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Teaching Note: Case 9 – Jamba Juice
Case Objectives
1. To investigate choice of competitive strategy in a crowded industry environment.
2. To examine how external and internal forces affect competitive strategy and options for
innovation and growth.
See the table below to determine where to use this case:
NOTE: There are both PRIMARY and Secondary chapters that can be used for this case. The
Teaching Note gives guidance for the PRIMARY use chapters, and provides suggestions if the
Chapter Use Key Concepts Additional Reading and/or
Exercises
PRIMARY
Strategy
Competitive strategy; generic
NOTE additional reading
2: External
Industry competition five forces;
NOTE financial info
3: Internal Analysis Value-chain analysis; resource-
NOTE additional reading
4: Intellectual Assets Intellectual and human capital;
6: Corporate-Level
Diversification; synergy; core
SECONDARY
CONCEPTS:
11: Strategic
Leadership
Leadership
12: Managing
Innovation
Innovation; scope of innovation
8: Entrepreneurial
Strategies
Opportunity recognition
Case Synopsis
Juice Club (which would eventually become Jamba Juice Company) was founded by Kirk Perron
and opened its first store in San Luis Obispo, California in April 1990. The company began with
a franchise strategy and opened its second and third stores in Northern and Southern California
Jamba’s core customers were health conscious consumers who led, or aspired to lead, a healthy
lifestyle. Therefore Jamba positioned its products as healthy alternatives to conventional
American fare, such as hamburgers, french fries, and ice cream. Due to vast options in size,
CEO White had instituted a new set of strategic priorities, following a business philosophy
focused on branding (attention to the product attributes, and company vision and values),
business planning (for long-term growth), culture (creating a team environment, passion for the
With competition highly fragmented in the specialty juice and smoothie industry, Jamba Juice
had a unique opportunity, but the expansion plan to evolve the business into an active lifestyle
company might have been too aggressive. With its new menu items, Jamba Juice would now be
Teaching Plan
The Jamba Juice case can be used to set the stage for a discussion of business policy and strategy
in a practical real-world environment. Most students can see themselves managing a juice bar, so
At the time of the case, Jamba Juice was at a critical juncture and uniquely positioned in the
specialty juice and smoothie industry. The competition was highly fragmented in the juice and
smoothie industry, with competitors including other juice and smoothie retailers (e.g. Juice It
NOTE – this case can also be used to illustrate marketing strategy, so could accompany a course
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign,
and also which additional readings or exercises to include to augment each discussion. Refer
back to the Case Objectives Table to identify any additional readings and/or exercises so they can
be assigned in advance.
1. How should Jamba Juice compete?
2. What are key forces in the general and industry environments that affect Jamba Juice’s
choice of strategy?
3. What internal resources and assets does Jamba Juice have that may give it a competitive
advantage?
4. How should Jamba Juice manage growth?
5. OPTIONAL QUESTION: How should leadership manage innovation in this industry, and
is Jamba Juice still entrepreneurial?
Discussion Questions and Responses
1. How should Jamba Juice compete?
Referencing Chapter 5: Formulating Business-Level Strategies -
How firms compete with each other and how they attain and sustain competitive advantages go
to the heart of strategic management. In short, the key issue becomes: why do some firms
outperform others and enjoy such advantages over time? The viability of a firm’s success is
At this point, Jamba Juice appeared to be facing two critical decisions: what it could do to
maintain its lead in the juice and smoothie market; and how much it should broaden its menu
A business-level strategy is a strategy designed for firm or a division of the firm that competes
within a single business. Within the firm’s industry environment generic strategies include basic
types of business level strategies based on breadth of target market (industrywide versus narrow
market segment) and type of competitive advantage (low-cost versus uniqueness). Here are the
See the types of competitive strategies, including the three generic strategies that are used to
overcome the five forces and achieve a competitive advantage:
●Overall cost leadership
oLow-cost-position relative to a firm’s peers
●Differentiation
oCreate products and/or services that are unique and valued
●Focus strategy
oNarrow product lines, buyer segments, or targeted geographic markets
Jamba Juice had followed a focused differentiation strategy: focused on the healthy consumer
segment; differentiated through its attention to quality products and creative store atmosphere.
Jamba Juice appeared to have been fairly successful with this strategy, in the juice and smoothie
industry. If Jamba Juice expanded its offerings to include more food, it would now compete with
firms in a slightly different yet still highly competitive environment. To what degree would its
assets and value-adding activities help it against the likes of Starbucks or McDonald’s? This
NOTE – ADDITIONAL READING, WEB LINKS AND VIDEO:
In a series of articles in late 2012, Motley Fool analysts discussed Jamba Juice’s situation:
Munarriz, R.A. 2012. Is a Smoothie War Breaking Out? MotleyFool. September 4.
http://www.fool.com/investing/general/2012/09/04/is-a-smoothie-war-breaking-out.aspx?
source=isesitlnk0000001&mrr=0.11
South, J. 2012 Why Jamba Juice Jumped. Motley Fool. October 2.
http://www.fool.com/investing/general/2012/10/02/why-jamba-juice-jumped.aspx?
source=isesitlnk0000001&mrr=0.14
Munarriz, R.A. 2012. Is Jamba the Next Teavana? Motley Fool. November 15.
http://www.fool.com/investing/general/2012/11/15/is-jamba-the-next-teavana.aspx
Caplinger, D. 2012. How Jamba Juiced Investors’ 2012 Returns. Motley Fool. December 21.
http://www.fool.com/investing/general/2012/12/21/how-jamba-juiced-investors-2012-
returns.aspx
In January 2013, CEO James White was interviewed on CNBC about the increasing competition
in the juice business. See the video here:
http://video.cnbc.com/gallery/?video=3000139247&__source=yahoo|headline|quote|video|
&par=yahoo
An investor presentation from June 2015 details some of the newer issues. Go to
http://ir.jambajuice.com/phoenix.zhtml?c=192409&p=irol-presentations and click to download
the presentation.
