Case Study Description of Natura: Exporting Brazilian Beauty
This case describes the development and international expansion of Natura, a Brazilian cosmetics company. The company was founded in 1969, and developed products using environmentally sustainable practices, and that were distributed using a direct sales model. The company was highly successful in the Brazil, despite the challenging Brazilian economy. Natura had successfully entered the Mexican and French markets. In 2008, it considered entering the U.S. market. The case describes the company's growth, its principles of environmental and social responsibility, its culture and organization, and its international expansion to 2008. It describes the U.S. market, and the challenges and opportunities that Natura would face if it tried to expand into the U.S.
Authors :: Bruce McKern, Leonardo Yamamoto, Daniela Bouissou, David W. Hoyt
Swot Analysis of "Natura: Exporting Brazilian Beauty" written by Bruce McKern, Leonardo Yamamoto, Daniela Bouissou, David W. Hoyt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Natura Brazilian facing as an external strategic factors. Some of the topics covered in Natura: Exporting Brazilian Beauty case study are - Strategic Management Strategies, Operations management, Social responsibility and Global Business.
Some of the macro environment factors that can be used to understand the Natura: Exporting Brazilian Beauty casestudy better are - – there is increasing trade war between United States & China, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing transportation and logistics costs, geopolitical disruptions,
increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Natura: Exporting Brazilian Beauty
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Natura: Exporting Brazilian Beauty case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Natura Brazilian, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Natura Brazilian 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 Natura: Exporting Brazilian Beauty can be done for the following purposes –
1. Strategic planning using facts provided in Natura: Exporting Brazilian Beauty case study
2. Improving business portfolio management of Natura Brazilian
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Natura Brazilian
Strengths Natura: Exporting Brazilian Beauty | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Natura Brazilian in Natura: Exporting Brazilian Beauty Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Natura Brazilian in the sector have low bargaining power. Natura: Exporting Brazilian Beauty has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Natura Brazilian to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Natura Brazilian in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Natura Brazilian has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Natura: Exporting Brazilian Beauty 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.
Sustainable margins compare to other players in Global Business industry
– Natura: Exporting Brazilian Beauty firm has clearly differentiated products in the market place. This has enabled Natura Brazilian to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Natura Brazilian to invest into research and development (R&D) and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Natura Brazilian digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Natura Brazilian 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.
Innovation driven organization
– Natura Brazilian is one of the most innovative firm in sector. Manager in Natura: Exporting Brazilian Beauty Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Natura Brazilian 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 Brazilian is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Natura: Exporting Brazilian Beauty Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Natura Brazilian 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 Natura: Exporting Brazilian Beauty - 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 Brazilian has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Natura Brazilian 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.
Strong track record of project management
– Natura Brazilian is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Natura Brazilian 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.
Highly skilled collaborators
– Natura Brazilian 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 Natura: Exporting Brazilian Beauty HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Natura: Exporting Brazilian Beauty | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Natura: Exporting Brazilian Beauty are -
High operating costs
– Compare to the competitors, firm in the HBR case study Natura: Exporting Brazilian Beauty 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 Brazilian 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Natura Brazilian is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Natura: Exporting Brazilian Beauty can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Natura: Exporting Brazilian Beauty, is just above the industry average. Natura Brazilian 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.
Low market penetration in new markets
– Outside its home market of Natura Brazilian, firm in the HBR case study Natura: Exporting Brazilian Beauty needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Bruce McKern, Leonardo Yamamoto, Daniela Bouissou, David W. Hoyt suggests that, Natura Brazilian 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 Natura Brazilian 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.
Increasing silos among functional specialists
– The organizational structure of Natura Brazilian is dominated by functional specialists. It is not different from other players in the Global Business segment. Natura Brazilian needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Natura Brazilian to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Natura: Exporting Brazilian Beauty HBR case study mentions - Natura Brazilian takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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 Natura Brazilian supply chain. Even after few cautionary changes mentioned in the HBR case study - Natura: Exporting Brazilian Beauty, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Natura Brazilian vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Natura: Exporting Brazilian Beauty, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High cash cycle compare to competitors
Natura Brazilian 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 Natura: Exporting Brazilian Beauty | 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 Natura: Exporting Brazilian Beauty are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Natura Brazilian is facing challenges because of the dominance of functional experts in the organization. Natura: Exporting Brazilian Beauty 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.
Using analytics as competitive advantage
– Natura Brazilian 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 Natura: Exporting Brazilian Beauty - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Natura Brazilian to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Natura Brazilian to increase its market reach. Natura Brazilian 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.
Developing new processes and practices
– Natura Brazilian can develop new processes and procedures in Global Business 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.
Manufacturing automation
– Natura Brazilian can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Leveraging digital technologies
– Natura Brazilian 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.
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 Brazilian in the consumer business. Now Natura Brazilian can target international markets with far fewer capital restrictions requirements than the existing system.
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 Brazilian 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
– Natura Brazilian can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Natura: Exporting Brazilian Beauty 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Natura Brazilian 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 Brazilian to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Natura Brazilian 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, Natura: Exporting Brazilian Beauty, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Natura Brazilian 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 Brazilian 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 Natura: Exporting Brazilian Beauty External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Natura: Exporting Brazilian Beauty are -
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 Brazilian needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Regulatory challenges
– Natura Brazilian 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 Global Business industry regulations.
Shortening product life cycle
– it is one of the major threat that Natura Brazilian is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Natura: Exporting Brazilian Beauty, Natura Brazilian may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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 Brazilian business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Natura Brazilian with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Natura Brazilian.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Natura Brazilian can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Natura Brazilian 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. Natura Brazilian can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Technology acceleration in Forth Industrial Revolution
– Natura Brazilian has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Natura Brazilian needs to keep up with the evolution of technology in the Global Business 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.
Stagnating economy with rate increase
– Natura Brazilian 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.
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.
Weighted SWOT Analysis of Natura: Exporting Brazilian Beauty 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 Natura: Exporting Brazilian Beauty 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 Natura: Exporting Brazilian Beauty 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 Natura: Exporting Brazilian Beauty 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 Natura: Exporting Brazilian Beauty 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 Brazilian needs to make to build a sustainable competitive advantage.