Introduction
The steady growth of the Asian Cosmetic industry in the past few years draws the attention of the responsible individuals across the in the sector. Local companies are competing to grab a lot of profits expected from the global market (Tan, 2016). Specifically, the rapid rise of the organization is in conjunction with the increase in growth of economy in the area, which has remained constant from 1980s. Additionally, there is rapid growth of the Asian cosmetic industry which contributes to a change in life style and directing the people towards natural and green products. moreover, it lures individuals to consume innovative products and technologies to enhance development (Gusharan & Kumar, 2018). Biotech is a multinational cosmetic company owned by American family.
It manufactures and market cosmetics and health products. This company is aiming at venturing into the Asian market through Asian division. Its specific target markets include India, South Korea, Japan, Singapore, Philippines, China, and Thailand. The company aims at marketing its products in the entire Asia through targeting these states in the future ten years. Consequently, the company requires a detailed market analysis and an entry plan that will assist it in developing effective approach to the new market environment (Gusharan & Kumar, 2018). Through consideration of this perspective, this paper will provide a comprehensive report analysis on the external and internal factors that hinder the company and the market and a detailed business approach for Biotech as it pursues to outcompete the rapid growing and competitive industry.
SWO Analysis of Biotech and Asian Cosmetic Industry
Strengths
Biotech is a worldwide family possessed American company organization which specialize on selling of natural products to promote health and beauty. There is an establishment of a strong, persuasive profile, and name that enables from the time of its foundation in the early 20th century in the United States. Over many years, it is regarded as household name in the North America., Europe and Brazil. The company experiences a progress and success in all its activities among the existing related industries. Similarly, in the Asian market, Biotech is at the peak in the global market by becoming famous through its brand name that attracts large number of customers that will enable it to compete effectively with the local and global players. Secondly, Biotech is mainly involved in the manufacturing, designing, and selling natural products with a focus on health and beauty. This characteristic makes the company to be famous in both North America and Europe. There is a rising demand of natural products in Asia and an increased in number of people is still expected since many people turn back to green and natural. Its global name enables it to apply its long professionalism history to and innovativeness to develop natural products to win and persuade more consumers. The company is large and deals with diversified products through a reflection on the nature of the society. The existence of the large population implies the existence of opportunities to survive and grow into the new market.
The company target is three billion people with the largest population coming from India and China with a proximate population of above one billion. Secondly, there is a diversity in the population and cultural factors that affect the industry in many ways. There is an increase in change of life style in the Asian market especially women who divert to the application of natural cosmetics that is contrary to the past practice. Furthermore, in Asia many people are aware of natural products., lotions which moisturize the body, sun screen creams, face wash, hair gels among other products which are developed as a result of their excessive demand. People are increasingly becoming conscious about their physical appearance. Additionally, the increase in disposable income for different people in many parts of Asia implies an expansion of market. the rapid developing economies is another evidence of the strength of the market and its ability to survive among its competitors.
Weaknesses
Biotech is new to the region; therefore, it requires aggressive approaches to outdo the competitors with some possessing long history of specialization in the market. These competitors have established a well brand name such as Kao, Shiseido, Revlon, among others. These companies have flooded the Asian region with new products to outcompete Biotech (Chung, 2014). The consumers can tend to stick to the familiar products posing threat to the progress of the Biotech company. Biotech also has a weakness of diversification of the population and the target market. This means people have different behavior that will influence their preferences. The company cannot determine what people from different countries prefer. there is also diverse culture that affect the preference of people in different ways. For example, the Indian culture is more focused on the traditional Indian way of living and religion while in Japan, and South Korea tends to be modernized. It is difficult for the Biotech to understand these diverse market population. There is an increase in Gross Domestic Product. There is an increase purchase power for the people.
Threats
Competition is the major threat to the Biotech industry. Despite of the long history of the company operation, there are many competitors that strives to outcompete the company. there are different threats that affect the growth of the industry and its entry into the market. for instance, the variation in the laws and politics in both local and global level threatens the position of the company at the global level. The diplomatic relationship between Asian nations and the United States affect the trade between the two sides. For example, the relationship between China and the United States is sometimes affect the trade operations of Biotech.
PESTEL Analysis of the Cosmetic Industry
Political factors.
The actions of the government are the main political factors that influence the economy. These include laws and regulations on labor, tax, consumer protection, employment, environmental, trade, and standards. Additionally, diplomatic and trade relationship between nations can affect the economy and the players in the sectors.
Legal factors
This factor is likely to affect Biotech as it advances into the Asian market. There are no strict laws on employment in India, Philippines, and Thailand. However, in Japan, South Korea, and Singapore have strict regulation minimum wage level of for workers in different sectors. These laws affect Biotech during the period of venturing into the market, establish manufacturing units, and sales outlets.
Economic factors
Inflation, interest, rate of exchange and other economic growth have an impact on any economy and the existing players. In Asia the targeted economies grow at different ways. Inflation rate is dynamic in Thailand and Philippines compared to other nations. there is variation in interest rates. Decrease in the rate of interest influence people to borrow and withdraw more. This implies that many people spend money and enjoy low interest rates.
