Smoke and Mirrors B Case Solution

The Harvard Business Review published a case study that primarily focuses on Smoke and Mirrors B. The following case solution has been designed to give the reader an overview about the business world along with a clear understanding of its growth dynamics. Recently, Smoke and Mirrors B has been subjected to strategic as well as managerial problems that require immediate attention so that they can be resolved to allow future growth, expansion, and competitive edge within the marketplace. This case study solution is being written to provide a strategic solution to Smoke and Mirrors B using various appropriate tools and frameworks. Harvard Business Review’s case studies involve a central problem that is faced by a particular company. The problem identified involves strategic and managerial implications for the company. Therefore, it is important for readers to critically identify the problem Smoke and Mirrors B faces. Moreover, it is also essential to highlight the key stakeholders that are impacted and influenced by the problem identified.

External Environmental Analysis

The external environment holds significant importance for Smoke and Mirrors B to ensure that the company is able to respond to all the changes in the macro-environment. This is because Smoke and Mirrors B cannot control the factors and thus can directly influence the company's operations (Indris & Primiana, 2015). The external environment of Smoke and Mirrors B will be assessed using PESTLE Analysis.

Political

• A stable political environment provides a favorable market growth trend for Smoke and Mirrors B.

• It is important for Smoke and Mirrors B to analyze the pressure groups, and social environment activists. The company can make close collaborations with these groups to achieve company goals (Wang, Wang, & Shi, 2022).

• High restrictions on trade and high levels of taxes can contribute to the complex business environment for Smoke and Mirrors B by impacting imports and exports.

Economic

• Smoke and Mirrors B can benefit from wide-range opportunities in business growth by operating in developing economies (Munro, 2017).

• High GDP can determine the long-term growth strategies of Smoke and Mirrors B, signaling the ability of consumers to spend on more products.

• Higher rates of interests can provide Smoke and Mirrors B with more investment opportunities.

• The flexibility in the labor market allows Smoke and Mirrors B to take advantage of higher workforce productivity.

Social

• The selection of appropriate demographic segments has allowed Smoke and Mirrors B to select the right segments of the market that have high growth potential.

• The research on gender roles has helped Smoke and Mirrors B to develop and align communication as well as marketing strategies accordingly.

• Smoke and Mirrors B has been successful in understanding the norms and cultures of different countries by developing local teams and partnerships (Hueske, Endrikat, & Guenther, 2015).

Technological

• The adoption of innovative marketing techniques that involves communication technologies has allowed Smoke and Mirrors B to collaborate successfully with consumers.

• The company has stayed ahead in the market, and can significantly increase its market share by placing its major focus on emerging technologies (Akpoviroro & Owotutu, 2018).

• Smoke and Mirrors B should maximize its profits by investing in disruptive technologies.

Environmental

• It is crucial for Smoke and Mirrors B to adopt effective waste management practices to reduce environmental pollution (J. K, W. J, & D., 2016).

• Smoke and Mirrors B should adopt eco-friendly products to establish better relationships with the stakeholders.

• Smoke and Mirrors B can take advantage of subsidies offered in renewable technologies to achieve the long-term goal of sustainability.

Legal

• Smoke and Mirrors B should follow proper laws concerning employee health and safety, and anti-discrimination laws to effectively develop HRM.

• Consumer protection laws are also important for Smoke and Mirrors B as it involves the consumer protection from fraudulent marketing (S. Samusenko, S. Plaskova, & A. Prodanova, 2020).

• Smoke and Mirrors B can gain a competitive advantage, and can position itself strongly in the market by protecting intellectual property laws.

Porter’s Five Forces Analysis

Threat of New Entrants

• It is difficult to achieve economies of scale in Smoke and Mirrors B’s industry, making it a weaker force for new entrants.

• There are high capital requirements in the industry. This makes it difficult for new businesses to set up their companies, and compete against Smoke and Mirrors B.

• The industry has a strong product differentiation, and heavy investment is needed for customer acquisition. Thus, Smoke and Mirrors B can focus on innovation to differentiate itself from its competitors (H. Th. Bruijl, 2018).

• There are strict legal requirements to join the industry in which Smoke and Mirrors B operates, making it difficult for new entrants to enter the market.

Bargaining Power of Suppliers

• The bargaining power of suppliers in the industry is weak.

• Smoke and Mirrors B operates in an industry with a higher number of suppliers. This means that suppliers do not have much control over their prices.

• Standardized products that have low switching costs are provided by suppliers allowing buyers like Smoke and Mirrors B to easily switch their suppliers (Fabbri & F.Klapper, 2016).

• Raw materials can be purchased at lower prices by Smoke and Mirrors B. The company can also switch suppliers for more reasonable pricing.

