To evaluate the opportunities for Burt’s Bees in the case we would need to do an internal analysis of Burt’s Bees i. e. look into its strengths, weaknesses, threat and opportunity vis-a-vis the competition and the market scenario in 1997. Burt’s Bees’ success was hard won through 18~ to 24 months of pruning after the company’s move from Guilford, Maine in 1994. Production was extremely labor intensive in Maine due to the large supply of low-paid unskilled labor, Burt’s Bees had to automate production in North Carolina, though, to minimize the cost of its highly paid skilled labor.
Thus it is important to understand the internal environment after 1997. Hence, we should go ahead with a SWOT analysis of Burt’s Bees and understand the position of the company with a focus on internal improvement. Strengths Burt’s Bees already had presence in nearly 3000 stores across the nation in 1997. There margins were at 35 percent of their sales e. g. a lip balm which was manufactured in 23 cents was sold at $2. 25 in the stores. Burt’s Bees had entered international markets like Europe and Japan.
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The stores are now looking for products that are more innovative and would provide a pleasant experience to the customers when they come to shop. Burt’s Bees has completely revised its product list in the last ten and is adding new products at a very fast pace. This has made their bucket full of a variety of products that other players do not have. By 1997, Burt’s Bees had over 70 “Earth Friendly, Natural Personal Care Products”. Burt’s Bees are the only player in the market who are all natural and do not add any stuff like synthesized petroleum fillers or artificial preservatives.
Burt’s Bees reduces the use of unnatural substances, reuse the material and recycle the waste. They deliver what others only promise. Sales in the bath products and skin care both have shown an upward trend in the last year with the largest category growth Weaknesses Burt’s Bees till now does not have the capability to compete with all the players countering them with some or the other product. The product range has to further developed in the future. They are not operating in all personal care categories and the other players operate in most of them providing a more overall sort of solution to customers.
Even if Burt’s Bees stayed out of the retail market the competition would become fierce in manufacturing also and they still do not have a plan to counter this growing competition. They are not ready yet for a forward integration by launch their products in retail space. There are currently no guidelines in the company for food and drugs category which can be the immediate next category to enter. The strategy is not very clear regarding the expansion in to new markets and the entry of new products. The white spaces in the category need to be explored more rather than adding the products to the clutter Opportunities
Now if we look at the opportunities, we can see a lot of opportunities in front of the company, but the worrying part is the capabilities to take these opportunities: The biggest opportunity in front of Burt’s Bees is the growing trends in the personal care department. There growth has been 114 percent while the category growth has been 64 percent which is the largest till date. The next opportunity is in terms of forward integration with opening retail stores also. There was an experiment done where a retail store was opened to connect with the end user and this can be taken forward to expand the customer base further.
The other players in the market are not completely natural and this is a very big advantage for Burt’s Bees as they can leverage this in the market and advertise this as their USP to a larger audience. Threats The biggest threat is their competition in the market. The entry barriers have been decreasing and the competition is becoming more fierce by the day. Not only in the retail space but also the manufacturing space is becoming more and more competitive. The other players are investing huge amounts on expanding their distribution network and hence expanding their customer base.
Another internal threat is that Burt’s Bees does not have the capability to expand their manufacturing units and forward integrate them to their own retail outlets. This is not only a huge risk but also a huge investment which if fails can take the company with it to the dust. TWOS Analysis Now, to analyze these facts and points in a better manner we should do a TOWS analysis. In this analysis we try to see the Strength and weaknesses vis-a-vis the threats and opportunities in the following manner: Strength Weakness Opportunity Match strengths to specific opportunities
You need to invest to overcome weakness or to compensate or negate Weakness Threat These are strengths that can be used to reduce or avoid the consequences of a threat There may be little that you can do to avoid the impact. Create or import Strengths This analysis can be done for Burt’s Bees: Strength Weakness Opportunity The strength and opportunity lies in the “all natural” secret of Burt’s Bees The second thing to be mentioned here is the retail presence and the provision present for expansion in this area To tap the opportunity of leveraging on the all natural products, huge investment in terms of media spends is required to position the product in the desired space in the minds of the consumers Threat The strength that can be sued to avoid threats is the USP of natural ingredients of the personal care products This is the area where the competition would focus. The same has to be avoided from being uncovered like the incapability of forward integration Components of Burt’s Bees Supply Chain Burt’s Bees supply chain had a very simple structure. The Inbound Logistics were managed at the plant where the bee wax was available in plenty amount.
The Operations were scheduled according to the set process and the manufacturing was done according to the specific timings decided. Outbound logistics depended on the place where the products had to go. They had a strong network of outbound logistics as they had reach of more than 3000 stores. Marketing for them was a concern and the largest scope for improvement. They can do in-store marketing which was not started till now or start with outdoor campaigns which by 1997 had become popular enough to be recognized as a main stream medium of promoting your product.
Sales again was not a problem, but sales via own channel were an issue i. e. sales by own retail stores or even entering in the retail format was a challenge. There were some risks and rewards attached with the same like: Some of the risks are like mixed signals that confuse customers and distributors, lack of infrastructure to go mass market, marketing information system not yet optimized, lose bargaining power over buyers/retailers – must fight over shelf space and lastly, compete head-to-head with all mass-marketed packaged goods.
The rewards can be increase market share, increasing brand awareness, consistency with original vision “natural and earth-friendly products ultimately reaching everyone, everywhere. ” Service was fantastic and of high quality. It was majorly pre sales as in personal care very few customers would come back with a request of post sales services. Thus, the supply chain of Burt’s Bees was in place but need some corrections or improvements rather after the outbound logistics to make theirs a much bigger and successful organization