Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola
In 2012, Sanofi, a French pharmaceutical company, was considering forming a joint venture with the American soft drinks giant Coca-Cola to develop and commercialize a new line of beauty drinks, "Beautific," which would provide health and beauty benefits to consumers. Rumours about the partnership in the press had been met with anger from Sanofi's employees and skepticism from market analysts. It was unclear whether the initiative made sense from a strategic point of view for Sanofi. How different was the initiative from similar past projects that had been met with reluctance by consumers? What were the implications of internal dissent within Sanofi? Venturing into the beauty drinks business might signal a shift by Sanofi away from research and development-driven drugs. Would association with Coca-Cola, a company often decried for contributing to poor health, help or damage the reputation of a pharmaceutical company like Sanofi?
Swot Analysis of "Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola" written by Ali Taleb, Jon Capus includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sanofi Drinks facing as an external strategic factors. Some of the topics covered in Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola case study are - Strategic Management Strategies, Joint ventures, Manufacturing, Marketing, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola casestudy better are - – technology disruption, wage bills are increasing, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, there is backlash against globalization,
increasing energy prices, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sanofi Drinks, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sanofi Drinks 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola can be done for the following purposes –
1. Strategic planning using facts provided in Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola case study
2. Improving business portfolio management of Sanofi Drinks
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 Sanofi Drinks
Strengths Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sanofi Drinks in Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola Harvard Business Review case study are -
Effective Research and Development (R&D)
– Sanofi Drinks 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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.
Successful track record of launching new products
– Sanofi Drinks has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sanofi Drinks 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.
Ability to lead change in Strategy & Execution field
– Sanofi Drinks 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 Sanofi Drinks in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Sanofi Drinks is one of the most innovative firm in sector. Manager in Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Strategy & Execution industry
– Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola firm has clearly differentiated products in the market place. This has enabled Sanofi Drinks to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sanofi Drinks to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Sanofi Drinks digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sanofi Drinks 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.
Low bargaining power of suppliers
– Suppliers of Sanofi Drinks in the sector have low bargaining power. Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sanofi Drinks to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Sanofi Drinks 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 Sanofi Drinks is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Sanofi Drinks 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.
Ability to recruit top talent
– Sanofi Drinks is one of the leading recruiters in the industry. Managers in the Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Sanofi Drinks 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola, in the dynamic environment Sanofi Drinks has struggled to respond to the nimble upstart competition. Sanofi Drinks has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Sanofi Drinks has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Sanofi Drinks even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Sanofi Drinks 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola, is just above the industry average. Sanofi Drinks 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.
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 Sanofi Drinks supply chain. Even after few cautionary changes mentioned in the HBR case study - Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sanofi Drinks vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Sanofi Drinks 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.
High cash cycle compare to competitors
Sanofi Drinks has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Sanofi Drinks has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola, it seems that the employees of Sanofi Drinks 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.
Low market penetration in new markets
– Outside its home market of Sanofi Drinks, firm in the HBR case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola | 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sanofi Drinks 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. Sanofi Drinks 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 Strategy & Execution industry, but it has also influenced the consumer preferences. Sanofi Drinks can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sanofi Drinks is facing challenges because of the dominance of functional experts in the organization. Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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.
Leveraging digital technologies
– Sanofi Drinks 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.
Building a culture of innovation
– managers at Sanofi Drinks 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.
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. Sanofi Drinks can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sanofi Drinks can use these opportunities to build new business models that can help the communities that Sanofi Drinks operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sanofi Drinks can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Sanofi Drinks in the consumer business. Now Sanofi Drinks can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Sanofi Drinks can develop new processes and procedures in Strategy & Execution 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sanofi Drinks 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, Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Sanofi Drinks can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Sanofi Drinks to increase its market reach. Sanofi Drinks 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Sanofi Drinks in the Strategy & Execution sector and impact the bottomline of the organization.
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. Sanofi Drinks 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.
Consumer confidence and its impact on Sanofi Drinks 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
– Sanofi Drinks 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. Sanofi Drinks can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sanofi Drinks with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sanofi Drinks 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola .
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 Sanofi Drinks.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sanofi Drinks can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Sanofi Drinks needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Sanofi Drinks is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Sanofi Drinks 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.
Weighted SWOT Analysis of Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Beautific: Sanofi's Initiative to Enter the 'Beauty Drinks' Market with Coca-Cola 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 Sanofi Drinks needs to make to build a sustainable competitive advantage.