Bio-Oil is a multi-purpose skin care product that has gone from being sold only in South Africa to being the No. 1 scar treatment product in 16 of the 17 countries that it is distributed. Retail sales have jumped from R3 million per annum to R1 billion from 2000 to 2008. Justin and David Letschert made key decisions to eliminate all of the other 119 products that were being manufactured by the company that they took over in 2000, and focused on the mainstay product of Bio-Oil. Union-Swiss accomplished its successful sales through the use of a hybrid distribution model that compelled its distributors in each country to communicate and share knowledge with each other. Union-Swiss also ensured that it remained focused on building the brand through limiting its activities in the value chain to that of marketing. It did this to such an extent that it created a separate entity to run the distribution of Bio-Oil in South Africa.
Swot Analysis of "Market Stretch" written by Gavin Price, Margaret Sutherland includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bio Oil facing as an external strategic factors. Some of the topics covered in Market Stretch case study are - Strategic Management Strategies, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Market Stretch casestudy better are - – central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing commodity prices, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, cloud computing is disrupting traditional business models,
there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Market Stretch case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bio Oil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bio Oil 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 Market Stretch can be done for the following purposes –
1. Strategic planning using facts provided in Market Stretch case study
2. Improving business portfolio management of Bio Oil
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 Bio Oil
Strengths Market Stretch | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bio Oil in Market Stretch Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– Market Stretch firm has clearly differentiated products in the market place. This has enabled Bio Oil to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Bio Oil to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Bio Oil in the sector have low bargaining power. Market Stretch has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bio Oil to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Bio Oil is one of the most innovative firm in sector. Manager in Market Stretch Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Bio Oil digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bio Oil 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.
Superior customer experience
– The customer experience strategy of Bio Oil in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Bio Oil 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 Market Stretch HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Bio Oil has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bio Oil to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Bio Oil has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Market Stretch Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Bio Oil has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bio Oil 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.
Operational resilience
– The operational resilience strategy in the Market Stretch 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.
Cross disciplinary teams
– Horizontal connected teams at the Bio Oil 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 recruit top talent
– Bio Oil is one of the leading recruiters in the industry. Managers in the Market Stretch are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Market Stretch | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Market Stretch are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Market Stretch, in the dynamic environment Bio Oil has struggled to respond to the nimble upstart competition. Bio Oil has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Bio Oil supply chain. Even after few cautionary changes mentioned in the HBR case study - Market Stretch, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bio Oil vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Bio Oil, firm in the HBR case study Market Stretch needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Market Stretch HBR case study mentions - Bio Oil 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.
Products dominated business model
– Even though Bio Oil 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 - Market Stretch should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Bio Oil 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 operating costs
– Compare to the competitors, firm in the HBR case study Market Stretch 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 Bio Oil 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Bio Oil 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. Bio Oil 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Market Stretch 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 Bio Oil has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Bio Oil 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.
Increasing silos among functional specialists
– The organizational structure of Bio Oil is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Bio Oil needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bio Oil to focus more on services rather than just following the product oriented approach.
Opportunities Market Stretch | 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 Market Stretch are -
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. Bio Oil can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Bio Oil has opened avenues for new revenue streams for the organization in the industry. This can help Bio Oil to build a more holistic ecosystem as suggested in the Market Stretch case study. Bio Oil can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Bio Oil can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Market Stretch 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.
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 Bio Oil in the consumer business. Now Bio Oil can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Bio Oil 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.
Using analytics as competitive advantage
– Bio Oil 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 Market Stretch - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bio Oil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Bio Oil 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.
Developing new processes and practices
– Bio Oil 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bio Oil can use these opportunities to build new business models that can help the communities that Bio Oil operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Bio Oil 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.
Learning at scale
– Online learning technologies has now opened space for Bio Oil 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bio Oil 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.
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. Bio Oil 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. Bio Oil 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.
Threats Market Stretch External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Market Stretch are -
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.
High dependence on third party suppliers
– Bio Oil 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.
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. Bio Oil needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Bio Oil is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Bio Oil
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Bio Oil.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Market Stretch, Bio Oil 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 .
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 Bio Oil business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Bio Oil 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.
Environmental challenges
– Bio Oil 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. Bio Oil can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bio Oil 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.
Stagnating economy with rate increase
– Bio Oil 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.
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. Bio Oil can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Weighted SWOT Analysis of Market Stretch 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 Market Stretch 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 Market Stretch 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 Market Stretch 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 Market Stretch 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 Bio Oil needs to make to build a sustainable competitive advantage.
