Running Head: STRATEGIC PLANNING FOR SEVENTH GENERATION INC.

Strategic Planning for Seventh Generation Inc

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Introduction

Seventh Generation Inc. is perceived to be the leading wholesaler of eco-friendly

household products. The company started as a catalog marketer then changed to wholesale in the

1990s. After a few years of operation, it shifted to retail market selling nontoxic cleaning goods

such as Chlorine-free bleach, laundry detergent and dishwasher. The firm is also the supplier of

paper towel and toilet paper that are manufactured using a high recycled fiber material, baby

detergent and recycled plastic trash bags. The organization creates and markets its product

without involving other firms. Seventh Generation Inc. was operating as the mail-order in

Washington, DC which marketed water and energy conserving products such as low flow

showerheads and fluorescent light bulbs (Seventh Generation, 2019). In 1988, Renew America

gave the catalog to Alan Newman. Newman later developed entrepreneurship skills from

experience.

The company employed 120 workers in 1989 after the catalog sales started to witness

tremendous growth. The catalog sales increased from $million in 1989 to $7 in 1990. The

company started to engage in wholesale by selling its products to retailers in 1992. It started with

natural food stores like Bread &Circus, Harvest Co-ops and Cambridge Natural Foods.

Hollender bought the company in 1999 making it a private firm. By this time, the sales had

reached $11 million. A new marketing strategy focused on the health benefits of applying

products that were free from artificial chemicals. It used the tagline "Healthier for You and the

Planet " while investing in consumer knowledge cautioning of the threats of toxic chemicals

found in different cleaning products (Haigh & Hoffman, 2011).

Strategic Analysis
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The Seventh Generation, Inc business model focuses on offering the customers better

opportunities to buy relevant natural products while saving money. Strategic analysis of Seventh

Generation, Inc is important to establish its strategies. The aim of the comprehensive analysis is

to develop and affirm an organization's specific business model which will align with the

company's resources and abilities to the demands of the business setting it operates.

Internal Strengths and Weaknesses

Strengths

Seventh Generation has company policies and strengths to protect the environment and

the consumer. The cost of the company’s products is similar in prices with other brands without

having negative impacts on the environment.

Weaknesses

Seventh Generation’s marketing does include all the demographics. The company does not

produce and market different types of scents to meet the needs of different customers.

Porter’s Five-Forces Analysis

Internal Rivalry

The market for household and personal products has become very competitive currently.

One of the main reasons that have contributed to this increase is the growth of discount retailers.

Discount retailers like Target, Kmart and Wal-Mart operate as bulk buyers of personal and

household products, affecting firms such as Seventh Generation’s sales. The discount retailers

can introduce secretly labeled products that create unfavorable competition. However, due to stiff

competition in the industry, there have been cases of partnerships between firms. For instance,

the Seventh Generation can have an in-store deal with Wal-Mart. The internal rivalry is strong

and Seventh Generation faces high competition (Manteghi & Zohrabi, 2011). Other powerful
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players introduced green household products such as Clorox and Church $ Dwight. Competitors

launched several products which present threats to Seventh Generation.

New Entry

The entrant of new firms into the eco-friendly household products market is not likely to

critically threaten Seventh Generation. Most of the existing organizations are very diversified

and large. For example, Seventh Generation has a market cap of over $200 million and product

line spanning more than 10 diverse types of products. The products range from Chlorine-free

bleach, laundry detergent, dishwasher, paper towel, toilet paper, baby detergent and recycled

plastic trash bags (Seventh Generation, 2019). Additionally, Seventh Generation and other

competitors in the sector are not limited geographically.

Their products are recognized and sold globally that is why the new entrant would find it

difficult to attract new loyal customers. A new entrant will not be able to penetrate the market

share and survive. A new entrant will find it rough because of the huge start-up costs. It requires

a lot of money to invest in properties, equipment and plant to match the well-established firms

(E. Dobbs, 2014). However, there is a threat that faces the Seventh Generation. The development

of the existing competitor which can use private labeling is a risk.

