Herborist: A Chinese Personal Care Brand Goes Abroad SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Herborist: A Chinese Personal Care Brand Goes Abroad
Herborist, a high-end Chinese personal care brand, had been steadily expanding its share in global markets since 2008. The brand distinguished itself by integrating traditional Chinese medicine with modern biotechnology and emphasising its green and organic ingredients. Whereas the Chinese were familiar with the concept, how would Herborist sell it to consumers outside mainland China who were used to using established Japanese brands, such as Shiseido and SK-II, or Western brands, such as EstA?e Lauder and Sisley? In 2001, Herborist chose to enter the Hong Kong market and test its product in this very competitive market that was dominated by the major Japanese and Western cosmetics brands. The company opened two Herborist-branded stores in major shopping centres but was forced to close them down two years later due to bad results. The company tried again in 2007, this time distributing its products through the Hong Kong personal health and beauty chain Mannings. In 2008, Herborist entered the Paris market with the help of the cosmetics chain store Sephora. Results were mixed; although some of its products became top sellers, the overall sales figures were not very promising. By 2011, Herborist was ready for the next step in its international expansion plan. Which markets should it target and what strategy should it adopt?
Swot Analysis of "Herborist: A Chinese Personal Care Brand Goes Abroad" written by Kevin Zhou, Grace Loo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Herborist Chinese facing as an external strategic factors. Some of the topics covered in Herborist: A Chinese Personal Care Brand Goes Abroad case study are - Strategic Management Strategies, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Herborist: A Chinese Personal Care Brand Goes Abroad casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, technology disruption, challanges to central banks by blockchain based private currencies, increasing commodity prices, there is backlash against globalization,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Herborist: A Chinese Personal Care Brand Goes Abroad
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Herborist: A Chinese Personal Care Brand Goes Abroad case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Herborist Chinese, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Herborist Chinese 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 Herborist: A Chinese Personal Care Brand Goes Abroad can be done for the following purposes –
1. Strategic planning using facts provided in Herborist: A Chinese Personal Care Brand Goes Abroad case study
2. Improving business portfolio management of Herborist Chinese
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 Herborist Chinese
Strengths Herborist: A Chinese Personal Care Brand Goes Abroad | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Herborist Chinese in Herborist: A Chinese Personal Care Brand Goes Abroad Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– Herborist: A Chinese Personal Care Brand Goes Abroad firm has clearly differentiated products in the market place. This has enabled Herborist Chinese to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Herborist Chinese to invest into research and development (R&D) and innovation.
Innovation driven organization
– Herborist Chinese is one of the most innovative firm in sector. Manager in Herborist: A Chinese Personal Care Brand Goes Abroad Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Herborist Chinese has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Herborist Chinese to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Herborist Chinese in the sector have low bargaining power. Herborist: A Chinese Personal Care Brand Goes Abroad has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Herborist Chinese to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Herborist Chinese has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Herborist Chinese 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.
Diverse revenue streams
– Herborist Chinese is present in almost all the verticals within the industry. This has provided firm in Herborist: A Chinese Personal Care Brand Goes Abroad 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.
Operational resilience
– The operational resilience strategy in the Herborist: A Chinese Personal Care Brand Goes Abroad Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Herborist Chinese digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Herborist Chinese has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High switching costs
– The high switching costs that Herborist Chinese 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 Herborist Chinese 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.
Analytics focus
– Herborist Chinese 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 Kevin Zhou, Grace Loo 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.
Effective Research and Development (R&D)
– Herborist Chinese 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 Herborist: A Chinese Personal Care Brand Goes Abroad - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Herborist: A Chinese Personal Care Brand Goes Abroad | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Herborist: A Chinese Personal Care Brand Goes Abroad are -
Workers concerns about automation
– As automation is fast increasing in the segment, Herborist Chinese 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 Herborist Chinese 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 - Herborist: A Chinese Personal Care Brand Goes Abroad should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Herborist Chinese is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Herborist: A Chinese Personal Care Brand Goes Abroad can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Herborist Chinese is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Herborist Chinese needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Herborist Chinese to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Herborist: A Chinese Personal Care Brand Goes Abroad HBR case study mentions - Herborist Chinese takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Herborist Chinese 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. Herborist Chinese 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.
Interest costs
– Compare to the competition, Herborist Chinese 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Herborist: A Chinese Personal Care Brand Goes Abroad, in the dynamic environment Herborist Chinese has struggled to respond to the nimble upstart competition. Herborist Chinese has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Herborist: A Chinese Personal Care Brand Goes Abroad 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 Herborist Chinese has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Herborist: A Chinese Personal Care Brand Goes Abroad that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Herborist: A Chinese Personal Care Brand Goes Abroad can leverage the sales team experience to cultivate customer relationships as Herborist Chinese is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Herborist: A Chinese Personal Care Brand Goes Abroad, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Herborist: A Chinese Personal Care Brand Goes Abroad | 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 Herborist: A Chinese Personal Care Brand Goes Abroad are -
Using analytics as competitive advantage
– Herborist Chinese 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 Herborist: A Chinese Personal Care Brand Goes Abroad - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Herborist Chinese to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Herborist Chinese is facing challenges because of the dominance of functional experts in the organization. Herborist: A Chinese Personal Care Brand Goes Abroad 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Herborist Chinese 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, Herborist: A Chinese Personal Care Brand Goes Abroad, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Herborist Chinese 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.
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. Herborist Chinese 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. Herborist Chinese 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Herborist Chinese can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Herborist Chinese in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Herborist Chinese 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.
Creating value in data economy
– The success of analytics program of Herborist Chinese has opened avenues for new revenue streams for the organization in the industry. This can help Herborist Chinese to build a more holistic ecosystem as suggested in the Herborist: A Chinese Personal Care Brand Goes Abroad case study. Herborist Chinese can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Herborist Chinese can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Herborist Chinese can use these opportunities to build new business models that can help the communities that Herborist Chinese operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Herborist Chinese 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.
Buying journey improvements
– Herborist Chinese can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Herborist: A Chinese Personal Care Brand Goes Abroad suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Herborist: A Chinese Personal Care Brand Goes Abroad External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Herborist: A Chinese Personal Care Brand Goes Abroad are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
Technology acceleration in Forth Industrial Revolution
– Herborist Chinese has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Herborist Chinese 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Herborist Chinese 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
– Herborist Chinese 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. Herborist Chinese can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Herborist: A Chinese Personal Care Brand Goes Abroad, Herborist Chinese 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 .
Shortening product life cycle
– it is one of the major threat that Herborist Chinese is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Herborist Chinese business can come under increasing regulations regarding data privacy, data security, etc.
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. Herborist Chinese 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, Herborist Chinese 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 Herborist: A Chinese Personal Care Brand Goes Abroad .
Regulatory challenges
– Herborist Chinese 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 Herborist Chinese with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Herborist Chinese can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Herborist: A Chinese Personal Care Brand Goes Abroad 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 Herborist: A Chinese Personal Care Brand Goes Abroad 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 Herborist: A Chinese Personal Care Brand Goes Abroad 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 Herborist: A Chinese Personal Care Brand Goes Abroad 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 Herborist: A Chinese Personal Care Brand Goes Abroad 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 Herborist Chinese needs to make to build a sustainable competitive advantage.