What does this say about Jamba Juice’s strategy going forward?
2. What are key forces in the general and industry environments that affect Jamba
Juice’s choice of strategy?
Referencing Chapter 2: Analyzing the External Environment -
Organizational leaders must become aware of factors in the overall environment that might affect
their ability to create a competitive advantage. So how do managers become environmentally
Environmental scanning involves surveillance of a firm’s external environment to predict
environmental changes and detect changes already under way. It is a BIG PICTURE viewpoint
Environmental monitoring is a firm’s analysis of the external environment that tracks the
evolution of environmental trends, sequences of events, or streams of activities. Leaders need to
The challenges for Jamba Juice include increased competition in the juice and smoothie industry,
how to appeal to a wider range of consumers from differing demographics, and how to reposition
What factors or trends might be most important to Jamba Juice? To assess how the external
environment might affect the firm’s strategy, it’s necessary to take a look at the factors in the
Political-Legal: given the franchise model used by many fast food restaurants, companies have
Economic: economic uncertainty was still affecting all fast food traffic – cheap alternatives such
Demographic: weather played a role, so expansion of the smoothie market tended to follow
customer relocations – if population increases occurred in the south, then fairly steady sales
Sociocultural: consumer demand had shifted from fast food, regardless of nutritional content, to
a preference for quick but healthy alternatives, especially those that provided extra benefits such
Technological: any improvements of technology used in design of store ambiance, equipment
It’s also necessary to assess the segments of the external competitive environment that include
One important question is “what business is Jamba Juice in?” Until students are sure about the
boundaries of the business, it is impossible to do an industry analysis – what is the “industry” to
be analyzed? Given Jamba Juice’s current push to enlarge the menu to include more non-juice
1
The juice and smoothie industry is a relatively young industry with few strong direct
competitors. In contrast, the fast food industry is an old and pervasive competitor. Jamba’s
Porter’s five forces model allows strategists to anticipate where the industry might be most
vulnerable. See Exhibit 2.7. The industry chosen in this example is the juice and smoothie
industry.
Based on the external environmental factor analysis, the specialty juice business has many
competitors trying to carve out a piece of the “profit” pie. There are differences between the
Rivalry
High
Substitutes
Threat
Buyers’
Suppliers’
Power
Med-High
Suggested: many rivals
compete for market share in the
southern-California-style juice
power negotiating for
seasonable, perishable commodity.
Suggested: substitutes
for the store smoothie
are easy – customers
just need a recipe and a
Threat of
NOTE – ADDITIONAL WEB LINKS TO FINANCIAL DATA AND COMPETITORS:
Find information about Jamba Juice’s current stock position and its competitors available at:
http://finance.yahoo.com/q?s=JMBA&ql=0
The broader refranchising strategy was one of the initiatives proposed in Jamba Juice’s
“BLEND” program in January 2009. According to President and CEO James White, “Today we
wanted to formally reiterate our strategic priorities to allow all of our core constituencies the
ability to understand our actions to revitalize Jamba in light of continuing weaknesses in the
And in January 2013 CEO White announced strategic priorities to focus on brand building,
product innovation, growth and store refresh programs under BLEND Plan 3.0. See
http://ir.jambajuice.com/phoenix.zhtml?c=192409&p=irol-newsArticle&ID=1775032 for details.
And here is the Jamba Juice website. See the Franchise Opportunities at the top right of the page.
Jamba does not allow single store franchises, only multi-unit agreements that require the area
In the smoothie category, Jamba Juice competes against several well-established players such as
Froots, Tropical Smoothie Cafe, Smoothie Factory, Booster Juice, and Smoothie King. Visit the
How does Jamba Juice appear to compete, and in what categories?
3. What internal resources and assets does Jamba Juice have that may give it a
competitive advantage?
Referencing Chapter 3: Analyzing the Internal Environment -
A competitive strategy is linked to the value chain, and supported by intangible assets. As can be
When one firm outperforms others by a wide margin over a long period of time, it’s important to
figure out how this could be. The answer may lie in how that firm arranges its activities and
A sample value chain analysis follows:
Value chain activity How does Jamba Juice create value for the
customer?
Primary:
Inbound logistics (distribution
facilities, material control
Emphasis on high quality ingredients. Conducted
quality assurance testing at supplier locations to ensure
Operations (efficient work flow
Emphasis on consistent product quality and attention to
Outbound logistics
(consolidation of goods, efficient
Stores were bright, clean, had a theatrical atmosphere so
customers could be entertained during food preparation.
Marketing and Sales (motivated
sales people, innovative
advertising & promotion,
Jamba Juice promoted its healthy products by stressing
healthy benefits, keeping the menu appealing,
introducing new exciting products, creating an
Service (ability to solicit
Given Jamba Juice’s emphasis on its culture, this could
Secondary (or support):
Procurement (win-win
relationships with suppliers,
reduced dependence on single
Purchased all projected product requirements at the
height of the season for each type of produce in order to
assure the highest quality and reduce product costs.
Technology development (state
of the art hardware & software,
Formal training of franchisees fostered a common
culture, focus on healthy living. Use of new point-of-
Human resource management
Franchisees were carefully screened; employees were
General Administration
access to capital, effective top
management communication,
relationships with diverse
stakeholders)
Change of strategy regarding franchisees could help get
In addition, see the concept of the resource-based view of the firm, and the three key types of
resources: tangible resources, intangible resources, and organizational capabilities. Determining
An important issue to focus on here is the importance of intangible resources like innovation and
reputation. In this consumer-based business, sustaining brand reputation is essential. Look at
