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Nature of Ownership and Challenges Faced by Family Businesses of Organic Cosmetic Manufacturing in Algeria - 4000
Nature of Ownership and Challenges Faced by Family Businesses of Organic Cosmetic Manufacturing in Algeria - 4000
manufacturing in Algeria
Table of Contents
Abstract 4
1 Introduction 5
1.1 Background 5
1.3 Justification 5
1.6 Scope 6
2 Literature review 8
2.1 Introduction 8
3 Research methodology 11
3.1 Introduction 11
4.4.1 Training 14
4.4.4 Competition 15
4.4.5 COVID-19 16
5.1 Conclusion 17
5.3 limitations 17
6 References 19
Abstract
The organic cosmetic products demand is on the rise as consumers adopt green
consumption strategies. The number of businesses involved in organic cosmetic products
manufacture is also rising. The current study aimed to evaluate the nature of the ownership
and the challenges of businesses manufacturing organic cosmetic products in Algeria. The
study adopted the use of secondary data to answer the research question. Pragmatic
philosophy and inductive approach were used to guide data collection, analysis and
interpretation. A mixed research method was used as both quantitative and qualitative data
was considered in the study. From the research finding, the organic cosmetic products
market of Algeria is fast growing due to increased demand. The manufacturing process is
mainly done on a small scale, with a business owned by families, local groups, or
multinational organizations in Algeria. Organic cosmetic manufacturing businesses were
reported to face challenges. The main challenge included lack of training, low manufacturing
capacity, lack of certification and standardization, and competition in the market. It is
recommended that empowerment businesses and standardization of organic cosmetic
products be undertaken to enhance the sector's growth.
1 Introduction
1.1 Background
The cosmetic industry is considered a multi-billion industry segmented by geographical
location, product types, and consumer needs (Lee, et al., 2019). The competition for
products in the cosmetic industry has continuously increased as consumers' demand and
need to evolve. The customer demand for the product has been changing with the shift to
healthy and environmental conscious products. Consequently, the organic cosmetic product
niche has grown as more consumers prefer an organic product that they perceive as healthy
(Tewary, et al., 2021). Organic cosmetics products comprise over 75% of organic raw
material (Thukaram, 2019). There are many upcoming businesses in different parts of the
world, including Algeria, focusing on organic cosmetic manufacturing. The current study
aimed to evaluate the ownership and challenges of Family businesses of organic cosmetic
manufacturing in Algeria.
1.3 Justification
Undertaking the research will provide more information about the organic cosmetic industry
in Algeria that will be vital for policymakers to improve the industry and influence more
sustainable business establishment. In addition, the research findings will facilitate existing
businesses to identify ways of overcoming the challenges in the industry. The study also
contributes to the body of literature by identifying challenges that the organic cosmetic
manufacturing organization faces in Algeria. Moreover, the study contributes to the body of
research by identifying the research gap area that exists that needs to be filled and
providing background information that can guide future research undertaking.
1.6 Scope
The scope of a study represents the limits that bound the research study being undertaken.
The current study was limited to the organic cosmetic industry of Algeria, and the study was
also limited to the use of secondary data in answering the research questions. The theme of
focus was the challenges faced in the organic cosmetic industry and the nature of ownership
of businesses involved in the manufacturing process.
1.6.1 Structure of the report
The research report will comprise the introduction chapter that defines the research
problems, objectives, research questions and the justification of the study undertaking. The
second section will be the literature review of theories, models and published information
relating to the research question. The third chapter presents the research methodology, and
this will be followed by the description of the research findings and their discussion. The last
section offers the research conclusion and recommendations for future research and
industry development.
2 Literature review
2.1 Introduction
Organic cosmetic products have gained popularity in the market, seeing the number of
research studies undertaken in the area rise. This section aims to undertake an in-depth
literature review on organic cosmetics manufacturing. The specific section covered include
challenges faced in organic cosmetic manufacturing and Organic cosmetics manufacturing in
general.
Due to the high demand for organic cosmetics, its manufacture has increased in different
parts. According to Stita and Alkhayyat (2021) manufacture of organic cosmetics is
associated with the use of natural and non-toxic ingredients in developing cosmetic
products. Furthermore, Karaduman (2014) refers to organic cosmetic manufacturing as
converting natural raw material to cosmetic products with minimal interference. Even so,
Barbaud and Lafforgue (2021) pointed out that the definition of natural and organic in
literature has not been harmonized, which can impact which ingredients in the cosmetic
product can be referred to as organic. Romero et al. (2018) point that organic cosmetics
should meet the definition of ingredients provided by government policies and international
standards.
Yapar (2017) pointed out that manufacturing organic cosmetic products must adopt the
right manufacturing practices that meet the international standard for organic cosmetic
ingredients and manufactured outputs. The research concurs that organic cosmetic
manufacturing should focus not only on the production of the different products but also on
the set guidelines for them to be accepted in the market and effectively meet the needs of
the consumers. Gamage et al. (2021) recognized that manufacture of herbal-based
cosmetics is a new cosmetic niche gaining popularity due to the perceived benefits to the
users. The study identified over 150 plant species that could be utilized in the development
of herbal-based cosmetic products focusing on Sri Lanka. The study also pointed out that for
effective manufacturing of organic cosmetics, there is a need to control the quality of the
raw materials and undertake further research to identify other organic materials and
technic for cosmetic production (Gamage, et al., 2021).
