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 - – cloud computing is disrupting traditional business models, technology disruption, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, geopolitical disruptions, there is backlash against globalization,
increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, 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 -
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.
Analytics focus
– Natura Brazilian 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 Bruce McKern, Leonardo Yamamoto, Daniela Bouissou, David W. Hoyt 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.
High brand equity
– Natura Brazilian has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Natura Brazilian to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Organizational Resilience of Natura Brazilian
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Natura Brazilian 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 Brazilian 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.
Operational resilience
– The operational resilience strategy in the Natura: Exporting Brazilian Beauty Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
Diverse revenue streams
– Natura Brazilian is present in almost all the verticals within the industry. This has provided firm in Natura: Exporting Brazilian Beauty 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.
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.
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.
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 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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Natura Brazilian 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.
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.
Need for greater diversity
– Natura Brazilian has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
Interest costs
– Compare to the competition, Natura Brazilian 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.
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.
Slow decision making process
– As mentioned earlier in the report, Natura Brazilian 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 Brazilian 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.
Lack of clear differentiation of Natura Brazilian products
– To increase the profitability and margins on the products, Natura Brazilian needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Natura Brazilian 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.
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 -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Natura Brazilian in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
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.
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 Brazilian can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Natura Brazilian has opened avenues for new revenue streams for the organization in the industry. This can help Natura Brazilian to build a more holistic ecosystem as suggested in the Natura: Exporting Brazilian Beauty case study. Natura Brazilian can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Natura Brazilian 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.
Building a culture of innovation
– managers at Natura Brazilian 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 Global Business segment.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Natura Brazilian can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Natura Brazilian can use these opportunities to build new business models that can help the communities that Natura Brazilian operates in. Secondly it can use opportunities from government spending in Global Business sector.
Learning at scale
– Online learning technologies has now opened space for Natura Brazilian 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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Natura Brazilian in the Global Business industry. The Global Business 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.
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.
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.
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.
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 Brazilian 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Natura Brazilian 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 Natura: Exporting Brazilian Beauty .
Consumer confidence and its impact on Natura Brazilian 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.
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.
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.
High dependence on third party suppliers
– Natura Brazilian 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 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.