Title:                            NARS Company Case

Subject Area:          Global strategy, competitive strategy

Region:                      United States, China

Industry:                   Cosmetics

Company:                 NARS Cosmetics

Challenge:                While working on formulating its global strategy, NARS Cosmetics faced a quintessential business ethics dilemma. While competitors were rapidly entering the Chinese cosmetics market, NARS was debating whether it wants to enter China. Once a company starts selling cosmetics in China, it cannot be qualified as ‘cruelty-free’, as laws and regulations require testing on animals for all cosmetic products sold in the country. NARS has a choice to make; stay true to its original values and mission, or adapt their values to exclude remaining cruelty-free and advance into China to attain market share. If NARS does not act quickly, competitors will jump at the chance and take all of the available market share. If they make the wrong choice, their customers could turn their backs to the brand permanently. Our team was excited to tackle this challenge and analyze all available data to provide NARS with the best possible strategy recommendations.

Personal Capital: Embedding in Industry

Data collection from a variety of public sources allowed our team to gain a comprehensive and unbiased perspective about NARS. Listed below are the key sources we utilized to analyze the situation and formulate our strategy recommendations.

• Secondary sources regarding industry information and PESTLE factors in China and its autonomous regions – IBIS World, Statista, World Bank, BBC, and Morgan Stanley
• Brand knowledge from former marketing co-ops at NARS
• Financial and organizational information provided by Shiseido’s (NARS’ parent company) annual report

Social Capital: Elucidating the Team’s Professional Core

• Our team consists of six members, all with a variety of specialties and different career interests such as investment banking, marketing, consulting, and accounting. We have a wide range of skills, perspectives and past experiences that allowed us to take on this project with vigor and analyze all possible solutions to the dilemma that NARS faced.
• Even those of us who are not currently planning to work in the cosmetics industry can relate to and learn from this case. At its core, this case is a question of business ethics, positioning, and market entry. These foundational tenets are of interest to all our team members as future businessmen and women.
• Some of our team members who specialize in accounting and finance have looked closely at the financial information of NARS and its parent company Shiseido, as well as industry competitors, to determine the feasibility of each option. The marketing specialists have brought their knowledge of the industry, the company, and its products to decide on the proper way to introduce NARS to a new market, or to thrive in their existing market.

Professional Capital: Analyzing and Solving the Challenge

Overall, we found that NARS has 3 options in this business ethical dilemma. NARS can:

1. Enter China with an international or localization strategy
2. Not enter China and remain dominant in current markets
3. Enter China’s neighboring markets, such as Hong Kong, Macau, or Taiwan, to create brand influence within China without sacrificing its position on animal cruelty

In order to solve this problem, we approached the dilemma through the lens of a variety of successful strategy frameworks.

• Creating a SWOT analysis (Strength, Weaknesses, Opportunities, Threats)
• Evaluated the items listed in the SWOT using the VRIO framework and Porter’s Five Forces
• Analyzing the climate in which NARS operates in through a PESTLE framework (Political, Economic, Sociocultural, Technological, Legal, and Environmental)
• Exploring industry factors, market factors, and company characteristics that could impact the decision
• Evaluating different types of strategy, including global, positional, corporate, and business