Case Study Description of Renova Toilet Paper: Escaping the Commoditization Trap - Abridged
Renova, a Portuguese toilet paper manufacturer, is battling to survive in a stagnant, commoditised market dominated by international giants and private labels. To grow and remain independent, CEO Paulo Pereira da Silva is considering three options: 1) price competition, 2) private label manufacturing, or 3) new functional innovations. There may be another way, but that is far from clear. What should he do? And how should the chosen strategy be implemented?
Authors :: Yakov Bart, Pierre Chandon, Stven Sweldens, Raquel Seabra de Sousa
Swot Analysis of "Renova Toilet Paper: Escaping the Commoditization Trap - Abridged" written by Yakov Bart, Pierre Chandon, Stven Sweldens, Raquel Seabra de Sousa includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Renova Toilet facing as an external strategic factors. Some of the topics covered in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged case study are - Strategic Management Strategies, Competitive strategy, Innovation and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Renova Toilet Paper: Escaping the Commoditization Trap - Abridged casestudy better are - – there is increasing trade war between United States & China, increasing energy prices, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, there is backlash against globalization,
increasing commodity prices, geopolitical disruptions, etc
Introduction to SWOT Analysis of Renova Toilet Paper: Escaping the Commoditization Trap - Abridged
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Renova Toilet, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged can be done for the following purposes –
1. Strategic planning using facts provided in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged case study
2. Improving business portfolio management of Renova Toilet
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 Renova Toilet
Strengths Renova Toilet Paper: Escaping the Commoditization Trap - Abridged | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Renova Toilet in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged Harvard Business Review case study are -
Ability to recruit top talent
– Renova Toilet is one of the leading recruiters in the industry. Managers in the Renova Toilet Paper: Escaping the Commoditization Trap - Abridged are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Renova Toilet is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Renova Toilet 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 Yakov Bart, Pierre Chandon, Stven Sweldens, Raquel Seabra de Sousa 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.
Diverse revenue streams
– Renova Toilet is present in almost all the verticals within the industry. This has provided firm in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Renova Toilet Paper: Escaping the Commoditization Trap - Abridged firm has clearly differentiated products in the market place. This has enabled Renova Toilet to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Renova Toilet to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Renova Toilet 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.
Organizational Resilience of Renova Toilet
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Renova Toilet does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Sales & Marketing field
– Renova Toilet 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 Renova Toilet in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Renova Toilet in the sector have low bargaining power. Renova Toilet Paper: Escaping the Commoditization Trap - Abridged has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Renova Toilet to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Renova Toilet has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Renova Toilet to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Renova Toilet is one of the most innovative firm in sector. Manager in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Renova Toilet Paper: Escaping the Commoditization Trap - Abridged are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, it seems that the employees of Renova Toilet don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Renova Toilet 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.
Need for greater diversity
– Renova Toilet has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Yakov Bart, Pierre Chandon, Stven Sweldens, Raquel Seabra de Sousa suggests that, Renova Toilet 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.
No frontier risks strategy
– After analyzing the HBR case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Renova Toilet is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged can leverage the sales team experience to cultivate customer relationships as Renova Toilet is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Renova Toilet 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.
Lack of clear differentiation of Renova Toilet products
– To increase the profitability and margins on the products, Renova Toilet needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Renova Toilet 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.
Opportunities Renova Toilet Paper: Escaping the Commoditization Trap - Abridged | 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged are -
Loyalty marketing
– Renova Toilet 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.
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. Renova Toilet can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Renova Toilet 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.
Creating value in data economy
– The success of analytics program of Renova Toilet has opened avenues for new revenue streams for the organization in the industry. This can help Renova Toilet to build a more holistic ecosystem as suggested in the Renova Toilet Paper: Escaping the Commoditization Trap - Abridged case study. Renova Toilet can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Renova Toilet 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, Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Renova Toilet 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.
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 Renova Toilet in the consumer business. Now Renova Toilet can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Renova Toilet can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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.
Learning at scale
– Online learning technologies has now opened space for Renova Toilet 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.
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 Renova Toilet 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, Renova Toilet 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Renova Toilet is facing challenges because of the dominance of functional experts in the organization. Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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.
Using analytics as competitive advantage
– Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Renova Toilet to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Renova Toilet Paper: Escaping the Commoditization Trap - Abridged External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged are -
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 Renova Toilet.
Consumer confidence and its impact on Renova Toilet 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
– Renova Toilet 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. Renova Toilet can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Renova Toilet with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Renova Toilet needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Renova Toilet 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged .
Regulatory challenges
– Renova Toilet 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.
Shortening product life cycle
– it is one of the major threat that Renova Toilet is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, Renova Toilet 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 .
Stagnating economy with rate increase
– Renova Toilet 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.
Weighted SWOT Analysis of Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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 Renova Toilet needs to make to build a sustainable competitive advantage.