• Smoke and Mirrors B can benefit from a variety of suppliers as it can have multiple suppliers for its various geographical areas (Cho, Ke, & Han, 2019).

Bargaining Power of Buyers

• The bargaining power of buyers in the Smoke and Mirrors B industry is weak.

• There is a high product differentiation in the industry, making it difficult for buyers to switch to alternative firms.

• Smoke and Mirrors B can come with differentiated and innovative products to attract more buyers of the industry (Zhao, Zuo, & Wu, 2016).

• Buyers of this industry has low incomes. This means they prefer to purchase items at lower prices, making them more price sensitive. Organizations like Smoke and Mirrors B can offer lower prices to attract customers.

Threat of Substitute Products or Services

• There are few substitute products available in the industry in which Smoke and Mirrors B operates.

• Expensive substitutes are available in the industry of Smoke and Mirrors B, making it difficult for buyers to switch to those substitutes (Aithal, 2016).

Rivalry Among Existing Firms

• The rivalry among existing firms is moderate to weak.

• There are few competitors in the industry in which Smoke and Mirrors B operates.

• A large market share is enjoyed by fewer firms in the industry. This means that more competitive actions will be made to become leaders in the market (Seema, 2016).

• The industry in which Smoke and Mirrors B operates has highly differentiated products, making it difficult for companies to win each other customers.

• Smoke and Mirrors B can focus on making more differentiated products to gain a strong competitive edge in the market (Zhao, Zuo, & Wu, 2016).

Internal Environmental Analysis

Smoke and Mirrors B can use internal environmental analysis to identify and evaluate the competitive positioning of a company in the business environment. This involves conducting a SWOT Analysis that can help Smoke and Mirrors B to identify the company’s internal strengths, weaknesses, opportunities, and threats (Halmaghi, Iancue, & Băcilă, 2017).

SWOT Analysis

Strengths

• Smoke and Mirrors B has a strong distribution network that has allowed it to make its products available to large customers within the given timeframe.

• A strong presence on social media platforms has allowed Smoke and Mirrors B to have a high level of customer engagement (Rizaldi, 2015).

• Smoke and Mirrors B has been successful in building a large product portfolio, so unique and distinctive products can be offered to consumers.

• Smoke and Mirrors B has a strong brand image in the market.

• A low-cost structure of Smoke and Mirrors B has allowed it to manufacture products at lower costs, so they become affordable for consumers to purchase.

• The financial position of Smoke and Mirrors B is strong as the company has generated higher profits over the past years (Phadermrod, M.Crowder, & B.Wills, 2019).

• Smoke and Mirrors B has invested in the training and development of its employees to keep them motivates, leading to higher efficiency and productivity.

Weaknesses

• The expenditure of Smoke and Mirrors B on its research and development is comparatively less to other competitors of the market.

• Smoke and Mirrors B uses a centralized decision-making process that takes time and reduces operational efficiency (Ahmadi, Dileepan, & K. Wheatley, 2016).

• There are high rental costs because Smoke and Mirrors B operates on more of the rental properties rather than purchasing them.

• There is no workforce diversification in Smoke and Mirrors B. This makes it difficult for the employees to adjust with the different workers who belong to different backgrounds.

Opportunities

• Since the online shopping has increased significantly, Smoke and Mirrors B can take it as an opportunity to expand its online presence.

• Smoke and Mirrors B can make use of social media platforms to market its products, with more customers interactions.

• Due to more technological developments, Smoke and Mirrors B can make its operations more automated so that overall company costs can be reduced (Ahmadi, Dileepan, & K. Wheatley, 2016).

• Globalization provides an opportunity to Smoke and Mirrors B to expand its operations in multiple countries.

• Smoke and Mirrors B can enter in a niche market and sell distinctive products to gain a competitive advantage.

• The increase in the demand of environmentally friendly goods, Smoke and Mirrors B, can place its major focus on making such products (E.Quezada, A.Reinao, & I.Palominos, 2019).

Threats

• In recent times, there has been an increase in the bargaining power of suppliers, making it difficult for Smoke and Mirrors B to buy raw materials at lower costs.

• Numerous players are entering the industry, posing a major threat to Smoke and Mirrors B.

• There has been constant pressure on Smoke and Mirrors B to conduct frequent research to understand the changing customer tastes and preferences (Kolbina, 2015).

• Technological advancements require workforce training. This adds to the costs of Smoke and Mirrors B.

VRIO Analysis

Smoke and Mirrors B uses VRIO Analysis to assess and evaluate the company resources to determine the competitiveness, and strategic advantage.

Valuable

• Smoke and Mirrors B has a strong brand image and engages in corporate social responsibility.