Social
Social factors are the contributions of culture, population, age distribution, growth rates, attributes of career, social and ethnic background among others affect the economy. These factors are important in segmentation of markets by the Biotech in its effort to reach Asia. as economy increases, the people focus on the necessity of life and luxuries. Matters of spiritual needs and physical look make people to spend more on cosmetics and beauty. This will promote the success of the Biotech company.
Technological factors
Biotech operates with technology. It applies modern technology to develop natural products in unique manner and design which provides a competitive advantage in the market. Asian market major on technology as a major drive for the economy. China, Japan, and South Korea are among the technology warriors in the world. People prefer products that are modern and technically produced. Biotech will have to present itself as a high-tech company with its products made from innovations and modern technologies that merit the people’s needs.
Porter’s Five Forces Analysis
Competitive rivalry
Asian cosmetic company is both large and continuously growing. It offers space for new entrants and many players. This creates stiff competition in the market. There is multiple cooperation apart from manufacturing companies and other small and medium companies which offer stiff competition in the market. this implies that Biotech should develop an efficient product and marketing approach to meet the needs of the customers. the company should ensure natural development of its products and ensure innovativeness in its production.
Supplier power
There is need to develop adequate supply of plants and other raw materials consistently. Luckily, there are a lot of potential suppliers in the Asian market. India, Thailand, and China are among the leading producers of places which are used for herbal development of cosmetic products. manufacturing these countries means an increase in demand for the natural raw materials and there are alternatives that the suppliers can shift to if there are no good deals. Biotech therefore needs comprehensive strategy that will enable the suppliers to be readily available to give the products as expected.
Buyer power
The buyer power in the focused market is comparatively high. Adults are the major targets of the Biotech, with women forming the largest part of the market. Asian market is considerately possessing higher buyer power because there are opportunities to shift to other product lines or brands incase they discover dissatisfaction of the brand. It is important to note that manufacturing companies which deals with cosmetics give the customers chance to shift from one product to another.
Threat of substitution
There is low possibility of customers to find an alternative product to substitute a newly introduced product. These products are made of raw materials from the natural surroundings. It is i9mportant to note that an individual cannot develop natural cosmetics when there is no good supply of natural raw materials which come from plants. Under such circumstances it is difficult for the customers to find options for substitution when looking for naturally manufactured cosmetics.
Threats of new entrants
There can be an effect on the company position in Asia when other players enter the market. Specifically, the natural product business is more lucrative because it is a new area and many companies are perusing it. Secondly, there are no strict rules that offer restriction to the new entrants. Any company can get into the market and give products to the consumers when it requires a legal and regulation in each market.
Explanation of results for SWOT, PESTEL, and Porter’s Five Forces Analyses
From the SWOT, PESTEL, and Porter’s Five Forces analyses, one can conclude that Biotech has an opportunity to access the new market and stabilize itself recognizable competitor in the product line of natural commodities. The analysis reveals that the strengths outdo the weaknesses foe both the company and the industry. The fact that the market has a characteristic of a large population, increase in peoples’ purchasing power, stable and rising GDP and varying lifestyle means that there are higher chances for the new entrants like Biotech to survive. Moreover, the political, social, economic, environmental, and other legal factors and how they influence market is different from every country. This implies that there is an opportunity for the country to design an entry which is customized for every market. consequently, it is important to note that it is important to note that the buyer and the power of the supplier is stronger in these markets. This is an evidence that Biotech should acquire an effective approach to ensure maintenance of its position in the market.
Major goals of the business strategy
From the finding of the SWOT, PESTEL, and the Five Forces analyses, Biotech’s business unit approach should focus in attaining five important goals. First, it should attain an entry approach that will offer the company a starting competitive edge. This will ensure a comprehensive study on the market and identification of existing gaps and orienting the products towards addressing the status. Secondly, it is important to carry out an initial promotion and establish a marketing strategy at the beginning of the business. This will enable Biotech to give first impression during the introduction of the product to the market. Third, the objective of sustainable approach should be developed from the start of entry. This will give the company an approach that will enable it to consolidate its market after entering into the, market and the attainment of the competitive advantage over the rivals.
Fourth, the business should meet the goals of the existing customers and the demand in the market. as the company progress towards the Asian market, it should have a well-planned market view of what people need in cosmetics. This is possible through giving information that informs the customers. Information on the ingredients and the effects of the product will enable the customers to determine the level of naturality. Finally, there should be a readily available market response approach that will enable it to solve the merging forces in the market, customers orders, and other market dynamics. Some of the aspects include demand of goods in the market, and customization of the products to fulfil the market needs in the counties in Asia. This case calls for the Internet media strategy to engage and communicate with customers to understand their demands and concerns.
References
Chung, K. (2014). Symbiosis in the World of Beauty: The Cosmetics Industry and the Western Beauty Ideal. Retrieved November, 26, 2014.
Gursharan, S., & Kumar, S. S. (2018). Mannans: An overview of properties and application in food products. International journal of biological macromolecules.
Tan, R. (2016). Asia: Where the Cosmetics and Skin Care Industry Reigns Supreme. Retrieved from http://www.asianscientist.com/2016/02/features/asia-cosmetics-skin-careindustry-reigns-supreme/.