House of Tara: Building an African Beauty Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of House of Tara: Building an African Beauty Company
In early 2014, Tara Fela-Durotoye, the founder and CEO of House of Tara, was contemplating one of her greatest achievements to date. Her company had been named by L'OrA?al as a strategic distributor for Nigeria of leading international cosmetics brand Maybelline - marking another milestone in its ongoing success story. Lauded as a pioneer in the beauty and makeup industry in Nigeria, House of Tara was credited with launching the country's first makeup studio, establishing the first makeup school in West Africa, and creating a full makeup product line entirely dedicated to African women. From a small venture in the late 90s, the company had grown into a sophisticated organization with a broad array of products and services, a multi-channel distribution network, professional makeup schools, and high-touch customer service. With operations throughout the country, House of Tara was well placed to take advantage of the continued growth in cosmetics sales, fuelled by an emerging middle class with more disposable income. But despite the apparent opportunities, a number of distribution challenges remained. Unlike a typical beauty company operating through retail channels, House of Tara had a limited pool of beauty sales reps through which to reach the end customer. Since the mass-market segment accounted for the majority of cosmetics sales, how best could the products be made widely available? The case describes the evolution of House of Tara from a 'one woman show' initially offering bridal makeup services to a fully-fledged beauty business with a network of resellers and branded stores throughout the country. It gives an update on the latest developments that have seen House of Tara become the leading indigenous makeup brand in Nigeria, with a focus on how the local retail environment shaped its distribution strategy to reach its target markets.
Swot Analysis of "House of Tara: Building an African Beauty Company" written by Jesper Sorensen, Laurent De Clara includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tara Makeup facing as an external strategic factors. Some of the topics covered in House of Tara: Building an African Beauty Company case study are - Strategic Management Strategies, Emerging markets, Entrepreneurship, Marketing, Product development, Sales and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the House of Tara: Building an African Beauty Company casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, supply chains are disrupted by pandemic , technology disruption, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing government debt because of Covid-19 spendings,
increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of House of Tara: Building an African Beauty Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in House of Tara: Building an African Beauty Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tara Makeup, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tara Makeup 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 House of Tara: Building an African Beauty Company can be done for the following purposes –
1. Strategic planning using facts provided in House of Tara: Building an African Beauty Company case study
2. Improving business portfolio management of Tara Makeup
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tara Makeup
Strengths House of Tara: Building an African Beauty Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tara Makeup in House of Tara: Building an African Beauty Company Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Tara Makeup 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.
Diverse revenue streams
– Tara Makeup is present in almost all the verticals within the industry. This has provided firm in House of Tara: Building an African Beauty Company 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.
Ability to lead change in Innovation & Entrepreneurship field
– Tara Makeup 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 Tara Makeup in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Tara Makeup 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 House of Tara: Building an African Beauty Company - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Tara Makeup in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Tara Makeup 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 Jesper Sorensen, Laurent De Clara 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.
Successful track record of launching new products
– Tara Makeup has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tara Makeup 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– House of Tara: Building an African Beauty Company firm has clearly differentiated products in the market place. This has enabled Tara Makeup to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Tara Makeup to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the House of Tara: Building an African Beauty Company 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.
Highly skilled collaborators
– Tara Makeup 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 House of Tara: Building an African Beauty Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Tara Makeup has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in House of Tara: Building an African Beauty Company 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
- Tara Makeup 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 Tara Makeup is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in House of Tara: Building an African Beauty Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses House of Tara: Building an African Beauty Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of House of Tara: Building an African Beauty Company are -
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 Tara Makeup supply chain. Even after few cautionary changes mentioned in the HBR case study - House of Tara: Building an African Beauty Company, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tara Makeup vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tara Makeup is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study House of Tara: Building an African Beauty Company can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study House of Tara: Building an African Beauty Company, in the dynamic environment Tara Makeup has struggled to respond to the nimble upstart competition. Tara Makeup has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study House of Tara: Building an African Beauty Company 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 House of Tara: Building an African Beauty Company can leverage the sales team experience to cultivate customer relationships as Tara Makeup is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As House of Tara: Building an African Beauty Company HBR case study mentions - Tara Makeup 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 operating costs
– Compare to the competitors, firm in the HBR case study House of Tara: Building an African Beauty Company 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 Tara Makeup 's lucrative customers.
Need for greater diversity
– Tara Makeup 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study House of Tara: Building an African Beauty Company, is just above the industry average. Tara Makeup 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study House of Tara: Building an African Beauty Company, it seems that the employees of Tara Makeup 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.
Skills based hiring
– The stress on hiring functional specialists at Tara Makeup 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Tara Makeup 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.
Opportunities House of Tara: Building an African Beauty Company | 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 House of Tara: Building an African Beauty Company are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Tara Makeup can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Tara Makeup 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 Tara Makeup in the consumer business. Now Tara Makeup can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Tara Makeup 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 House of Tara: Building an African Beauty Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tara Makeup to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Tara Makeup can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Tara Makeup 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tara Makeup in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tara Makeup can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Tara Makeup 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.
Better consumer reach
– The expansion of the 5G network will help Tara Makeup to increase its market reach. Tara Makeup 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tara Makeup can use these opportunities to build new business models that can help the communities that Tara Makeup operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Tara Makeup can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Tara Makeup can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Threats House of Tara: Building an African Beauty Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study House of Tara: Building an African Beauty Company are -
High dependence on third party suppliers
– Tara Makeup 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.
Consumer confidence and its impact on Tara Makeup 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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tara Makeup can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tara Makeup 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 Tara Makeup.
Shortening product life cycle
– it is one of the major threat that Tara Makeup is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Tara Makeup 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. Tara Makeup 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.
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. Tara Makeup needs to understand the core reasons impacting the Innovation & Entrepreneurship 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 House of Tara: Building an African Beauty Company, Tara Makeup may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tara Makeup 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 House of Tara: Building an African Beauty Company .
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.
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 House of Tara: Building an African Beauty Company 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 House of Tara: Building an African Beauty Company 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 House of Tara: Building an African Beauty Company 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 House of Tara: Building an African Beauty Company 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 House of Tara: Building an African Beauty Company 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 Tara Makeup needs to make to build a sustainable competitive advantage.
