L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance
This case depicts an actual, real sequence of events in L'Oreal's Active Cosmetics Supply Chain. The case provides an illustration of the challenges facing large, multi-national organizations in aligning their supply chain planning along several dimensions. The span of the planning is from customers in several markets to the centralized production at the single source factory. The framework for laying out the facts of the case is the senior operations management request to conduct a supply chain planning audit on the Active Cosmetics planning process. The audit request was a direct response to complaints regarding customer service levels by general management. The case begins by setting the narrative that sets the audit in motion. Key actors across the supply chain speak their voices through testimony to the auditor, who serves as protagonist in the story of the case. This vehicle permits the case to express different points of view with objectivity, allowing the reader to consider the validity of each actor's behaviour using that actor's perspective. The case ends with a challenge to the reader to finish what the narrator has started. Having seen the case through his eyes, the reader must now experience the rest of the story as the narrator experienced, and prepare their own analysis and presentation for senior management.
Swot Analysis of "L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance" written by Ralf W. Seifert, Richard Markoff includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Actor's Narrator facing as an external strategic factors. Some of the topics covered in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance case study are - Strategic Management Strategies, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, increasing transportation and logistics costs,
there is backlash against globalization, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Actor's Narrator, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Actor's Narrator 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance can be done for the following purposes –
1. Strategic planning using facts provided in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance case study
2. Improving business portfolio management of Actor's Narrator
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 Actor's Narrator
Strengths L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Actor's Narrator in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Actor's Narrator 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.
Successful track record of launching new products
– Actor's Narrator has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Actor's Narrator 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.
Diverse revenue streams
– Actor's Narrator is present in almost all the verticals within the industry. This has provided firm in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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.
Effective Research and Development (R&D)
– Actor's Narrator 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance - 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
– Actor's Narrator 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 Ralf W. Seifert, Richard Markoff 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.
Highly skilled collaborators
– Actor's Narrator has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Actor's Narrator
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Actor's Narrator does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Technology & Operations field
– Actor's Narrator 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 Actor's Narrator in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Actor's Narrator digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Actor's Narrator 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
– Actor's Narrator has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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.
Superior customer experience
– The customer experience strategy of Actor's Narrator in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Actor's Narrator has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Actor's Narrator to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Actor's Narrator is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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 Actor's Narrator 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Ralf W. Seifert, Richard Markoff suggests that, Actor's Narrator 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.
Skills based hiring
– The stress on hiring functional specialists at Actor's Narrator 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance, in the dynamic environment Actor's Narrator has struggled to respond to the nimble upstart competition. Actor's Narrator has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Actor's Narrator 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.
Capital Spending Reduction
– Even during the low interest decade, Actor's Narrator 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.
Slow decision making process
– As mentioned earlier in the report, Actor's Narrator 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. Actor's Narrator 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 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 Actor's Narrator supply chain. Even after few cautionary changes mentioned in the HBR case study - L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Actor's Narrator vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Actor's Narrator needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Actor's Narrator 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.
Opportunities L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance | 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance are -
Loyalty marketing
– Actor's Narrator 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Actor's Narrator 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 Actor's Narrator to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Actor's Narrator 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Actor's Narrator in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Actor's Narrator 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. Actor's Narrator 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Actor's Narrator is facing challenges because of the dominance of functional experts in the organization. L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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
– Actor's Narrator 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.
Buying journey improvements
– Actor's Narrator can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Actor's Narrator 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, L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Actor's Narrator 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Actor's Narrator to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Actor's Narrator 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.
Creating value in data economy
– The success of analytics program of Actor's Narrator has opened avenues for new revenue streams for the organization in the industry. This can help Actor's Narrator to build a more holistic ecosystem as suggested in the L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance case study. Actor's Narrator can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Actor's Narrator can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance are -
Increasing wage structure of Actor's Narrator
– 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 Actor's Narrator.
Regulatory challenges
– Actor's Narrator 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 Technology & Operations industry regulations.
High dependence on third party suppliers
– Actor's Narrator 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.
Technology acceleration in Forth Industrial Revolution
– Actor's Narrator has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Actor's Narrator 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.
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. Actor's Narrator needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance, Actor's Narrator 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Actor's Narrator with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Actor's Narrator in the Technology & Operations sector and impact the bottomline of the organization.
Environmental challenges
– Actor's Narrator 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. Actor's Narrator can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Consumer confidence and its impact on Actor's Narrator 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.
Stagnating economy with rate increase
– Actor's Narrator 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.
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. Actor's Narrator can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Weighted SWOT Analysis of L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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 L'Oreal's ACD Supply Chain Puzzle: Diagnosing the Root Causes of Underperformance 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 Actor's Narrator needs to make to build a sustainable competitive advantage.
