Natura and Matilde: Friendly Neighbors SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Natura and Matilde: Friendly Neighbors

Natura is a company in the personal care, health, and make-up industry in Brazil. In the early 1990s, as part of its "good corporate neighbor" policy, the company made sporadic contributions to the communities surrounding its manufacturing plants and office premises. Natura's collaboration with the Matilde Maria Cremm public school, located near its Itapecerica da Serra plant, followed that pattern as well. By 1992, this association had all the characteristics of a traditional philanthropic collaboration, consisting of cash and in-kind donations made by the company to respond to specific school needs. However, Natura's management was not satisfied and regarded company contributions as patronizing. They approached their school counterparts to propose a new kind of relationship that would yield deeper and sustainable results. Both partners wanted the school to become a transformation agent in its community. They sought the assistance of CENPEC, a civil society organization devoted to strengthening public education. Matilde, a school located in an outer section of a county surrounding the state capital, managed to turn into one of the top five schools in that region of the Sao Paulo state.

Authors :: Rosa Maria Fischer, Tania Casado

Topics :: Strategy & Execution

Tags :: Joint ventures, Social enterprise, Social responsibility, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Natura and Matilde: Friendly Neighbors" written by Rosa Maria Fischer, Tania Casado includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Matilde Natura's facing as an external strategic factors. Some of the topics covered in Natura and Matilde: Friendly Neighbors case study are - Strategic Management Strategies, Joint ventures, Social enterprise, Social responsibility and Strategy & Execution.

Some of the macro environment factors that can be used to understand the Natura and Matilde: Friendly Neighbors casestudy better are - – increasing energy prices, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, technology disruption, central banks are concerned over increasing inflation, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of Natura and Matilde: Friendly Neighbors

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Natura and Matilde: Friendly Neighbors case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Matilde Natura's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Matilde Natura's 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Natura and Matilde: Friendly Neighbors can be done for the following purposes –
1. Strategic planning using facts provided in Natura and Matilde: Friendly Neighbors case study
2. Improving business portfolio management of Matilde Natura's
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Matilde Natura's

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Strengths Natura and Matilde: Friendly Neighbors | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Matilde Natura's in Natura and Matilde: Friendly Neighbors Harvard Business Review case study are -

Operational resilience

– The operational resilience strategy in the Natura and Matilde: Friendly Neighbors 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.

High switching costs

– The high switching costs that Matilde Natura's 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.

Innovation driven organization

– Matilde Natura's is one of the most innovative firm in sector. Manager in Natura and Matilde: Friendly Neighbors Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Learning organization

- Matilde Natura's 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 Matilde Natura's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Natura and Matilde: Friendly Neighbors Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Successful track record of launching new products

– Matilde Natura's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Matilde Natura's 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.

Digital Transformation in Strategy & Execution segment

- digital transformation varies from industry to industry. For Matilde Natura's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Matilde Natura's 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.

Training and development

– Matilde Natura's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Natura and Matilde: Friendly Neighbors 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.

High brand equity

– Matilde Natura's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Matilde Natura's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Superior customer experience

– The customer experience strategy of Matilde Natura's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to recruit top talent

– Matilde Natura's is one of the leading recruiters in the industry. Managers in the Natura and Matilde: Friendly Neighbors are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Low bargaining power of suppliers

– Suppliers of Matilde Natura's in the sector have low bargaining power. Natura and Matilde: Friendly Neighbors has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Matilde Natura's to manage not only supply disruptions but also source products at highly competitive prices.

Sustainable margins compare to other players in Strategy & Execution industry

– Natura and Matilde: Friendly Neighbors firm has clearly differentiated products in the market place. This has enabled Matilde Natura's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Matilde Natura's to invest into research and development (R&D) and innovation.

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Weaknesses Natura and Matilde: Friendly Neighbors | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Natura and Matilde: Friendly Neighbors are -

Interest costs

– Compare to the competition, Matilde Natura's 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.

