In order to response to professor questions and other students’ posts, using ONLY the following
files:
• Chapter 5 and 6. (For analysis)
• Hopworks Case. (For Answering questions)
I must make three posts to answer each of the three questions below, and also reply to any
student. Total of four posts.
My posts and reply should be in good quality and:
• Show that I have read and thought about the case
• Show that I have analyzed the case
• Show that I have read other students’ posts
The three pages below include the questions that I must answer and other student’s posts. I must
answer the three questions, but I can reply to anyone of students’ posts.
*Please reference your work, so I can know which paragraph is an answer to which question, and
which paragraph is a reply to which student.
For example:
Paragraph.1: Question.1 answer
Paragraph.2: Question.2 answer
Paragraph.3: Question.3 answer
Paragraph.4: Question.1, 2 or 3 (Student’s Post.1
Question #1
What is Hopworks’ business-level strategy? is it cost leadership or differentiation or
something else?
Does being sustainable matter in craft brewing in Portland? In other words, is
sustainability a differentiator?
Other Students’ Posts:
1. Hopworks’ business-level strategy predominantly involves differentiation through providing consumers
with certified organic beer and being a sustainable business. Cost leadership involves creating a similar
value to your businesses competitors and differentiation involves creating a higher value than your
businesses competitors. Hopworks aims to create a higher value than its competitors (differentiation) by
having sustainable values and providing its consumers with certified organic products. Furthermore,
Hopworks does try to keep costs at a minimum wherever possible in order to due to the increased
competition arising in the craft brewing industry.
Being sustainable is definitely a differentiator and does matter in craft brewing in Portland and Hopworks
is a prime example of this. Due to their sustainability values throughout the entire organization and certified
organic beer created from organic hops, Hopworks is able to attract several consumers that are willing to
pay a premium for their products due to creating a higher value for their goods. Furthermore, another aspect
that shows that being sustainable is a differentiator is through the awards and certifications that Hopworks
receives. These awards and certifications give Hopworks a unique avenue in marketing and promotion and
aid the business to entice consumers to pay more for their products.
2. Hopwork’s business-level strategy primarily focuses on differentiating their brew from other breweries by
offering a certifiably organic beer that values environmental values and sustainable business practices.
Hopwork’s can be identified as a hybrid between cost leadership and and differentiation in wishes to
achieve a sustainable business while understanding being organic and environmentally friendly inherently
has its costly downside. Moreover, keeping costs at a minimum, especially when competing with other
organic breweries is a differentiator in itself.
Sustainability is essential in craft brewing in Portland. If a brewery is not sustainable, the business will not
meet its intended goals and will eventually become another one of the forgotten beers that did not last. With
that being said, I do not believe sustainability is a differentiator. Every businesses primary functions in
general, should preeminently plan for having a sustainable business-level strategy.
Question #2
Hopworks is a brewpub, in that it has both a restaurant and sells wholesale beer to other
retailers. As the case says, the restaurant’s profit margin is only 5% while the wholesale
business has a 25% profit margin. It seems a no-brainer to me — push the wholesale
business more because of its higher margin and perhaps, even shut down the restaurant.
Am I right?
Other Students’ Posts:
1. What you have stated of pushing the wholesale business more and perhaps even shutting down the
restaurant and focusing on the wholesale business entirely due to the 5% compared to 25% profit margin
does make financial sense especially due to the increase competition arising in the craft brewing industry
and the increasing possibility of Hopworks getting pushed by their increasing amount of competitors.
However, I do not completely agree with this decision.
I do agree with the aspect of possibly pushing the wholesale business more due to its higher profit margins,
but I do not agree with completely shutting down the restaurant. Firstly this is because 70% of Hopworks’
revenue came from on-premise sales, while wholesale accounted for only 30%. Secondly and more
importantly, this is because Hopworks has social sustainability values of doing good in their community.
Ettinger designed Hopworks to be “a central meeting spot for the neighborhood, the sought-after “third
place” between work and home, featuring a children’s play area and a free, bi-weekly story time for
toddlers.”. By shutting down the restaurant, Hopworks’ loyal customers may feel that Hopworks is starting
to change its initial values (including being certified organic and sustainable) due to closing the restaurant
and is becoming focused on creating the most financial gain.
Additionally, craft brewers focused on freshness and flavor and by focusing more on wholesale, this meant
that the beers would be transported further and would be sitting in cans in a truck and then supermarket
shelves for longer, resulting in less fresh and flavorsome beer.
Overall, in my opinion you are not entirely correct. Pushing the wholesale business does make more
financial sense due to its higher margins and I may begin to push this business slightly more than the other,
but I definitely would not shut down the restaurant.
Question #3
At the end of the case, Christian Ettinger is facing a number of issues. Let’s stick to the
following two:
(1) Pursuing new brewpub locations
(2) Expand their wholesale distribution reach by going beyond their current geographical
market area
If Ettinger hires you as his consultant, what would you tell him to do?
Other Students’ Posts:
1. As Ettinger’s consultant, I would firstly consider the pros and cons of pursuing both options. If I advised
Ettinger to proceed with the first option of opening new brewhub locations, this would mean that Hopworks
would be able to avoid the expensive distribution that would occur through expanding their wholesale
distribution. Furthermore, this first option would allow Hopworks to continue with its sustainability
practices, which would be much harder to follow if it were to expand its wholesale distribution. The
downside to this first option would be the cost of purchasing or leasing a location for Hopworks to work in
as the prices of Portland real estate was on the rise. This meant that Hopworks probably would have to
settle for a less desirable location if they were to take up this option.
The second option of expanding Hopworks wholesale distribution beyond what they currently distribute to
would definitely increase expenses as well as Hopworks carbon footprint. Furthermore, Hopworks focus
was on a sustainable community and this option definitely goes against Hopworks’ values. Also, as stated
before, increased distribution means that the beer will be less fresh and flavorsome as it will spend more
time in containers travelling and on shelves.
Overall, I would tell Ettinger to pursue the first option as it ties in more closely to Hopworks’ values. Even
if the location chosen isn’t perfectly ideal, I am sure that if Hopworks continues to stick with its principles
of being sustainable and providing consumers with certified organic beer that the businesses following will
increase.
