Harvard Case - House of Tara: Building an African Beauty Company
"House of Tara: Building an African Beauty Company" Harvard business case study is written by Jesper Sorensen, Laurent De Clara. It deals with the challenges in the field of Entrepreneurship. The case study is 22 page(s) long and it was first published on : Apr 22, 2015
At Fern Fort University, we recommend that Tara Fela-Durotoye pursue a multi-pronged growth strategy that leverages her existing strengths in product development, branding, and marketing while strategically addressing key challenges in manufacturing processes, supply chain management, and international expansion. This strategy will focus on building a sustainable and scalable business through a combination of organic growth, strategic partnerships, and potential acquisitions.
2. Background
The case study follows Tara Fela-Durotoye, a Nigerian entrepreneur who founded House of Tara, a leading beauty and cosmetics company in Africa. Tara?s entrepreneurial journey began with a passion for beauty and a desire to create high-quality products tailored to African skin tones. House of Tara has achieved significant success through its focus on product innovation, strong branding, and effective marketing campaigns.
The case study highlights several key challenges faced by House of Tara:
- Scaling production to meet growing demand while maintaining quality standards.
- Developing a robust supply chain to ensure consistent product availability across its expanding market.
- Expanding internationally to capture new markets and achieve greater growth.
- Securing adequate funding to support ambitious growth plans.
3. Analysis of the Case Study
Framework: We will analyze the case study through the lens of the Porter?s Five Forces Framework to understand the competitive landscape and identify key opportunities and threats.
- Threat of New Entrants: The African beauty market is growing rapidly, attracting new entrants with innovative products and marketing strategies. This poses a significant threat to House of Tara?s market share.
- Bargaining Power of Suppliers: House of Tara relies on a network of suppliers for raw materials and packaging. The bargaining power of these suppliers is moderate, as there are alternative suppliers available.
- Bargaining Power of Buyers: The bargaining power of buyers is moderate. While consumers have a wide range of choices, House of Tara has established a strong brand reputation and loyal customer base.
- Threat of Substitute Products: The threat of substitute products is moderate. While there are alternative beauty brands available, House of Tara?s focus on African skin tones and cultural relevance provides a unique selling proposition.
- Competitive Rivalry: The African beauty market is highly competitive, with numerous local and international brands vying for market share. This necessitates a strong focus on innovation, marketing, and customer service to maintain a competitive advantage.
Key Findings:
- Strong Brand Equity: House of Tara enjoys strong brand recognition and loyalty among its target market.
- Limited Scalability: The current manufacturing process and supply chain infrastructure are not equipped to handle significant growth.
- International Expansion Potential: The African beauty market is expanding rapidly, offering significant opportunities for international expansion.
- Funding Requirements: Achieving ambitious growth goals requires significant financial resources.
4. Recommendations
1. Optimize Manufacturing Processes and Supply Chain Management:
- Invest in technology and automation: Implement advanced manufacturing processes and automation to increase production efficiency and scale.
- Partner with established manufacturers: Collaborate with experienced manufacturers to leverage their expertise and production capacity.
- Develop a robust supply chain: Establish a reliable and efficient supply chain to ensure consistent product availability and quality.
- Implement inventory management systems: Utilize technology-driven inventory management systems to optimize stock levels and minimize waste.
2. Expand Internationally through Strategic Partnerships and Acquisitions:
- Focus on key regional markets: Identify high-growth markets in Africa and beyond, targeting regions with strong demand for African beauty products.
- Explore strategic partnerships: Collaborate with local distributors, retailers, and influencers to establish a strong market presence.
- Consider acquisitions: Acquire existing brands or businesses in target markets to accelerate expansion and gain access to new customer bases.
3. Secure Funding through a Combination of Sources:
- Explore venture capital and private equity investment: Attract investors who understand the potential of the African beauty market and are willing to support growth.
- Consider debt financing: Secure loans from financial institutions to fund expansion projects and working capital needs.
- Utilize crowdfunding: Leverage online platforms to raise funds from a wider base of investors and engage customers.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with House of Tara?s core competencies in product development, branding, and marketing, while addressing the need to scale operations and expand internationally.
- External Customers and Internal Clients: The recommendations focus on meeting the needs of both external customers and internal stakeholders, including employees, suppliers, and investors.
- Competitors: The recommendations aim to position House of Tara as a leader in the African beauty market by leveraging its strengths and addressing key competitive challenges.
- Attractiveness: The recommendations are expected to generate significant returns on investment through increased market share, revenue growth, and brand value.
- Assumptions: The recommendations assume continued growth in the African beauty market, access to adequate funding, and the ability to effectively manage potential risks associated with expansion.
6. Conclusion
By implementing these recommendations, House of Tara can leverage its existing strengths and overcome key challenges to achieve sustainable and profitable growth. The company has the potential to become a leading player in the global beauty market, empowering African women and promoting diversity in the industry.
7. Discussion
Alternatives:
- Organic Growth Only: This approach would focus on gradual expansion through internal growth and reinvestment of profits. However, this may be too slow to capitalize on the rapid growth potential of the market.
- Licensing Agreements: Licensing its brand and products to other companies could generate revenue without significant capital investment. However, this approach could limit control over brand image and product quality.
Risks and Key Assumptions:
- Competition: The African beauty market is becoming increasingly competitive, posing a risk to market share and profitability.
- Execution: Successfully implementing the recommended strategies requires strong leadership, effective management, and a dedicated team.
- Funding: Securing adequate funding from investors and lenders is crucial for achieving growth objectives.
8. Next Steps
Timeline:
- Year 1: Implement manufacturing process improvements and supply chain optimization. Explore strategic partnerships for international expansion.
- Year 2: Secure funding through venture capital, private equity, and debt financing. Begin international expansion into key regional markets.
- Year 3: Evaluate acquisition opportunities in target markets. Continue to scale operations and build a strong international presence.
Key Milestones:
- Increase production capacity by 50% within 12 months.
- Secure $10 million in funding within 18 months.
- Launch operations in two new international markets within 24 months.
- Acquire a leading beauty brand in a target market within 36 months.
By taking these steps, House of Tara can position itself for continued success and become a global leader in the African beauty industry.
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Case Description
In early 2014, Tara Fela-Durotoye, the founder and CEO of House of Tara, was contemplating one of her greatest achievements to date. Her company had been named by L'Oréal as a strategic distributor for Nigeria of leading international cosmetics brand Maybelline - marking another milestone in its ongoing success story. Lauded as a pioneer in the beauty and makeup industry in Nigeria, House of Tara was credited with launching the country's first makeup studio, establishing the first makeup school in West Africa, and creating a full makeup product line entirely dedicated to African women. From a small venture in the late 90s, the company had grown into a sophisticated organization with a broad array of products and services, a multi-channel distribution network, professional makeup schools, and high-touch customer service. With operations throughout the country, House of Tara was well placed to take advantage of the continued growth in cosmetics sales, fuelled by an emerging middle class with more disposable income. But despite the apparent opportunities, a number of distribution challenges remained. Unlike a typical beauty company operating through retail channels, House of Tara had a limited pool of beauty sales reps through which to reach the end customer. Since the mass-market segment accounted for the majority of cosmetics sales, how best could the products be made widely available? The case describes the evolution of House of Tara from a 'one woman show' initially offering bridal makeup services to a fully-fledged beauty business with a network of resellers and branded stores throughout the country. It gives an update on the latest developments that have seen House of Tara become the leading indigenous makeup brand in Nigeria, with a focus on how the local retail environment shaped its distribution strategy to reach its target markets.
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