Substitutes

Substitutes also present a threat to growth and profitability in the eco-friendly household

products sector since Seventh Generation must compete on quality, price and other consumer

benefits. The seventh Generation faces a problem of substitute in two ways. The first one is stiff

competition. Seventh Generation's products must directly face competition from rivals such as

Clorox and S.C. Johnson (Williams & Figueiredo, 2014). Rivals have almost similar products

with the same benefits. Additionally, other eco-friendly household products manufacturers can
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reduce their prices in efforts to gain market share for specific products such as laundry detergent.

Discount retailers such as Kmart are capable of private development and selling their own

alternatives and sell them at low prices as compared to Seventh Generation products prices.

Although brand loyalty can assist to reduce the potential effects such as price competition, the

prospects of lower sales are still present. From the examples, in the eco-friendly household

products sector, there are common developments of new products and the extension of existing

products. Hence, a significant strategic issue for organizations such as Seventh Generation that is

able to establish emerging consumer needs and improve the competitiveness of its line of

products (Seventh Generation, 2019). The seventh Generation needs to get involved in the

marketing and advertising of its products.

Complements

Seventh Generation’s product line is exceedingly diverse. Its line product has the

prospective to be complemented with other benefits or products in cases where the price of its

products’ compliments drops. Other factors can make the sales of Seventh Generation products

like rainy weather creating a demand for detergents. Some Seventh Generation’s products can

even complement each other as well (Williams & Figueiredo, 2014).

Supplier Power

The bargaining power of suppliers is rather weak because of the high concentration of

businesses that sell basic material. Seventh Generation’s detergent is manufactured using a

simple cycle. Many businesses supply chemicals used for the manufacturing of detergents. Other

major inputs of Seventh Generation’s products are easily available from various suppliers. In

relation to product development and manufacturing, Seventh Generation owns most of the major

inputs as well. The manufacturing process of its eco-friendly household products takes place in
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its plants. By having the manufacturing plants, Seventh Generation eradicates most of the

downstream threat of price gouging. Additionally, Seventh Generation employee base has many

scientists and professionals who are constantly trying to increase the performance of the existing

products as well as creating new formulas to develop new unique products (E. Dobbs, 2014). The

availability of experienced employees accelerates the speed at which the product is introduced in

the market.

Buyer Power

The bargaining power of buyers such as discount retailers has been a serious threat to

organizations in the eco-friendly household products industry such as Seventh Generation. In the

previous decades, discount retailers have been growing drastically, their demands of businesses

in this sector have grown also. Because the market tactics of discount retailers like stocking

enough goods at better prices to attract a large pool of customers, they will always keep goods in

their store (Williams & Figueiredo, 2014). They will be able to stock themselves when there is an

increase in demand.

This approach requires a large volume of procurement by retailers to sustain inventory.

Discount retailers will always receive and demand discounts on those purchase. This increases

the bargaining power of retailers, particularly focusing on firms like Seventh Generation which

depend on bulk purchase to create sales. Additionally, because of the eco-friendly household

products industry is controlled by many firms selling various similar products to retailers, when

one of the discount retailers is not satisfied with one, its shifts to another (Seventh Generation,

2019). Or different retailers can take the organizations in the industry out of the market.

Multinationals such as Wal-Mart can still privately produce, label and be able to sell eco-friendly

household products of on their own (E. Dobbs, 2014).

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Summary of Five Forces Analysis

Force Threat to profits

Internal Rivalry High
Entry Low-Medium
Substitute & Compliments Medium-High
Buyer Power Medium-High
Supplier Power Low
Corporate and Business-Level Strategies

After evaluating the changing market trend, the firm established the increasing consumer

needs for eco-friendly products such as green products. There is also the need to find out what

ingredients are found in the products that customers eat, wash children and lotions they keep in

their bedrooms. Currently, green is very significant with corporations like Wal-Mart promoting

natural products. The seventh Generation being one of the visionary firms, it has continuously

shifted a hand of competitors. It has been able to gain a competitive advantage in the green

market share. Seventh Generation has been involved in product differentiation through better

communication (Williams & Figueiredo, 2014). Seventh Generation is dedicated to its mission to

nurture the health of the coming seven generations. In 2008, the company started to disclose the

ingredients used in most of the products. The ingredients are labeled on the back of all its

products because consumers have the right to recognize what they use.

