Case Study Description of Envirofit International: Cracking the BoP Market
In 2007, Envirofit International, a 501(c) (3) non-profit enterprise from Ft Collins, Colorado, USA, teamed up with the Shell Foundation to reduce indoor air pollution (IAP) in India by selling low-cost high-performance cookstoves designed to reduce carbon emissions by at least 50 percent. IAP was recognized as a silent killer in developing countries like India and a major environmental hazard in developing countries and around the world. The simple solution to this worldwide problem was a low or zero emissions cookstove. This case describes how Envirofit developed and marketed a high performance cookstove to the base of the pyramid (BoP) households in India earning $2-$7 a day and the challenges it encountered in the process. In spite of high investments in social marketing campaigns, Envirofit's push strategy did not result in strong sales growth in the BoP market segment in India. Harish Anchan, Envirofit India's country manager, and Tim Bauer, VP Operations at Envirofit, faced the daunting task of growing sales profitably in order to make the Indian venture financially sustainable. Students have the opportunity to analyze Envirofit India's market and financial performance and suggest alternatives to improve sales based on a sound understanding of consumer behavior in the Indian BoP market.
Swot Analysis of "Envirofit International: Cracking the BoP Market" written by Vijaya Narapareddy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Envirofit Bop facing as an external strategic factors. Some of the topics covered in Envirofit International: Cracking the BoP Market case study are - Strategic Management Strategies, Growth strategy, Marketing, Sustainability and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Envirofit International: Cracking the BoP Market casestudy better are - – increasing transportation and logistics costs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, technology disruption, increasing energy prices,
wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Envirofit International: Cracking the BoP Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Envirofit International: Cracking the BoP Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Envirofit Bop, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Envirofit Bop 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 Envirofit International: Cracking the BoP Market can be done for the following purposes –
1. Strategic planning using facts provided in Envirofit International: Cracking the BoP Market case study
2. Improving business portfolio management of Envirofit Bop
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Envirofit Bop
Strengths Envirofit International: Cracking the BoP Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Envirofit Bop in Envirofit International: Cracking the BoP Market Harvard Business Review case study are -
High brand equity
– Envirofit Bop has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Envirofit Bop to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Envirofit Bop 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.
Learning organization
- Envirofit Bop 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 Envirofit Bop is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Envirofit International: Cracking the BoP Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Leadership & Managing People industry
– Envirofit International: Cracking the BoP Market firm has clearly differentiated products in the market place. This has enabled Envirofit Bop to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Envirofit Bop to invest into research and development (R&D) and innovation.
Ability to lead change in Leadership & Managing People field
– Envirofit Bop 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 Envirofit Bop 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)
– Envirofit Bop 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 Envirofit International: Cracking the BoP Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Envirofit Bop is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Envirofit Bop in the sector have low bargaining power. Envirofit International: Cracking the BoP Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Envirofit Bop to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Envirofit Bop digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Envirofit Bop 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.
Ability to recruit top talent
– Envirofit Bop is one of the leading recruiters in the industry. Managers in the Envirofit International: Cracking the BoP Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Envirofit International: Cracking the BoP Market 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.
Organizational Resilience of Envirofit Bop
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Envirofit Bop does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Envirofit International: Cracking the BoP Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Envirofit International: Cracking the BoP Market are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Envirofit International: Cracking the BoP Market 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 Envirofit Bop has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Envirofit International: Cracking the BoP Market, in the dynamic environment Envirofit Bop has struggled to respond to the nimble upstart competition. Envirofit Bop has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Envirofit Bop products
– To increase the profitability and margins on the products, Envirofit Bop needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Envirofit Bop, firm in the HBR case study Envirofit International: Cracking the BoP Market needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Envirofit Bop 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.
No frontier risks strategy
– After analyzing the HBR case study Envirofit International: Cracking the BoP Market, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Capital Spending Reduction
– Even during the low interest decade, Envirofit Bop 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, Envirofit Bop is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Envirofit International: Cracking the BoP Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Envirofit Bop 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. Envirofit Bop 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.
Aligning sales with marketing
– It come across in the case study Envirofit International: Cracking the BoP Market 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 Envirofit International: Cracking the BoP Market can leverage the sales team experience to cultivate customer relationships as Envirofit Bop is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Vijaya Narapareddy suggests that, Envirofit Bop 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.
Opportunities Envirofit International: Cracking the BoP Market | 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 Envirofit International: Cracking the BoP Market are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Envirofit Bop 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. Envirofit Bop 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.
Loyalty marketing
– Envirofit Bop 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.
Creating value in data economy
– The success of analytics program of Envirofit Bop has opened avenues for new revenue streams for the organization in the industry. This can help Envirofit Bop to build a more holistic ecosystem as suggested in the Envirofit International: Cracking the BoP Market case study. Envirofit Bop can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Envirofit Bop can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Envirofit International: Cracking the BoP Market 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.
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 Envirofit Bop in the consumer business. Now Envirofit Bop can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Envirofit Bop can develop new processes and procedures in Leadership & Managing People 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.
Learning at scale
– Online learning technologies has now opened space for Envirofit Bop 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.
Leveraging digital technologies
– Envirofit Bop 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.
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 Envirofit Bop 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Envirofit Bop can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Envirofit Bop 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 Envirofit Bop 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 Leadership & Managing People segment.
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. Envirofit Bop can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Envirofit International: Cracking the BoP Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Envirofit International: Cracking the BoP Market are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Envirofit International: Cracking the BoP Market, Envirofit Bop may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Envirofit Bop can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Envirofit Bop 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 Envirofit International: Cracking the BoP Market .
Consumer confidence and its impact on Envirofit Bop 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
– Envirofit Bop 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. Envirofit Bop can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
Shortening product life cycle
– it is one of the major threat that Envirofit Bop is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Envirofit Bop in the Leadership & Managing People sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Envirofit Bop with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Envirofit Bop 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 Leadership & Managing People industry regulations.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Envirofit Bop in the Leadership & Managing People industry. The Leadership & Managing People 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.
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. Envirofit Bop 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.
Weighted SWOT Analysis of Envirofit International: Cracking the BoP Market 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 Envirofit International: Cracking the BoP Market 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 Envirofit International: Cracking the BoP Market 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 Envirofit International: Cracking the BoP Market 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 Envirofit International: Cracking the BoP Market 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 Envirofit Bop needs to make to build a sustainable competitive advantage.