International Strategy of Natura

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As the sales in Latin America were increasing and finally making profit, Natura decided to take on the West world by entering France in 2005. The strategy adopted there was again different as Natura opened a store in Paris which was more of a place where people could try the products and learn about habits in Brazil. This is why the company decided to sell only the Ekos line which the company defined in its website as the “line directly inspired by ancestral Brazilian traditions. Its ingredients come from the Brazilian biodiversity”. Again, Natura chose to bet on the fact that the country of origin is very important and that Brazil has a lot to offer in cosmetics. But Natura’s faced another problem: French people are not willing to buy products with paraben. That was the first time someone makes this comment and Natura immediately stopped using this ingredient. Today, we can see on their website that this is one of their motto.

Since then, Natura is doing well and continued its expansion in Latin America as the company does not believe in the potential of other markets like Russia or China where all products has to be tested on animals which is totally against the values of Natura. Without mentioning that the French store was making only few revenues. This is why the company entered Mexico in 2006 and Columbia in 2007.

In Mexico, Natura opened a store following the Parisian model except that it does not sold products. This was more a place where Natura’s managers and sales representatives could meet. This shows that Natura really take the lessons and learned from its former mistakes. Indeed, with this new Mexican store, Natura is building a strong and sustainable relationship with its workers.

4. Natura’s environment today: Porter’s 5 forces analysis

Since its creation in 1969, the external environment of Natura’s business has changed a lot. And that is for sure that this Porter’s 5 forces analysis has evolved. So, what is the situation today? [pic 4]

- Rivalry among existing competitors

The competition in the cosmetics industry is very strong so the rivalry is high. Indeed, as we saw in the introduction, there are many companies competing by adopting different strategies (mass production or nor, organic cosmetics…). Not to mention that Brazil is the third largest segment for beauty and care products. The rivalry in Brazil is also high as this is a huge consumer of cosmetics products and mainly cosmetics products for women. Also, some companies has established itself a string position in Brazil for years such as Avon which even was a model and inspiration for Natura.

- Threat of new entrants

On one hand, entering the market of the organic cosmetics could seem to be a good opportunities as people tend more and more to buy products that respect the environment. On the other hand, to enter this market, a company has to obtain several accreditations and respect very strict norms such as dermatological tests. This is why the threat of new entrants is medium.

- Bargaining power of buyers

The bargaining power of buyers is medium. Indeed, Natura has different types of buyers which are its customers and its sales representatives. The bargaining power of the customers is low as the bargaining power of sales representatives is high. Actually, sales representatives can chose which products to sell and by doing so can influence customers on which products to buy.

- Threat of substitute products or services

The threat of substitute products or services is high as there are many other companies that offer organic products such as Yves Rocher, The Body Shop or Avon. More than that, people can chose to buy other products from the mass market coming from other giant companies like L’Oréal or Nivea, for example.

- Bargaining power of suppliers

The bargaining power of suppliers is high has they are not numerous. Indeed, the less they are, the more they have power. As Natura has a strong commitment to the environment and respect of the forest, not many suppliers can fulfill its requirements. Also, the ingredients used by Natura come from only 36 rural communities which has signed a partnership agreements with the company. This commitment to the environment is partly what create value to Natura’s product is also what enable the suppliers to have more power.

Conclusion

In conclusion, Natura’s success relies on several key points. First, Natura failed by using a global strategy meaning using the same products and strategy in its different markets. So, the company finally adopted a multidomestic strategy adapting the offer to the different markets but the company has been struggling during a few time to finalize this strategy. Then, after a long time, Natura finally accepted the fact that the centralized model of the company has to be changed to a decentralized model. And finally there is the differentiation by keeping its prices during the devaluation of the currency in Argentina.

Today, Natura is one of the leaders of the cosmetics industry in Latin America with 1,421,000 consultants (1,175,000 in Brazil) but still the French market remains insufficient and what makes Natura’s competitive advantage in Latin America becomes a competitive disadvantage in other markets such as Russia or Asia. So, the international expansion of Natura could be limited and may have reached an end. Effectively, from 2010 to 2016, Natura has not been to any other countries.

Finally, if Natura has find the good strategy for the Latin American market it seem that another effort has to be done to find the good strategy to adopt in the Western markets.

BIBLIOGRAPHY

Jones, G. (2012). The Growth Opportunity That Lies Next Door. Harvard Business Review, pp.141-145.

Naturabrasil.fr. (2016). Natura Brasil - Cosmétiques d'origine naturelle. [online] Available at: https://www.naturabrasil.fr/ [Accessed 24 Dec. 2016].