• Smoke and Mirrors B has a high brand recognition because of the quality of products it offers to its customers (Ariyani & Daryanto, 2018).

• The distribution system of Smoke and Mirrors B is valued all round the world. The company has been able to successfully establish strong relationships with its suppliers.

• Smoke and Mirrors B focuses on continuous innovation in its business. The company has expanded this innovation in its multiple functional areas.

• There are potential growth opportunities in the market, and Smoke and Mirrors B has been able to penetrate the market through its ability to raise large funds.

Rare

• Smoke and Mirrors B operates globally. This global presence has allowed the company to increase its customer base (Miethlich & G. Oldenburg, 2019).

• Smoke and Mirrors B has an organizational culture that promotes more teamwork, innovation, and creativity among its employees, that leads to a competitive advantage.

• Since Smoke and Mirrors B has a global presence, it allows the company to easily adapt to different cultures, norms and values.

• The risk-taking ability of Smoke and Mirrors B is strong. This provides more opportunities to the company to penetrate different markets.

Inimitable

• The inimitable resource for Smoke and Mirrors B is its high-quality products. These products have allowed consumers to make repeat purchases.

• Smoke and Mirrors B operates through multiple locations of stores in different companies, allowing easy access to products.

• Strong marketing communications have been used by Smoke and Mirrors B to attract more customers.

• Smoke and Mirrors B has been using integrated technology that has allowed it to offer competitive pricing to its customers (Ariwibowo, Saputro, & Haryanto, 2021).

• Smoke and Mirrors B maintains an excellent customer service that has enabled it to have a high brand engagement.

Organization

• Strong financial position has allowed Smoke and Mirrors B to explore more product development opportunities.

• Smoke and Mirrors B is successfully maintaining the efficiency and effectiveness of its business operations with the help of more integrated and advanced technology.

• Employees are given both in-house and off-the-job training opportunities by Smoke and Mirrors B that allow more skills development (Adnan, Abdulhamid, & Sohail, 2018).

• The strong value chain and distribution network has enabled Smoke and Mirrors B to increase its revenue through the sale of its products.

Marketing Mix

Marketing Mix is needed by Smoke and Mirrors B to formulate effective strategies to achieve the company objectives.

Product

• Smoke and Mirrors B has five product categories. Each of these categories has a product line that involves more variety of products (Išoraitė, 2016).

• Highly differentiated products are offered by Smoke and Mirrors B to its customers. These distinctive products are not easily available at competitors.

• The products of Smoke and Mirrors B are of higher quality, and thus, customers pay more prices for these products.

• Smoke and Mirrors B designs products with traditional designs giving customers more product variety.

• Smoke and Mirrors B offers multiple sizes for its every product to make it easy for its customers to select the right product.

• Warranty and same-day delivery option if also provided by Smoke and Mirrors B to its customers.

Price

• Smoke and Mirrors B follows a competitive pricing strategy.

• To attract more customers, bundle pricing has also been used by the company.

• Little higher prices are charged for products that are sold online because of the delivery costs (Thabit & Raewf, 2018).

• Optional product pricing strategy is also adopted by Smoke and Mirrors B for some of its products, such as a base product is offered for a certain price, and there are separate prices for its accessories.

• Regular promotional prices are also offered by Smoke and Mirrors B to its customers.

Place

• Smoke and Mirrors B uses two channels for its product distribution. This includes online selling and through own stores.

• There are more than multiple stores owned by Smoke and Mirrors B globally. This ensures easy product availability to customers (Pogorelova, Yakhneeva, & Agafonova, 2016).

• Smoke and Mirrors B has partnered with delivery service companies to distribute its products effectively to consumers.

• Smoke and Mirrors B has also adopted an omni-channel distribution system.

Promotion

• Smoke and Mirrors B uses a traditional promotional strategy that involves TV advertisements (Fan, Y.K.Lau, & Zhao, 2015).

• Social media advertisements are also adopted by Smoke and Mirrors B to increase brand awareness.

• Smoke and Mirrors B takes part in various events and exhibitions as a way of promoting its products.

• Large sales force is used to provide the customers with a more personal experience.

• Smoke and Mirrors B also makes use of influencer marketing to increase the demand for its products.

• Regular content and deals are posted on the social media pages of Smoke and Mirrors B to attract and retain customers.

Value Chain Analysis

Smoke and Mirrors B can use Value Chain Analysis to identify and assess inter-relationships as well as interdependencies.

Primary Activities

• Smoke and Mirrors B’s primary activities involves the production and selling of products to the final consumers (Mintz, J.Gilbride, & Lenk, 2021).

• Smoke and Mirrors B has a strong relationship with the suppliers. This ensures that the product is received, stored, and distributed in a timely manner.

• Operational activities of Smoke and Mirrors B are effectively aligned.

