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 - – supply chains are disrupted by pandemic , there is increasing trade war between United States & China, 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, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
central banks are concerned over increasing inflation, increasing household debt because of falling income levels, 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 -
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.
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.
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.
Diverse revenue streams
– Jahwa Shower is present in almost all the verticals within the industry. This has provided firm in Shanghai Jahwa: Liushen Shower Cream (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
Highly skilled collaborators
– Jahwa Shower has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Shanghai Jahwa: Liushen Shower Cream (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
Successful track record of launching new products
– Jahwa Shower has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jahwa Shower has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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.
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.
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 -
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 decision making process
– As mentioned earlier in the report, Jahwa Shower has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Jahwa Shower even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Jahwa Shower has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
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 operating costs
– Compare to the competitors, firm in the HBR case study Shanghai Jahwa: Liushen Shower Cream (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Jahwa Shower 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Jahwa Shower is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Jahwa Shower needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jahwa Shower to focus more on services rather than just following the product oriented approach.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Shanghai Jahwa: Liushen Shower Cream (A), in the dynamic environment Jahwa Shower has struggled to respond to the nimble upstart competition. Jahwa Shower has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 -
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.
Developing new processes and practices
– Jahwa Shower can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jahwa Shower to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Jahwa Shower to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Jahwa Shower has opened avenues for new revenue streams for the organization in the industry. This can help Jahwa Shower to build a more holistic ecosystem as suggested in the Shanghai Jahwa: Liushen Shower Cream (A) case study. Jahwa Shower can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Jahwa Shower can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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 -
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jahwa Shower can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shanghai Jahwa: Liushen Shower Cream (A), Jahwa Shower may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Jahwa Shower in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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) .
Technology acceleration in Forth Industrial Revolution
– Jahwa Shower has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Jahwa Shower needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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.
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.