OGL 355 Leading Organizational Innovation and

Change:
Environmental Analysis

Team: Revolutionary Masterminds

1a) What is a Porter's Five Forces Industry Analysis?

According to Porter, the key sources of competitive pressure in an industry are broken

down into five different forces (Mindtools, 2023). Number one on that list is Competitive

Rivalry. Competitive rivalry shows you how many rivals you may have and how strong

of a competitor they may be. This can show how their products are similar or different to

yours. Supplier Power is next, the people who supply your product have a very important

role because they decide what price you are paying, if that number changes at all, it can

impact the prices you decide to sell the product at. Buyer Power is third, if the number of

buyers is smaller than the amount of suppliers within the industry means the buyer may

have an easier time switching to different suppliers or products. The fourth force is

Threat of Substitution, which means the consumer may find an easier or cheaper way to

get/make the same product or a similar product. which would possibly take a hit to the

company. Lastly is the Threat of New Entry. Meaning, other people joining the same

market as you and therefore becoming a threat to your company. All of these combined

create a kind of cycle that your company will need to keep in mind if you want to stay

successful (Guthrie, 2013).

1b) How would the team implement a Porter's Five Forces Industry Analysis?

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 The best way our team could implement Porter’s Five Forces Industry Analysis is going

through each step one by one. The brand we selected, Rare Beauty is part of the beauty

and cosmetics industry. For example, for the first force our team would discuss and

compare which are the immediate competitors of Rare Beauty and seek out the

competition. There are other famous women-owned cosmetics companies out there that

are direct competitors to Rare Beauty. For example, Fenty Beauty by Rihanna, Gxve by

Gwen Stefani, Haus Labs by Lady Gaga and Kylie Cosmetics by Kylie Jenner. All these

companies are founded by women in the entertainment industry, just like Rare Beauty’s

founder, Selena Gomez. In addition, we would analyze the feasibility of new brands

entering the market and how they would compete with the Rare Beauty brand and

products. Furthermore, we would also discuss and research buyer power and how much

customers influence the popularity and sales of Rare Beauty compared to the next

competitor brands. Next, our team would examine the threat of substitution, in relation to

how accessible it is for consumers to access and purchase other more affordable and/or

similar products and how readily available they are. Lastly, in reference to the threat of

new entries into the market by new companies, we would evaluate how competing

companies entering the market would affect Rare Beauty’s profits, clientele and market

share and summarize what steps can be taken to maintain relevance in the market.

Overall, according to Porter, these drivers are a holistic way of analyzing and looking at

any industry and the underlying drivers of profitability and income (Harvard Business

Review, 2008).

2) Pick the threat level of new entrants within the team’s organization’s industry.

a. Threat Level of New Entrants is:

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 ● High

b. 3 reasons why the team has chosen High

i. Start up can be done as a simple side-hustle and there are a lot of benefits

without much effort therefore making it an accessible market to enter

(Jivani,2022).

ii. The threat of new entrants is high because the cost of entering the business

is low making it easy for someone who is willing to put in the money able

to enter the market. The estimated cost of fees to start a makeup line is

very accessible between $17,550 – $62,550 with a relative investment cost

(Abiolu, 2021). The cost would be achievable for someone with low-to-

median resources and capital.

iii. Profit margin being high overall and it makes it an attractive business

especially in the U.S. with a leading active cosmetic market with the

highest revenue of USD 1.83 Billion

3) Pick the bargaining power level of buyers within the team’s organization's industry.

c. What one group does the team consider the buyers?

d. Ages 12 to 42 of all genders who are interested in the makeup industry.

● Bargaining Power Level of Buyers is:

● High

● 3 reasons why the team has chosen High:

i. Buyers can choose to not buy makeup at all

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 ii. Buyers can simply choose to only be loyal to one brand for life. Corra.com

says that over 30% of the people they surveyed used the same beauty

products for a long time, additionally 19% of the same people said the

value of their products convinced them to continue to repurchase time and

time again. (Hipps, 2020).

iii. Buyers can choose to shop at a more convenient neighborhood market

near their home vs. only being able to purchase exclusively at Sephora or

online. Currently Rare Beauty is only sold at Sephora and on the Rare

Beauty webpage (Marsh, 2022).

4) Indicate the bargaining power level of suppliers within the team’s organization's

industry.

e. What one group does the team consider the suppliers?