• For inbound logistics, after the arrival of raw material, the company processes it to manufacture the final product (Hasan, Nekmahmud, & Yajuan, 2019).

• In terms of outbound logistics, Smoke and Mirrors B has been able to set up optimal costs as well as efficient delivery processes to deliver the product on time.

• Smoke and Mirrors B invests in its sales and marketing activities to build relationships with customers.

• Marketing funnel approach is used by Smoke and Mirrors B to effectively devise and build sales and marketing activities.

• Smoke and Mirrors B offers both pre-sale and post-sales services to its customers.

Secondary Activities

• Smoke and Mirrors B has an effective infrastructure that has allowed the company to successfully optimize its value chain.

• The competitive pressure in terms of employee skill development, motivation, and commitment is reduced as Smoke and Mirrors B has developed a strong HRM (Linkov, Carluccio, Pritchard, & Bhreasail, 2020).

• Smoke and Mirrors B uses a cost minimization approach to reduce its costs by analyzing the costs associated with training and hiring the employees.

• Smoke and Mirrors B has been using integrated technology in its value chain activities. This includes technological customer support, research and data analytics concerning product design, and automated software.

• The procurement activities of Smoke and Mirrors B are effectively optimized with its inbound, outbound, and operational activities (Maheswari, Yudoko, & Adhiutama, 2019).

Market Penetration Strategies

• Smoke and Mirrors B can increase the capacity of its production so it can reach more of the customers in its existing market.

• Smoke and Mirrors B can focus on controlling the overhead costs so that it can offer competitive pricing that can attract customers of the market (Dawes, 2018).

• Investments can be made by Smoke and Mirrors B in marketing and sales activities to increase the chances of successful market penetration.

• Smoke and Mirrors B can design and develop a content that increases customer engagement within a particular marketplace.

• Smoke and Mirrors B can assess and identify more enhanced distribution networks (Radpour, Mondal, & Kumar, 2017).

• Improved distribution systems and supply chains can improve the product accessibility for the customers, making it easier for Smoke and Mirrors B to penetrate the market.

• Smoke and Mirrors B can adopt price cuts in its products to compete in the market. This will give a company a competitive edge over its competitors.

• Smoke and Mirrors B can plan strategies where it can focus on acquiring the leading players of the market. Such acquisitions will give the company an opportunity to reach more customer segments.

• Strategic partnerships and joint ventures agreements can be signed by Smoke and Mirrors B to mitigate the risk factors, and to gain customer groups of the market.

• Smoke and Mirrors B can come up with new and innovative features in its already existing product for the market (Daouda, Barth, & T. M. Ingenbleek, 2019).

Market Development Strategies

• It is important for Smoke and Mirrors B to invest in the research and development department so potential markets can be identified (Hilman, Bohari, & Abdullah, 2018).

• Regional expansion strategy can be used by Smoke and Mirrors B for growth purposes. This will also take into consideration the cultural differences.

• Smoke and Mirrors B should also consider to expand its business operations in the international market. This will allow access to a larger customer base.

• New customer groups and segments should be explored by Smoke and Mirrors B.

• Smoke and Mirrors B should also invest in brand-building activities as it will give an opportunity to reach more potential customers (C. Koks & M. Kilika, 2016).

• Smoke and Mirrors B should consider the market education in terms of its product. The company can significantly increase its sales by giving product awareness to new segments.

Product Development Strategies

• Smoke and Mirrors B can come up with new improvements and modifications in the existing products to attract the market.

• Smoke and Mirrors B should undergo the NPD process, so the company is able to assess and identify new points for its customers.

• Regular investments in the research and development will help Smoke and Mirrors B to develop something new and innovative that can give a competitive advantage (Kalogiannidis & Mavratzas, 2020).

• Smoke and Mirrors B can develop new products by getting into more strategic partnerships.

Diversification Strategies

• Smoke and Mirrors B can adopt vertical diversification to develop business. This can be done by adding more products to the existing portfolio (Kalogiannidis & Mavratzas, 2020).

• Horizontal integration can also be adopted by Smoke and Mirrors B, where the company can enter into a completely new product development phase that does not exist in the current product line.

• Smoke and Mirrors B can also consider to conglomerate by starting a different business.

Conclusion

Based on all the models and frameworks discussed above, it is concluded that Smoke and Mirrors B should focus on widening the existing product portfolio. Moreover, the psychological pricing strategy can be adopted. Smoke and Mirrors B should also maintain close relationships with its suppliers to benefit from lower prices. Similarly, Smoke and Mirrors B should develop more integrated outbound logistics for its perishable items. It is also important to continue producing quality and innovative products, so Smoke and Mirrors B is less affected by the new emerging competition in the industry.

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