In 2002, Esteban Garriga, customer service director at Henkel Iberica, questions whether Collaborative Planning, Forecasting, and Replenishment (CPFR) would help manage retail promotions and limit their impact on the stock-outs and obsolete inventory. Describes the situation facing Henkel Iberica, the Spanish subsidiary of the German consumer products company Henkel KgaA, with respect to the management of retail promotions. The increasing number of promotions and the complexity of the company portfolio seriously taxed Henkel Iberica's sales, production, and distribution systems. Many in the organization believed the company should abandon or cut back promotions and adopt an everyday low pricing strategy. Garriga believes the solution to be in CPFR. Describes Henkel Iberica's operations and provides the necessary background to discuss whether CPFR is the adequate solution for its problems.
Authors :: F. Asis Martinez-Jerez, V.G. Narayanan, Lisa Brem
Swot Analysis of "Henkel Iberica (A)" written by F. Asis Martinez-Jerez, V.G. Narayanan, Lisa Brem includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Henkel Cpfr facing as an external strategic factors. Some of the topics covered in Henkel Iberica (A) case study are - Strategic Management Strategies, Decision making, Marketing, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Henkel Iberica (A) casestudy better are - – cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels,
geopolitical disruptions, there is backlash against globalization, etc
Introduction to SWOT Analysis of Henkel Iberica (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Henkel Iberica (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Henkel Cpfr, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Henkel Cpfr 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 Henkel Iberica (A) can be done for the following purposes –
1. Strategic planning using facts provided in Henkel Iberica (A) case study
2. Improving business portfolio management of Henkel Cpfr
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Henkel Cpfr
Strengths Henkel Iberica (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Henkel Cpfr in Henkel Iberica (A) Harvard Business Review case study are -
Ability to lead change in Technology & Operations field
– Henkel Cpfr 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 Henkel Cpfr in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Technology & Operations industry
– Henkel Iberica (A) firm has clearly differentiated products in the market place. This has enabled Henkel Cpfr to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Henkel Cpfr to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Henkel Cpfr 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.
Analytics focus
– Henkel Cpfr 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 F. Asis Martinez-Jerez, V.G. Narayanan, Lisa Brem 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.
Effective Research and Development (R&D)
– Henkel Cpfr 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 Henkel Iberica (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Henkel Cpfr digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Henkel Cpfr 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.
Successful track record of launching new products
– Henkel Cpfr has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Henkel Cpfr 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.
Learning organization
- Henkel Cpfr 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 Henkel Cpfr is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Henkel Iberica (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Henkel Cpfr is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Henkel Cpfr is present in almost all the verticals within the industry. This has provided firm in Henkel Iberica (A) 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.
Organizational Resilience of Henkel Cpfr
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Henkel Cpfr does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Henkel Cpfr in the sector have low bargaining power. Henkel Iberica (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Henkel Cpfr to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Henkel Iberica (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Henkel Iberica (A) are -
Lack of clear differentiation of Henkel Cpfr products
– To increase the profitability and margins on the products, Henkel Cpfr needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Henkel Cpfr 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. Henkel Cpfr 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.
Interest costs
– Compare to the competition, Henkel Cpfr 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Henkel Iberica (A) 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 Henkel Cpfr has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Henkel Cpfr is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Henkel Cpfr needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Henkel Cpfr to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Henkel Cpfr, firm in the HBR case study Henkel Iberica (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Henkel Cpfr 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 - Henkel Iberica (A) should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Henkel Cpfr 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 bargaining power of channel partners
– Because of the regulatory requirements, F. Asis Martinez-Jerez, V.G. Narayanan, Lisa Brem suggests that, Henkel Cpfr 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Henkel Iberica (A) 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 Henkel Cpfr 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Henkel Iberica (A), it seems that the employees of Henkel Cpfr 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.
Opportunities Henkel Iberica (A) | 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 Henkel Iberica (A) are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Henkel Cpfr is facing challenges because of the dominance of functional experts in the organization. Henkel Iberica (A) 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Henkel Cpfr can use these opportunities to build new business models that can help the communities that Henkel Cpfr operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Developing new processes and practices
– Henkel Cpfr can develop new processes and procedures in Technology & Operations 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, Henkel Cpfr 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, Henkel Iberica (A), 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. Henkel Cpfr 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 Henkel Cpfr 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.
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 Henkel Cpfr in the consumer business. Now Henkel Cpfr can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Henkel Cpfr 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 Henkel Iberica (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Henkel Cpfr to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Henkel Cpfr 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 Henkel Cpfr to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Henkel Cpfr has opened avenues for new revenue streams for the organization in the industry. This can help Henkel Cpfr to build a more holistic ecosystem as suggested in the Henkel Iberica (A) case study. Henkel Cpfr can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Henkel Cpfr to increase its market reach. Henkel Cpfr 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Henkel Cpfr 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 Henkel Cpfr 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.
Threats Henkel Iberica (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Henkel Iberica (A) are -
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Henkel Cpfr can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Henkel Cpfr business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Henkel Cpfr in the Technology & Operations industry. The Technology & Operations 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.
Technology acceleration in Forth Industrial Revolution
– Henkel Cpfr has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Henkel Cpfr needs to keep up with the evolution of technology in the Technology & Operations 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.
Environmental challenges
– Henkel Cpfr 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. Henkel Cpfr can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
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. Henkel Cpfr 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.
Stagnating economy with rate increase
– Henkel Cpfr 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Henkel Iberica (A), Henkel Cpfr may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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 Henkel Cpfr in the Technology & Operations sector and impact the bottomline of the organization.
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.
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. Henkel Cpfr needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Consumer confidence and its impact on Henkel Cpfr 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.
Weighted SWOT Analysis of Henkel Iberica (A) 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 Henkel Iberica (A) 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 Henkel Iberica (A) 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 Henkel Iberica (A) 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 Henkel Iberica (A) 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 Henkel Cpfr needs to make to build a sustainable competitive advantage.