PRAEDICO GLOBAL RESEARCH PVT LTD

Name: SHAIKH SANA AFZAL

College: HK INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

Team leader: MS. PRASIDDHI TOMAR

Company Report

About Nykaa
Nykaa is an Indian e-commerce company that sells beauty, wellness and fashion products across
websites, mobile apps and 76 o ine stores. It is a kind of unicorn startup, founded in the year
2012 by Falguni Nayar a former managing director at Kotak Mahindra Capital Company.

Nykaa sells products that are manufactured in India as well as internationally. In 2015, the
company expanded itself from online- only to an omnichannel model and began selling products
apart from beauty.

In 2020, Nykaa launched Nykaa Pro and in December 2020 Nykaa Fashion launched its rst store
in Delhi, intending to make its fashion business omnichannel. It also started retailing over 2,000
brands and 200,000 products across its platforms. This startup is an inspiration for many women
who want to start their e-commerce businesses.

HORIZONTAL ANALYSIS OF NYKAA &

RATIO ANALYSIS OF NYKAA

https://docs.google.com/ le/d/1KDdcxMnJU_t1ohjDfL9QdyHN7F-5sw6P/edit?
usp=docslist_api& letype=msexcel

REPORT OF SWOT ANALYSIS OF NYKAA

Quick stats on Nykaa

Founder: Falguni Nayar

Year Founded: 2012

Origin:Mumbai, India

No. of Employees: 2,000

Company Type: Public

Market Cap: Rs 1 Lakh Crore (2021)

Annual Revenue: Rs 1,860 Crore (2020)

Net Income/ Pro t: Rs 278 Crore (2020)

Products by Nykaa

Since Nykaa has come a long way, serving for 9 years, let’s have a look at its products.

Beauty

Fashion

Wellness

Competitors of Nykaa

The top 5 competitors of Nykaa are as follows:

Purplle

Plum

MyGlamm

Scentials

FabAlley.

Now that we understand the company’s key business, let’s look after the SWOT Analysis of
Nykaa.

SWOT ANALYSIS OF NYKAA

Talking about the Nykaa business, let’s understand how this corporation can cater to di erent
individuals using SWOT Analysis. SWOT Analysis of Nykaa helps us to understand companies
through the lens of internal and external factors. Internal factors refer to strengths and
weaknesses, which can be controlled by the corporation.

Strengths of Nykaa

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 As strength is an essential component of SWOT. Nykaa has several strengths that make them one
of the largest e-commerce companies in the beauty and wellness sector in India.

Innovation:

Nykaa is constantly adding innovations to its product range and o erings to capture the attention
of customers and meet the dynamic business environment by shifting from online-only to
omnichannel.

Strong Social Media Interaction:

Nykaa has been able to attract many social media users as potential customers with regular
online campaigns, contests such as Nykaa Beauty Femina Awards, brand endorsement,
magazines, and web series etc.

Wide Range of Products:

Nykaa has very well managed in showcasing a wide range of products in both online and o ine
stores to prevent customers from migrating away from the brand due to lack of stock.

Geographical Presence:

Since geographic presence in di erent regions is considered to be one of the company’s greatest
strengths. It helps to determine the reach of the company in the target market and ensures easy
accessibility.

A ordability:

As the ability to pay and willingness to buy is a factor determining demand. Nykaa also has
considered this factor and has priced its product keeping in mind the needs of di erent classes.

Less Charging Suppliers:

Access to suppliers that o er raw materials at a lower cost can improve the overall e ciency of
the business.

Property Rights:

A company may own various intellectual property rights that can make the product o ering
unique and exclusive, making it di cult for competitors to imitate.

Weaknesses of Nykaa

Everyone business has its positive and negative sides, so Nykaa’s. Though Nykaa is one of the
current market leaders in beauty product e-commerce companies in India, many weaknesses can
become a nightmare for Nykaa’s growth.

The environment within which our organization operates o ers opportunities. An organization can
identify such opportunities and enjoy bene ts arising from them by planning and executing
required strategies.

Poor Waste Management:

Nykaa has been criticized by environmentalists for its poor waste management and inability to
integrate sustainability into its business operations.

R&D:

Low spending on research and development activities may weaken the company’s performance
due to a lack of local/ international market knowledge.

Delivery Charges:

It o ers free delivery for orders above Rs. 700, which excludes some of the prospective buyers.

Customer Care: Nykaa has not been able to resolve customer complaints so e ectively.

Decision-making Process:

Decision making at Nykaa takes too much time, leading to costly delays in bringing new products
to market.

Opportunities for Nykaa

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 The environment within which our organization operates o ers opportunities. An organization can
identify such opportunities and enjoy bene ts arising from them by planning and executing
required strategies.

Expanding Reach to Population:

The exponential growth of the population and especially the existing or potential customer
segments is a great growth opportunity for the company.

E-commerce & Networking:

The emergence of e-commerce and social media networking as a trend can be a great
opportunity for Nykaa. It can ensure a strong online presence on various social networks.

Government Subsidies:

Government provided subsidies and other measures that make the business environment
friendlier are a positive external environmental factor for Nykaa.

Matching Lifestyle of Customers:

Improving customers’ lifestyles and standards means more consumption of consumer goods and
services and more opportunities to encourage purchases.

Business Model:

Nykaa’s business model is climbing a new ladder to increase its international reach and boost
pro ts.

New Technologies:

The development of new technologies to support the production and delivery process of
products can be used to integrate innovation into business operations. Advanced Technology
integration can reduce costs, improve e ciency, and lead to the rapid adoption of innovative
products.

Following Trends:

The changing needs, tastes, and preferences of customers can be an opportunity if the company
has good market knowledge.

Threats to Nykaa

Every coin has two sides, so does Nykaa have.