Increasing silos among functional specialists

– The organizational structure of Matilde Natura's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Matilde Natura's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Matilde Natura's to focus more on services rather than just following the product oriented approach.

Need for greater diversity

– Matilde Natura's 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, Matilde Natura's 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.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Natura and Matilde: Friendly Neighbors, is just above the industry average. Matilde Natura's 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.

Products dominated business model

– Even though Matilde Natura's 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 - Natura and Matilde: Friendly Neighbors should strive to include more intangible value offerings along with its core products and services.

Low market penetration in new markets

– Outside its home market of Matilde Natura's, firm in the HBR case study Natura and Matilde: Friendly Neighbors needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Skills based hiring

– The stress on hiring functional specialists at Matilde Natura's 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.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Natura and Matilde: Friendly Neighbors, in the dynamic environment Matilde Natura's has struggled to respond to the nimble upstart competition. Matilde Natura's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

High operating costs

– Compare to the competitors, firm in the HBR case study Natura and Matilde: Friendly Neighbors 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 Matilde Natura's 's lucrative customers.

High cash cycle compare to competitors

Matilde Natura's 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.

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Opportunities Natura and Matilde: Friendly Neighbors | 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 Natura and Matilde: Friendly Neighbors are -

Building a culture of innovation

– managers at Matilde Natura's 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 Strategy & Execution segment.

Low interest rates

– Even though inflation is raising its head in most developed economies, Matilde Natura's 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.

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 Matilde Natura's 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Matilde Natura's can use these opportunities to build new business models that can help the communities that Matilde Natura's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Matilde Natura's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Matilde Natura's 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, Natura and Matilde: Friendly Neighbors, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. Matilde Natura's 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 Matilde Natura's 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.

Leveraging digital technologies

– Matilde Natura's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Manufacturing automation

– Matilde Natura's can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.

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 Matilde Natura's in the consumer business. Now Matilde Natura's can target international markets with far fewer capital restrictions requirements than the existing system.

Creating value in data economy

– The success of analytics program of Matilde Natura's has opened avenues for new revenue streams for the organization in the industry. This can help Matilde Natura's to build a more holistic ecosystem as suggested in the Natura and Matilde: Friendly Neighbors case study. Matilde Natura's 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, Matilde Natura's is facing challenges because of the dominance of functional experts in the organization. Natura and Matilde: Friendly Neighbors 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.

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Threats Natura and Matilde: Friendly Neighbors External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Natura and Matilde: Friendly Neighbors are -

Technology acceleration in Forth Industrial Revolution

– Matilde Natura's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Matilde Natura's needs to keep up with the evolution of technology in the Strategy & Execution 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.

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.

Shortening product life cycle

– it is one of the major threat that Matilde Natura's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Environmental challenges

– Matilde Natura's 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. Matilde Natura's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.

Regulatory challenges

– Matilde Natura's 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 Strategy & Execution industry regulations.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Matilde Natura's 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 Natura and Matilde: Friendly Neighbors .

Increasing wage structure of Matilde Natura's

– 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 Matilde Natura's.

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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Matilde Natura's in the Strategy & Execution industry. The Strategy & Execution 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.

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. Matilde Natura's needs to understand the core reasons impacting the Strategy & Execution 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 Matilde Natura's in the Strategy & Execution sector and impact the bottomline of the organization.

Stagnating economy with rate increase

– Matilde Natura's 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.

Consumer confidence and its impact on Matilde Natura's 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.

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Weighted SWOT Analysis of Natura and Matilde: Friendly Neighbors 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 Natura and Matilde: Friendly Neighbors 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 Natura and Matilde: Friendly Neighbors 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 Natura and Matilde: Friendly Neighbors 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 Natura and Matilde: Friendly Neighbors 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 Matilde Natura's needs to make to build a sustainable competitive advantage.

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