The Multichannel Challenge at Natura in Beauty and Personal Care SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Multichannel Challenge at Natura in Beauty and Personal Care
Faced with declining market share and sales, Natura, Brazil's second largest brand in the cosmetics, fragrances, and toiletries market, expanded its customer reach by moving from a direct-sales company to a multichannel company. In 2014, Natura added online catalogs, physical stores, and drugstores to its well-established direct-selling model, but the results were disappointing. Between 2014 and 2016, three different Natura CEOs attempted to lead the company in the strategic transition to focus less on the direct sales consultants and more on reaching the end consumers directly with multiple channels and touchpoints. On October 2016, the company's board appointed its former commercial vice president, JoA?o Paulo Ferreira, as the most recent CEO. Ferreira's challenge was to find the right balance between the direct-selling and other channel formats to market Natura, thus enabling it to thrive in the face of intense competition in the beauty and personal care market in Brazil.
Authors :: Paul W. Farris, Leandro Guissoni, Kusum Ailawadi, Murillo Boccia
Swot Analysis of "The Multichannel Challenge at Natura in Beauty and Personal Care" written by Paul W. Farris, Leandro Guissoni, Kusum Ailawadi, Murillo Boccia includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Natura Direct facing as an external strategic factors. Some of the topics covered in The Multichannel Challenge at Natura in Beauty and Personal Care case study are - Strategic Management Strategies, Performance measurement and Sales & Marketing.
Some of the macro environment factors that can be used to understand the The Multichannel Challenge at Natura in Beauty and Personal Care casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, geopolitical disruptions,
increasing household debt because of falling income levels, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of The Multichannel Challenge at Natura in Beauty and Personal Care
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Multichannel Challenge at Natura in Beauty and Personal Care case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Natura Direct, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Natura Direct 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 The Multichannel Challenge at Natura in Beauty and Personal Care can be done for the following purposes –
1. Strategic planning using facts provided in The Multichannel Challenge at Natura in Beauty and Personal Care case study
2. Improving business portfolio management of Natura Direct
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Natura Direct
Strengths The Multichannel Challenge at Natura in Beauty and Personal Care | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Natura Direct in The Multichannel Challenge at Natura in Beauty and Personal Care Harvard Business Review case study are -
Ability to recruit top talent
– Natura Direct is one of the leading recruiters in the industry. Managers in the The Multichannel Challenge at Natura in Beauty and Personal Care are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Natura Direct in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Natura Direct
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Natura Direct does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Natura Direct 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.
High switching costs
– The high switching costs that Natura Direct 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 Sales & Marketing field
– Natura Direct 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 Natura Direct in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Natura Direct 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 Paul W. Farris, Leandro Guissoni, Kusum Ailawadi, Murillo Boccia 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
– Natura Direct 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 The Multichannel Challenge at Natura in Beauty and Personal Care HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Natura Direct has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Multichannel Challenge at Natura in Beauty and Personal Care 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.
Learning organization
- Natura Direct 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 Natura Direct is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Multichannel Challenge at Natura in Beauty and Personal Care Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Natura Direct 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 The Multichannel Challenge at Natura in Beauty and Personal Care - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Natura Direct has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Natura Direct 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.
Weaknesses The Multichannel Challenge at Natura in Beauty and Personal Care | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Multichannel Challenge at Natura in Beauty and Personal Care are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Multichannel Challenge at Natura in Beauty and Personal Care, it seems that the employees of Natura Direct 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.
Aligning sales with marketing
– It come across in the case study The Multichannel Challenge at Natura in Beauty and Personal Care that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case The Multichannel Challenge at Natura in Beauty and Personal Care can leverage the sales team experience to cultivate customer relationships as Natura Direct is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul W. Farris, Leandro Guissoni, Kusum Ailawadi, Murillo Boccia suggests that, Natura Direct 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 cash cycle compare to competitors
Natura Direct 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.
Products dominated business model
– Even though Natura Direct 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 - The Multichannel Challenge at Natura in Beauty and Personal Care should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Multichannel Challenge at Natura in Beauty and Personal Care 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 Natura Direct has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study The Multichannel Challenge at Natura in Beauty and Personal Care 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 Natura Direct 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Natura Direct 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Natura Direct is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Multichannel Challenge at Natura in Beauty and Personal Care can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Natura Direct products
– To increase the profitability and margins on the products, Natura Direct 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, Natura Direct 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. Natura Direct 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.
Opportunities The Multichannel Challenge at Natura in Beauty and Personal Care | 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 The Multichannel Challenge at Natura in Beauty and Personal Care are -
Creating value in data economy
– The success of analytics program of Natura Direct has opened avenues for new revenue streams for the organization in the industry. This can help Natura Direct to build a more holistic ecosystem as suggested in the The Multichannel Challenge at Natura in Beauty and Personal Care case study. Natura Direct can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Natura Direct in the consumer business. Now Natura Direct can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Natura Direct is facing challenges because of the dominance of functional experts in the organization. The Multichannel Challenge at Natura in Beauty and Personal Care 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.
Building a culture of innovation
– managers at Natura Direct 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 Sales & Marketing segment.
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 Natura Direct 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.
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. Natura Direct can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Natura Direct can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Natura Direct can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Natura Direct 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Natura Direct 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 Natura Direct to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Natura Direct 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. Natura Direct 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Natura Direct can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Natura Direct 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.
Threats The Multichannel Challenge at Natura in Beauty and Personal Care External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Multichannel Challenge at Natura in Beauty and Personal Care are -
High dependence on third party suppliers
– Natura Direct 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.
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. Natura Direct 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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Natura Direct 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. Natura Direct needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
Stagnating economy with rate increase
– Natura Direct 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.
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 Natura Direct business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Natura Direct has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Natura Direct needs to keep up with the evolution of technology in the Sales & Marketing 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Multichannel Challenge at Natura in Beauty and Personal Care, Natura Direct may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Regulatory challenges
– Natura Direct 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 Sales & Marketing industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Natura Direct 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 The Multichannel Challenge at Natura in Beauty and Personal Care .
Consumer confidence and its impact on Natura Direct 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.
Increasing wage structure of Natura Direct
– 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 Natura Direct.
Weighted SWOT Analysis of The Multichannel Challenge at Natura in Beauty and Personal Care 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 The Multichannel Challenge at Natura in Beauty and Personal Care 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 The Multichannel Challenge at Natura in Beauty and Personal Care 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 The Multichannel Challenge at Natura in Beauty and Personal Care 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 The Multichannel Challenge at Natura in Beauty and Personal Care 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 Natura Direct needs to make to build a sustainable competitive advantage.