Badalyan and Borhani (2019) reported that it is possible to manufacture organic cosmetics
from macro fungi. The study identified 52 species of fungi that could be used to
manufacture organic cosmetic products. The fungi cosmetic, nutritional, and medicinal
properties make it a crucial raw material in manufacturing cosmetics (Badalyan & Borhani,
2019). The study identified the importance of maintaining the quality of raw material
utilized in organic cosmetic production. On the other hand, Hsiao et al. (2017) reported the
importance of adequate packaging of the cosmetic products before releasing them to the
market. The literature review shows that organic cosmetic manufacturing is on the rise, with
organizations required to adhere to set standards and regulations.
Neacșu and Madar (2015) evaluate the case of Romania, the main challenge identified in
processing and packaging limitations. The cost of the equipment required for the process of
manufacturing the organic cosmetic product is high, with the majority of businesses not
able to afford it. Consequently, this lowers the capacity and ability of a country to leverage
the raw resources for organic cosmetic manufacture that are available (Neacșu & Madar,
2015). Bom et al. (2019) also pointed out that manufacturing businesses face a challenge in
identifying sustainable packaging material that can be used for organic cosmetic products.
Rajagopal (2007) pointed that for organic cosmetics, there is a need for creating awareness
among the consumers in order to influence their purchasing decision. The market is
considered to have many competing brands, hence the need to create awareness
(Rajagopal, 2007). According to Rybowska (2014) reported the cost and unavailability of
organic cosmetic products impact the attitude of the consumers towards the product.
Organizations are required to focus on lowering the cost of production of organic products
to make them accessible. The other challenge is that manufacturing products are
competitive in the market. The synthetic or inorganic products from local and international
organizations compete with organic products in the market (Jinachai, et al., 2016).
Organizations are therefore required to implement competitive advantage strategies to
remain competitive and leverage the growing organic cosmetic market.
3 Research methodology
3.1 Introduction
The methodology section is essential in enabling the organization to find a solution to a
research problem. The current section presents the methodology adopted to focus on
answering the research questions. The section offers the research philosophy, research
design, data collection and analysis, and ethical considerations in research.
Apart from research philosophy, the research approach is crucial as it influences researcher
reasoning and the generalization of research findings. Saunders et al. (2016) identified that
the research approach could either be deductive or inductive. For the current study, an
inductive research approach was adopted. The approach was adopted as the information
synthesis of the organic cosmetic industry in Algeria is limited, and the current research
provided a generalization based on the research findings.
Apart from the traditionally managed organic cosmetic manufacturing in Algeria, there are
some established brands. Celuxe Cosmetic is one of the stabled brands that manufacture
natural-based cosmetic products, including hair care, body care, soaps, and perfumes. The
company has its operation location in Igounane in Algeria. Even so, the company is a
subsidiary of Aurekad company located in France (www.celuxe-dz.com, 2021). This concurs
with Euro Monitor that pointed Algeria cosmetic industry dominated by multinational and
foreign brand (Euromonitor International, 2021). Consequently, it is expected that more
multinational companies will take advantage of the organic cosmetic market of Algeria that
is considered as to have a lot of potential. Thanisorn and Chanchai (2012) reported that
international brand entry in the market limit the growth of local business. Consequently,
this impact number and sustainability of local businesses. The same could impact the
businesses in Algeria, which reduced number of locally owned organic cosmetic
manufacturing business and increase the number of foreign owned business in the country.
4.4.1 Training
One of the leading challenges that faces the manufacture of organic cosmetic products in
Algeria is lack of sufficient training (Euromonitor International, 2021). Training and
competencies limitation negatively impact the business ability of effective utilization of the
natural resources available in Algeria to produce quality organic cosmetic products
(Euromonitor International, 2021). Lack of sufficient training on manufacturing,
commercialization and value addition limits the potential of the organic cosmetic
manufacturing that is done mostly through traditional methods in Algeria (Bouzabata,
2017). Iwata and Shimada (2012) note that improvement in research, techniques and
training in cosmetics formulation to improve quality, novel and safe cosmetic products in
the market. Consequently, there is need for provision of modern training on advance in
organic cosmetic production for the local businesses to facilitate them maximize the
potential in the market in Algeria and globally.
4.4.4 Competition
Competition is the other significant challenge the organic cosmetic business face in their
operation in Algeria. According to Euromonitor, Algeria cosmetic market is dominated by
international brands that includes Colgate-Palmolive, L'Oréal and Unilever as of 2020. The
brands have established distribution channel and are perceived to have higher quality by
Algerians hence more preference. Consequently, the organic cosmetic business has to face
the challenge and put in place effective competitive advantage to be able to remain
profitable (Euromonitor International, 2021). The competition is made worse by lack of
market transparency and information which could be crucial for the local manufacturing
businesses to thrive (Boudi, et al., 2016).
4.4.5 COVID-19
The recent challenge also that has impacted the cosmetic industry including the organic
cosmetic niche is the effect of COVID-19. The Algerian government implemented lockdown,
to contain the spread of the pandemic. The closure lead to reduction in the demand for
cosmetic products leading to low purchase of product and this impacted the cosmetic
manufacturing process (Euromonitor International, 2021). In addition, lock down impacted
the distribution channel and availability of labor which further impacted manufacturing
process, with some of the businesses being forced to closed down.
5.3 limitations
The research faced a number of limitations that impacted the meeting of the research
objective and accuracy of the research findings generalization. The first limitation of the
current study was the limited amount of information about organic cosmetics
manufacturing in Algeria, having minimal information to infer. Secondly, the accuracy of the
information utilised in the study was limited to the accuracy of the information of the
secondary data used in the study.
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