Case Study Description of Shanghai Jahwa: Liushen Shower Cream (A)
Shanghai Jahwa is the largest domestically-owned Chinese manufacturer of cosmetics and personal care products. In recent years, it has been part of a booming market with growth rates of 35% a year. This spectacular growth rate has attracted and been fuelled by the entry of major multinationals, including Unilever, Procter & Gamble, Shiseido, Kao, and others. The marketing challenge for Shanghai Jahwa is to carve out viable and defensible positions in the marketplace in the face of competition from some of the most powerful global players in the industry. This case illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette into the shower cream product category. Unilever already has a strong and established shower cream on the market under its well-known Lux brand. In addition, other international players are entering the market. The case calls for the development of a brand strategy, taking into consideration market position, brand extension, and competitive issues.
Swot Analysis of "Shanghai Jahwa: Liushen Shower Cream (A)" written by Niraj Dawar, Peter Yuan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jahwa Shower facing as an external strategic factors. Some of the topics covered in Shanghai Jahwa: Liushen Shower Cream (A) case study are - Strategic Management Strategies, Competition and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Shanghai Jahwa: Liushen Shower Cream (A) casestudy better are - – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
increasing commodity prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Shanghai Jahwa: Liushen Shower Cream (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shanghai Jahwa: Liushen Shower Cream (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jahwa Shower, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jahwa Shower operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Shanghai Jahwa: Liushen Shower Cream (A) can be done for the following purposes –
1. Strategic planning using facts provided in Shanghai Jahwa: Liushen Shower Cream (A) case study
2. Improving business portfolio management of Jahwa Shower
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Jahwa Shower
Strengths Shanghai Jahwa: Liushen Shower Cream (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jahwa Shower in Shanghai Jahwa: Liushen Shower Cream (A) Harvard Business Review case study are -
High brand equity
– Jahwa Shower has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Jahwa Shower to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Jahwa Shower is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Jahwa Shower is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Shanghai Jahwa: Liushen Shower Cream (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Jahwa Shower in the sector have low bargaining power. Shanghai Jahwa: Liushen Shower Cream (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Jahwa Shower to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Jahwa Shower
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jahwa Shower does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Jahwa Shower has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Jahwa Shower are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Sales & Marketing field
– Jahwa Shower is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Jahwa Shower in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Jahwa Shower has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Shanghai Jahwa: Liushen Shower Cream (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Jahwa Shower in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Jahwa Shower is one of the most innovative firm in sector. Manager in Shanghai Jahwa: Liushen Shower Cream (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Sales & Marketing industry
– Shanghai Jahwa: Liushen Shower Cream (A) firm has clearly differentiated products in the market place. This has enabled Jahwa Shower to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Jahwa Shower to invest into research and development (R&D) and innovation.
Analytics focus
– Jahwa Shower is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Niraj Dawar, Peter Yuan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Shanghai Jahwa: Liushen Shower Cream (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanghai Jahwa: Liushen Shower Cream (A) are -
Capital Spending Reduction
– Even during the low interest decade, Jahwa Shower has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Shanghai Jahwa: Liushen Shower Cream (A), is just above the industry average. Jahwa Shower needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Jahwa Shower needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Products dominated business model
– Even though Jahwa Shower has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Shanghai Jahwa: Liushen Shower Cream (A) should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Jahwa Shower has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, Niraj Dawar, Peter Yuan suggests that, Jahwa Shower is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Jahwa Shower supply chain. Even after few cautionary changes mentioned in the HBR case study - Shanghai Jahwa: Liushen Shower Cream (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Jahwa Shower vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Jahwa Shower has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Shanghai Jahwa: Liushen Shower Cream (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Jahwa Shower has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Jahwa Shower is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Shanghai Jahwa: Liushen Shower Cream (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Jahwa Shower, firm in the HBR case study Shanghai Jahwa: Liushen Shower Cream (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Shanghai Jahwa: Liushen Shower Cream (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Shanghai Jahwa: Liushen Shower Cream (A) are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Jahwa Shower in the consumer business. Now Jahwa Shower can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Jahwa Shower can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Jahwa Shower can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Jahwa Shower can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Jahwa Shower can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Better consumer reach
– The expansion of the 5G network will help Jahwa Shower to increase its market reach. Jahwa Shower will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Jahwa Shower has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Shanghai Jahwa: Liushen Shower Cream (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jahwa Shower to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Jahwa Shower can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Loyalty marketing
– Jahwa Shower has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Jahwa Shower can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Shanghai Jahwa: Liushen Shower Cream (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Jahwa Shower to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Jahwa Shower can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jahwa Shower is facing challenges because of the dominance of functional experts in the organization. Shanghai Jahwa: Liushen Shower Cream (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Jahwa Shower to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Shanghai Jahwa: Liushen Shower Cream (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shanghai Jahwa: Liushen Shower Cream (A) are -
Stagnating economy with rate increase
– Jahwa Shower can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Jahwa Shower demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Jahwa Shower.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Jahwa Shower business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Jahwa Shower high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Jahwa Shower will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jahwa Shower can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Shanghai Jahwa: Liushen Shower Cream (A) .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Jahwa Shower needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Environmental challenges
– Jahwa Shower needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Jahwa Shower can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Jahwa Shower in the Sales & Marketing sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Jahwa Shower with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Jahwa Shower needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Shanghai Jahwa: Liushen Shower Cream (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Shanghai Jahwa: Liushen Shower Cream (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Shanghai Jahwa: Liushen Shower Cream (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Shanghai Jahwa: Liushen Shower Cream (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Shanghai Jahwa: Liushen Shower Cream (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Jahwa Shower needs to make to build a sustainable competitive advantage.