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Case study: Ecover

Opportunities

* More and more Western European consumers are keen to buy environmentally friendly products

* Make consumers aware about allergies that could involve non-green detergents

* Penetrate the mass market through using the supermarket channel

Threats

* It is extremely difficult for new entrants in mass market to get and keep shelf space.

* Consumers don’t know exactly what green detergents are. According to Ecover, it is not just about packaging and energy consumption but also about the raw materials used and their effect on environment

* Commission of European Council’s Environment might award eco-labels to Ecover’s large competitors’ products, which are not using renewable raw materials. Thus Ecover would not have any advantage anymore.

Weaknesses

* Renewable natural raw materials are more expensive and their quantity is limited compared to petrochemicals product

* Ecover green detergents are less effective than petrochemical products: we need more time and effort to clean with green products.

* Ecover’s financial situation is critical: first it is undercapitalized: it has too much debt among the banks, then working capital is negative because they offer too long payment terms and finally, they have to finance their working capital need by a credit line which has a very high cost in interests.

Strengths

* Ecover has succeeded to reduce its production cost, offering better prices to customer and bringing the full cost of a wash close to the price of non-green brands.

* Ecover has invested in a factory for powder detergents, not to follow conditions of subcontractors who were asking sometimes to include chemicals products in their powder.

* Production process of liquid detergents is simple and needs little capital investment

* Ecover has a good brand image and its consumers are loyal.

* Ecover is leader in Europe and United States.

Suggestions

There is clearly a great...