● Cosmetic Certified GMP (Good Manufacturing Practices) Suppliers (Rare

Beauty, 2023)

f. Bargaining Power Level of Suppliers is:

● High

g. 3 reasons why the team has chosen High

i. According to resources, with high bargaining power, substitutes do not exist.

With low bargaining power, there are few buyers with many suppliers (which

may be the case because Selena Gomez’s company is using higher quality

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 products) (Kitov, 2023). Also in this case, buyers (or Selena) don't (doesn’t)

depend on the supplier to produce the product. Specifically, Selena uses

various ingredients and has her own manufacturing company. Selena uses high

quality supplies in order to meet specific standards set by her company

(Rarebeauty, 2023). These supplies may be more difficult to obtain/may cost

more/may not be easily substituted- products substituted must also meet PETA

certification standards for Beauty Without Bunnies as well as the GMP or good

manufacturing practices (PETA, 2023). Where it may be low is it seems that

her products are manufactured in the United States making it a domestic

product. There seems to be other manufacturing plants such as one in Italy,

(Nesvig, 2022).

ii. According to Wearemitu.com, “The packaging for most of their products has

unique shapes that help with grip.” (Quezada, 2023). Finding a supplier that is

willing and able to make the design style of the makeup containers that are

disability-friendly and are accessible to customers because it would assist

customers that have a difficult time with twisting their hands/dexterity issues.

iii. Bargaining power of suppliers is high as there are a limited number of

suppliers who are G.M.P (Good Manufacturing Practices) Certified

(Dfitzgerald, 2022).

5) Indicate the threat level of substitute products within the team’s organization's industry

based on the identified buyers in #3.

h. Threat Level of Substitute Products is:

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 ● High

i. 3 reasons why the team has chosen High

i. If the products are having to be substituted for inferior quality products for

the sake of time or money, the consumers may be able to tell and not be

trusting of their favorite product anymore and that could lead them to not

trusting the brand as a whole and may resort to other brands.

ii. The threat of substitution is considered high when there are similar

products on the market with potentially better prices. As stated earlier,

there is a plethora of competitors. There may be plenty who do not have as

high of standards as Rare Beauty, but there are also plenty that do. This

makes the switch by consumers easy and sometimes more convenient or

price efficient. This makes the threat level high (UKEssays, 2018).

iii. People who choose not to wear makeup. Byride.com interviewed people

who don’t wear makeup and one of them said “I’ve come to love my

natural look instead of hiding behind makeup.” For people who don’t wear

makeup, this industry is irrelevant because they don’t need the products.

(Metrus, 2022).

6) Indicate the threat level of industry rivalry within the team’s organization's industry.

j. Threat Level of Industry Rivalry is:

● High

k. 3 reasons why the team has chosen high:

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 i. There are existing makeup brands that compare to Rare Beauty already on

the market (Trakoshis, 2022).

ii. More cost-effective brands widely available at retail and drug stores that

are easily accessible, and more affordable to high end beauty brands

(Trakoshis, 2022).

iii. The beauty industry is known for its intense competition, with numerous

established brands and emerging players constantly vying for market

share. Limited availability of products could potentially create a sense of

exclusivity and desirability among consumers, but it could also hinder the

brand's ability to meet demand and capture a larger market share. ("Beauty

Industry, Cosmetics, Marketing & eCommerce," n.d.)

7) Who is the target market for the team’s selected Case Study Organization? Describe the

target market in 3-5 sentences providing at least one sourced material to earn excellent.

The target market for Rare Beauty are customers ages 12 to 42 of all genders.

With inclusivity in mind, their products are relatable and unique. According to

Mangurali, their fan base are looking to maintain a “natural makeup look” that

appeals to everyday “typical” people with a variety of skin tones and offers

different shades to match their skin tones (Mangurali, 2022).

8) Identify at least 2 strategies to maintain the organization’s target market. Discuss in at

least 5 sentences and provide cited source material for both strategies to earn excellent.

1. Continue utilizing online social media platforms such as TikTok and Instagram to

market Rare Beauty products. The target market uses Tiktok and Instagram to

receive data and information and find what is trending (Mangurali, 2022).

