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 - – geopolitical disruptions, increasing commodity prices, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies,
cloud computing is disrupting traditional business models, increasing energy prices, 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 -
Successful track record of launching new products
– Renova Toilet has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Renova Toilet 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.
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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Renova Toilet digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Renova Toilet 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 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.
Superior customer experience
– The customer experience strategy of Renova Toilet in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
Learning organization
- Renova Toilet is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Renova Toilet is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Renova Toilet Paper: Escaping the Commoditization Trap - Abridged Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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 -
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.
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 Renova Toilet supply chain. Even after few cautionary changes mentioned in the HBR case study - Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Renova Toilet vulnerable to further global disruptions in South East Asia.
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.
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.
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.
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.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, in the dynamic environment Renova Toilet has struggled to respond to the nimble upstart competition. Renova Toilet has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Renova Toilet Paper: Escaping the Commoditization Trap - Abridged, is just above the industry average. Renova Toilet needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, 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 -
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.
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.
Developing new processes and practices
– Renova Toilet 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Renova Toilet can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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 .
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.
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.
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.
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.
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 .
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.
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 Renova Toilet business can come under increasing regulations regarding data privacy, data security, etc.
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.
