Making China Beautiful: Shiseido and the China Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Making China Beautiful: Shiseido and the China Market
Describes the multinational growth of Shiseido, the world's fourth-largest cosmetics company, with a focus on its strategy in China since 1981. Explores the challenges facing firms in the globalization of a culturally specific industry such as cosmetics. The Japanese company displayed an early interest in international expansion, but its early investments were lost during World War II. Thereafter, it sought to build businesses in Europe and North America, but was challenged by market conditions quite different from those in Japan. Even within its home market, deregulation and the entry of foreign firms during the 1990s led to a significant loss in market share. Shiseido entered China in 1981 and built Aupres, a large cosmetics brand specifically aimed at Chinese women. Further growth followed, and in 2003, plans were announced to build a large network of voluntary chain stores. Highlights managerial challenges of growing the China business further in the face of increasing competition and provides a framework for discussing the challenges of prioritizing the allocation of resources in a global business.
Authors :: Geoffrey G. Jones, Akiko Kanno, Masako Egawa
Swot Analysis of "Making China Beautiful: Shiseido and the China Market" written by Geoffrey G. Jones, Akiko Kanno, Masako Egawa includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shiseido Cosmetics facing as an external strategic factors. Some of the topics covered in Making China Beautiful: Shiseido and the China Market case study are - Strategic Management Strategies, Competition, Entrepreneurship, Globalization, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Making China Beautiful: Shiseido and the China Market casestudy better are - – technology disruption, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, talent flight as more people leaving formal jobs, geopolitical disruptions,
central banks are concerned over increasing inflation, increasing commodity prices, etc
Introduction to SWOT Analysis of Making China Beautiful: Shiseido and the China Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Making China Beautiful: Shiseido and the China Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shiseido Cosmetics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shiseido Cosmetics 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 Making China Beautiful: Shiseido and the China Market can be done for the following purposes –
1. Strategic planning using facts provided in Making China Beautiful: Shiseido and the China Market case study
2. Improving business portfolio management of Shiseido Cosmetics
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 Shiseido Cosmetics
Strengths Making China Beautiful: Shiseido and the China Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shiseido Cosmetics in Making China Beautiful: Shiseido and the China Market Harvard Business Review case study are -
Diverse revenue streams
– Shiseido Cosmetics is present in almost all the verticals within the industry. This has provided firm in Making China Beautiful: Shiseido and the China Market 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.
Successful track record of launching new products
– Shiseido Cosmetics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shiseido Cosmetics 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Making China Beautiful: Shiseido and the China Market firm has clearly differentiated products in the market place. This has enabled Shiseido Cosmetics to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Shiseido Cosmetics to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Shiseido Cosmetics 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 Making China Beautiful: Shiseido and the China Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Shiseido Cosmetics 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 Geoffrey G. Jones, Akiko Kanno, Masako Egawa 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.
Training and development
– Shiseido Cosmetics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Making China Beautiful: Shiseido and the China Market 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 switching costs
– The high switching costs that Shiseido Cosmetics 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 lead change in Strategy & Execution field
– Shiseido Cosmetics 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 Shiseido Cosmetics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Shiseido Cosmetics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shiseido Cosmetics 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.
Strong track record of project management
– Shiseido Cosmetics is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Shiseido Cosmetics in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Making China Beautiful: Shiseido and the China Market 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.
Weaknesses Making China Beautiful: Shiseido and the China Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Making China Beautiful: Shiseido and the China Market are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Making China Beautiful: Shiseido and the China Market, is just above the industry average. Shiseido Cosmetics 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Making China Beautiful: Shiseido and the China Market, it seems that the employees of Shiseido Cosmetics 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.
Increasing silos among functional specialists
– The organizational structure of Shiseido Cosmetics is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Shiseido Cosmetics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shiseido Cosmetics to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Shiseido Cosmetics has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Making China Beautiful: Shiseido and the China Market 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 Shiseido Cosmetics 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Making China Beautiful: Shiseido and the China Market, in the dynamic environment Shiseido Cosmetics has struggled to respond to the nimble upstart competition. Shiseido Cosmetics has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Shiseido Cosmetics 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.
Skills based hiring
– The stress on hiring functional specialists at Shiseido Cosmetics 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.
Slow decision making process
– As mentioned earlier in the report, Shiseido Cosmetics 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. Shiseido Cosmetics 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Geoffrey G. Jones, Akiko Kanno, Masako Egawa suggests that, Shiseido Cosmetics is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shiseido Cosmetics is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Making China Beautiful: Shiseido and the China Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Making China Beautiful: Shiseido and the China Market | 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 Making China Beautiful: Shiseido and the China Market are -
Leveraging digital technologies
– Shiseido Cosmetics 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shiseido Cosmetics 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, Making China Beautiful: Shiseido and the China Market, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shiseido Cosmetics 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 Shiseido Cosmetics to hire the very best people irrespective of their geographical location.
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 Shiseido Cosmetics 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.
Buying journey improvements
– Shiseido Cosmetics can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Making China Beautiful: Shiseido and the China Market 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.
Manufacturing automation
– Shiseido Cosmetics 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.
Building a culture of innovation
– managers at Shiseido Cosmetics 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shiseido Cosmetics 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.
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. Shiseido Cosmetics 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. Shiseido Cosmetics 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shiseido Cosmetics 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.
Loyalty marketing
– Shiseido Cosmetics has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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 Shiseido Cosmetics in the consumer business. Now Shiseido Cosmetics can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Shiseido Cosmetics 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 Making China Beautiful: Shiseido and the China Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shiseido Cosmetics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Making China Beautiful: Shiseido and the China Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Making China Beautiful: Shiseido and the China Market are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shiseido Cosmetics 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 Making China Beautiful: Shiseido and the China Market .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Making China Beautiful: Shiseido and the China Market, Shiseido Cosmetics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Environmental challenges
– Shiseido Cosmetics 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. Shiseido Cosmetics can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Shiseido Cosmetics 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Shiseido Cosmetics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Shiseido Cosmetics 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.
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.
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. Shiseido Cosmetics 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.
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.
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 Shiseido Cosmetics in the Strategy & Execution sector and impact the bottomline of the organization.
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. Shiseido Cosmetics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Shiseido Cosmetics has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Shiseido Cosmetics 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.
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 Shiseido Cosmetics.
Weighted SWOT Analysis of Making China Beautiful: Shiseido and the China Market 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 Making China Beautiful: Shiseido and the China Market 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 Making China Beautiful: Shiseido and the China Market 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 Making China Beautiful: Shiseido and the China Market 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 Making China Beautiful: Shiseido and the China Market 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 Shiseido Cosmetics needs to make to build a sustainable competitive advantage.
