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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, geopolitical disruptions, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, technology disruption, 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 -
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.
Operational resilience
– The operational resilience strategy in the Renova Toilet Paper: Escaping the Commoditization Trap - Abridged 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.
Highly skilled collaborators
– Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
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.
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.
Effective Research and Development (R&D)
– Renova Toilet 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 Renova Toilet Paper: Escaping the Commoditization Trap - Abridged - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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 -
High cash cycle compare to competitors
Renova Toilet 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.
Products dominated business model
– Even though Renova Toilet 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 - Renova Toilet Paper: Escaping the Commoditization Trap - Abridged should strive to include more intangible value offerings along with its core products and services.
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.
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.
Slow to strategic competitive environment developments
– As Renova Toilet Paper: Escaping the Commoditization Trap - Abridged HBR case study mentions - Renova Toilet 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.
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.
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.
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.
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.
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.
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.
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 -
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. Renova Toilet 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. Renova Toilet 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.
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.
Manufacturing automation
– Renova Toilet 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Renova Toilet 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 Renova Toilet to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Renova Toilet can use these opportunities to build new business models that can help the communities that Renova Toilet operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Better consumer reach
– The expansion of the 5G network will help Renova Toilet to increase its market reach. Renova Toilet will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Renova Toilet in the Sales & Marketing sector and impact the bottomline of the organization.
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.
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.
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.
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.
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 .
Technology acceleration in Forth Industrial Revolution
– Renova Toilet has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Renova Toilet 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
– Renova Toilet 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. 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.
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.
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. Renova Toilet 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 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.