Since the environmentally friendly concern has grown in the recent past, as green and its

correlated adjectives natural, ammonia-free, perfume-free and organic have been common and

associated with cleanliness and safety. Differentiation helps the company to be competitive. The

organization’s products are harvested directly from plants giving customers the reason to believe

that the Seventh Generation brand is better than other competitors (Seventh Generation, 2019).
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Less than 60% of the company’s revenues come from one business. The market share has three

segments which have the same inputs: production technologies, distribution channels and the

same customers. It has continued to innovate using modern technology in all sectors of product

manufacturing. The organization employees qualified managers that are fully committed to

developing better results.

The firm has been practicing vertical integration value chain. The company conducts

intensive research on various products and raw material (Haigh & Hoffman, 2011). Research and

development have been constantly trying to increase the performance of the existing products as

well as creating new formulas to develop new unique products. The company has a variety of

consumer products which are 100 % recycled fiber such as a napkin, facial tissues, laundry

products natural lotion baby wipes, feminine hygiene products. Their commitments to

manufacturing products that are eco-friendly give it a competitive advantage (Williams &

Figueiredo, 2014).

The seventh Generation markets its brand for the cause. It works with other organizations

such as Gifts In Kind International to provide 10 million diapers to poor societies. Consumers are

advised to send the word "BABY" to code number 52000 to make donations of $5 that is used to

make children from vulnerable communities have a better life. The firm has been very

instrumental in proving better working conditions for its employees. For example, it provides

training, health insurance, telecommuting, energy saving incentives and other ways of supporting

the welfare of employees. All employees take part in the company’s equity program and get

shares if they are promoted on hired.

Analysis of Structure and Control Systems

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Seventh Generation organizational structure is dedicated by its corporate strategy. The

seventh Generation originally adopted a decentralized function to help in the management, but it

changed in1900 to standardized function management. The managers realized that their

subsidiaries were not correctly positioned on the international platform to provide services to

customers. The change enabled the Seventh Generation to minimize various limitations. The

company has achieved a lot of success from centralized control using modern technology to

innovate its products and create a better opportunity to advance and grow (Williams &

Figueiredo, 2014). The style of the company has procedures that function as a system that shows

a build from within the structure.

Seventh Generation has shared values in its management style that help to define and

shape what eco-friendly means in daily lives. The company’s products are naturally

manufactured and improve the lives of people. The managers credit their endurance and strength

to a steady approach to managing the organization. Seventh Generation's shared values, staff,

system, structure, strategy and skills work together in a cohesive manner to develop a synergy

that oversees the whole operations from searching raw material, production lines research and

development and manufacturing (Manteghi & Zohrabi, 2011).

Recommendation

The main issue that faces the Seventh Generation is the present product mix because it is

not a favorable one. While trying to compete with other firms in different categories, their prices

are too high which makes it hard to utilize its huge profits (Williams & Figueiredo, 2014). The

company should restructure its product line to improve its existing cost structure and get rid of

products which have been struggling. In combination with restructuring, it should focus on

increasing serious marketing and advertisement. It has the potential to improve most of its
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products and increase the market share in the competitive industry. It should always continue to

emphasize its strategic goals and priorities.

References

E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry

analysis templates. Competitiveness Review, 24(1), 32-45.

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Haigh, N., & Hoffman, A. J. (2011). Hybrid organizations: the next chapter in sustainable

business.

Manteghi, N., & Zohrabi, A. (2011). A proposed comprehensive framework for formulating

strategy: a Hybrid of balanced scorecard, SWOT analysis, Porter's generic strategies and

Fuzzy quality function deployment. Procedia-Social and Behavioral Sciences, 15, 2068-

2073.

Seventh Generation, (2019). About Seventh Generation. Retrieved from

http://www.seventhgeneration.com/about

Williams, B., & Figueiredo, J. (2014). Lessons from an innovation-leader and tools to learn

them. Journal of Industrial Engineering and Management, 7(4), 932-960.