Burt’s Bees Case Analysis
Evaluation of Opportunities in the case
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-à-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.
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. 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
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
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.
The biggest threat is their competition in the market. The entry barriers have been...
References: Jeffery Timmonas, “ New Venture entrepreneurship for 21st century ”2007
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