed some major deficits to Honest Tea’s strategic plan.

It was a smart move to hire more experienced managers for the sales force, however, since the current management structure is one tiered, any company growth could lead to significant management gaps resulting in poor customer service and quality control. It is recommended that a clear management strategy accompany any plan for growth. 

Due to the initial founders being highly engaged in the day-to-day activities of the company, a strong culture base is currently present. Again, without a specific strategy in mind to maintain culture, future growth could change the overall culture of the organization. It is recommended that a culture strategy accompany any plan for growth.

Due to the increase in competition in the ready-to-drink (RTD) tea market, and the expensive start-up costs, product pricing is not as low as expected. Along with the current marketing plan being based on opportunistic marketing options. It is recommended that a concrete marketing strategy be composed based on the social responsibility aspects of Honest Tea, placing Honest Tea morally superior to the competition.

Solution 2

Suppose Honest Tea has hired you as a consultant to evaluate the completeness of their strategy for future growth. Base your evaluation on the provided SWOT analysis. Provide a rationale for your response.

After looking over Honest Tea business plan and SWOT analysis, I would say that this company have the potential for future growth. They have some pros and cons but I feel that they can overcome these obstacles.

Starting with the pros, I think that being able to gain the attention for their product through the media has been a plus for Honest Tea. The reason being is because it helps the potential consumers know more about the company. Another reason Honest Tea strategy could grow because of them marketing their product as a healthy, and natural tea. This alone makes would be consumers want to buy the product.

The only cons issues that I would be wary about as a consultant is that Honest Tea, isn’t that well established financially. This could be used against them because it would give their competition a one up on them and this gives way for new entrants to enter the market with the same type of tea. To help get the company more money, Honest Tea could look to take out a business loan with a bank or look in the direction of getting angel investors. Another thing that I would see that could hurt Honest Tea is that the management team only has one level of employees. This is a problem because the competition have more levels of management to do all the tasks to help keep the company running smoothly. Another con that could stall Honest Tea’s future growth is health issues with their product but this is something that be overcome. Later on done the line, Honest Tea could conduct trials to see if their products are what they say which is healthy.

Overall, I think that Honest Tea future growth is something that has a high rate to succeed. The reason being that they have the opportunity to get the product into several supermarkets located in various states. These supermarkets are all well-known and because of this it would help with the distribution of Honest Tea’s product. By doing this, it could help Honest Tea very easily enter into the market. Another reason is because they are coming into the market at the right time because they have a ready-to-drink tea which people love. This means that Honest Tea’s product is convenient to the consumers and it’s considered future growth because it’s an explosive market right now ready-to-drink (RTD) teas and water.

Comments:

Kiyanah,

Great post. Most companies assess their weaknesses and threats in order to transform them into an opportunity or strength. The threats that face Honest Tea and the internal company weaknesses do not pose any significant barriers to Honest Tea maintaining its current success. However, one of their weaknesses (Relies on opportunistic ways to gain public attention and promote trial of the product) can definitely become a strength once they strategize and become consistent at gaining the public and promoting their product. What strategy would you offer Honest Tea to execute to gain the public’s attention?

Dr. Steed

Hello Dr. Steed,

I think that a good plan for Honest Tea to help attract customer attention to them is to use the strategy of branding. The reason being is that it would help Honest Tea differentiate themselves from their competition. By doing this it makes potential consumers want to know more about the product. Honest Tea should look into how they package their product because this will also set them apart when trying to brand it for the consumers. Another reason they should start with a branding as a strategy is because they already established a good relationship with the media and celebrities. Going this route mean that Honest Tea wouldn’t have to spend the money that they don’t have on advertising and marketing. The reason being because it would already be taken care of for them through the public relation firm that would help the company.

Honey Tea’s Mission Statement has made their words their bond to loyal customers.  Honest in teas and making them healthy for a better relation from stakeholders to customers.  Being hired as a consultant of Honest Tea, I have evaluated the strategies used in assessing growth for the company which appears that the company has a strong leadership team strategizing strong decision-making skills.  Honest Tea has proven it’s value.  In late 1998, the company was recognized as the top selling merchant over its competitors by leading in the natural tea trend in the food service industry.  Also, Honest Tea has been recognized for great relation with loyal customers.  Additionally, Honest Tea is marketable in the food market, cause of it low calories, affordability, and dramatic taste.  I believe Honest Tea weakness comes from not having direct relation with the tea growers and position of manufacture as well as packaging process.  For such a quality bottle tea, Honest Tea will need to be more aggressive in building a different horizon in increasing profitability globally.  Honest Tea strength is that they have had strong profits in the food market exchange and major universities and if the company continues to give small samples of their products, they have a greater chance of increasing relation with more committed consumers. 

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