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2. Continue being an ambassador and advocate for mental health initiatives via the

Rare Impact Fund, that is committed to addressing mental health and self-

acceptance issues by offering services to young people that promote positive self-

image and education around the world. With this initiative, the organization

positively connects with the brand followers and makes a deeper connection to the

buyers that are interested in such causes as this is one of the main reasons this

brand was established from the beginning. According to the Rare Beauty Impact

Fund, they are committed to raising $100 million over the next 10 years to

directly support organizations focused on strengthening mental health resources

for young people (Rare Beauty Social Impact Report, 2022). This meaningful

strategy will solidify the organization’s commitment to its customers/buyers and

will continue to maintain its industry target market.

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 References

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Business Brain. https://www.smallbusinessbrain.com/starting-a-business/how-much-

does-it-cost-to-start

Common Thread. (n.d.). Beauty industry, cosmetics, marketing & eCommerce. Coach's

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industry-cosmetics-marketing-ecommerce-makeup-line/

Coulter, M. (2013). Chapter 3. In Strategic Management in Action. essay, Pearson.

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Gomez, S. (2023). About rare beauty: Rare beauty by Selena Gomez. Rare Beauty.

http://www.rarebeauty.com/pages/about

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https://www.youtube.com/watch?v=PeN1pvahsSA

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Hipps, M. (2020, September 1). Beauty product loyalty. Corra.

https://corra.com/beauty-product-loyalty/

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Jivani, S. (2022, September 7). I make $58,800 in sales a week from my cosmetics business that I

started as a side hustle – here’s how. Business Insider. https://www.businessinsider.com/how-

make-thousands-a-week-cosmetics-side-hustle-2022-4

Kowalewicz, R. (2022, October 12). Council post: How Social Media Impacts Consumer

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social-media-impacts-consumer-buying/?sh=5078e16b337d.

Mangurali, H. (2022, March 7). Rare beauty – Their Marketing Strategies. Rare Beauty –

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Marsh, M. (2022, February 9). How Target, Kohl’s, and Walmart Came to Dominate In-

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https://www.verygoodlight.com/2021/08/12/future-of-beauty-industry-after-covid/

Metrus, L. (2022, May 23). 15 real women sound off on why they choose to not wear makeup.

Byrdie. https://www.byrdie.com/real-women-no-makeup

Mindtools. (2023). Porter’s Five Forces - The Framework Explained. MindTools.

http://www.mindtools.com/at7k8my/porter-s-five-forces

P., B. (2022, February 23). Rare Beauty: Proof that Authenticity Sells. Medium.

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Petruzzi, D. (2023a, March 17). Celebrity beauty brands: Sustainability Ranking 2022.

Statista. https://www.statista.com/statistics/1372848/ranking-of-leading-celebrity-beauty-

brands-worldwide-by-sustainability-score/

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 Petruzzi, D. (2023b, March 30). 2023 Celebrity Beauty Brands. Statista.

http://www.statista.com/topics/10746/celebrity-beauty-brands/#topicOverview.

Quezada, C. (2023, March 10). We’re just finding out about this rare beauty inclusive packaging

feature. We are Mitú. 100% American & Latino. https://wearemitu.com/fierce/were-just-

finding-out-about-this-rare-beauty-inclusive-packaging-feature/

Rarebeauty. (2023). Sustainable Makeup: Eco-friendly Makeup Packaging. Rare Beauty.

https://www.rarebeauty.com/pages/sustainability#:~:text=Cruelty%20Free

%20%26%20Vegan%20%7C%20Certified%20by,to%20test%20on%20our%20behalf

Robin, M., & Blay, A. (2022, November 21). 31 celebrities with beauty brands that are

here to stay. Allure. https://www.allure.com/gallery/celebrity-beauty-brands

Rubin, C. (2020, November 19). It’s Official: Every Celeb Now Has a Beauty Line. The

New York Times. https://www.nytimes.com/2020/11/19/style/celebrities-its-official-

every-celeb-now-has-a-beauty-line.html

Sustainable makeup: Eco-friendly makeup packaging. Rare Beauty. (n.d.).

https://www.rarebeauty.com/pages/sustainability#:~:text=Cruelty%20Free

%20%26%20Vegan%20%7C%20Certified%20by,to%20test%20on%20our%20behalf).

Trakoshis, A. (2022, September 21). The Best Beauty Products under $25 at the

Drugstore. Allure. https://www.allure.com/story/best-affordable-cheap-drugstore-

makeup-brands

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