E-commerce Regulations:

The altering legal framework and the introduction of new, stricter regulations pose a major threat
to Nykaa. Inability to comply with the changing regulations increases the risk of costly litigation.

The Rise in Competitors:

The increasing number of direct competitors such as purplle, indirect competitors such as small
businesses selling organic and cruelty-free products a ects the company’s ability to maintain and
expand its customer base.

Health Concern:

The growing trends of organic and cruelty- free products poses a great danger if the products
o ered are not environmentally friendly. Nykaa should now focus more on expanding its reach to
natural and organic products.

Economic Conditions:

During the pandemic, the purchasing power declined to an extent and the business got a ected
in the rst phase of lockdown as the economic conditions of people deteriorated.

To Conclude

Nykaa has become one of the largest platforms for meeting all the beauty, wellness and fashion
needs of customers and has been successful in doing so.

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 As we saw Nykaa has strengthened itself in providing products that are a ordable and has been
able to do well through its omnichannel mode but at the same time, it somewhere lacks in doing
R&D which will help its competitors to take Nykaa’s customers away from it.

Nykaa has so many opportunities to become more successful in its venture. But there are many
areas where Nykaa still has to work such as reducing the product cost by reducing the internal
expenses so that it can be a ordable for the majority of people.

It should increase the frequency of marketing digitally with the campaigns globally to create a
better digital presence and to cut o the competition by in uencing the minds of consumers by
frequent advertisement.

PASTEL ANALYSIS OF NYKAA

The application of PESTEL analysis can help Nykaa com A Passion for Beauty. identify the major
external environmental forces that shape the strategy and competitive landscape and support its
strategic decision making process. As Nykaa com A Passion for Beauty. looks to expand and
leverage its competencies and core capabilities, conducting the PESTEL analysis is imperative for
developing e ective strategies and achieving long-term growth objectives.

Political factors

1 Importance of political factors in the PESTEL

framework

Within PESTEL analysis, political factors exert a strong in uence on the long-term sustainability
and pro tability of Nykaa com A Passion for Beauty. The presence at international stage increases
the company’s sensitivity to changes in political environments of di erent countries. In a political
context, the key to success in a dynamic international business environment is to diversify the
systematic risks. The political environment of a country comprises multifaceted factors. Nykaa
com A Passion for Beauty. needs to consider the following political factors during the strategic
planning process.

2 Political factors that in uence Nykaa company A Passion for Beauty.

1 Political stability

High political stability provides a stable and friendly business environment with predictable market
growth trends. However, when there is political chaos, it deters the investors and harms the
stakeholders' trust in economic and consequent organizational performance. Currently, Nykaa
com A Passion for Beauty. is present in di erent countries, each having own political tensions.
Growing tensions and instabilities in the global political environment can a ect the Gold industry
growth and limit the growth opportunities available to Nykaa com A Passion for Beauty.

2 Changing policies

Frequent changes in government policies harm business performance by increasing

environmental uncertainty. It is important for Nykaa com A Passion for Beauty. to study the
current trends in the country's political scenario as changes in government may alter the
government's priorities towards the development of di erent industries.

3 Protests/pressure groups and governance system

Nykaa com A Passion for Beauty. should carefully analyze the protests by pressure groups, social/
environment activists and worker unions as such protests play an important role in the policy
making process. Close collaboration with such groups may enhance the Nykaa com A Passion for
Beauty.’s ability to collaborate with community and achieve long-term corporate goals. Moreover,
a well-developed governance system with a democratic political environment makes the business
environment more comfortable for international business organizations like Nykaa com A Passion
for Beauty.

4 Bureaucracy and corruption

Bureaucracy and corruption negatively in uence the business environment. Operating in countries
with high corruption level and weak law enforcement makes the business environment
increasingly unpredictable for Nykaa com A Passion for Beauty. due to jeopardized public trust on
business organizations and overall political and economic structure. The corruption can in uence
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 various business operations, ranging from licensing, contracting, fraudulent deals to frequent
lawsuits. If Nykaa com A Passion for Beauty. decides to enter in markets with the corrupt
economic, political system, it will threaten the organization's sustainable development by
destabilizing the society, harming justice system and endangering the rule of law.

5 Taxation, trade restrictions and intellectual property

protection

Entering in countries with high taxation level will directly in uence the pro tability of Nykaa com A
Passion for Beauty. High taxation a ects international trade and prevents exports. Nykaa com A
Passion for Beauty. can enter in low taxation markets and bene t from high pro ts that can be
invested in research and development activities. The organization may also study the industry
speci c taxation policies to understand the host government's priorities and interest in developing
industries. Similarly, high trade restrictions can make the business environment more complex by
a ecting the exports and harming relationships with foreign trade partners. Moreover, if the
government of the country under consideration is not serious about protecting the intellectual
property rights of business organizations, it will deter the entrepreneurs from investing in
organizations due to high risk of ideas being stolen. Hence, Nykaa com A Passion for Beauty.
should study how intellectual property rights are protected in the host country and make the
business strategies accordingly.

2 Economic factors

1 Importance of economic factors in the PESTEL

framework

It is important for Nykaa com A Passion for Beauty. to understand economic factors such as
foreign exchange/interest rate, labor market conditions, in ation and saving rates etc. as they
determine the overall economic environment of the country. A detailed understanding of the
economic environment can help Nykaa com A Passion for Beauty. estimate the growth trajectory
of industry and organization. Following economic factors need to be considered by Nykaa com A
Passion for Beauty. to make informed decisions.

2 Economic factors that in uence Nykaa company

A Passion for Beauty.

1 Economic/business cycle stage

The economic development of a country directly in uences organizational performance. Growing

economies o er wide- ranging growth opportunities to the Nykaa com A Passion for Beauty.
Similarly, it is important to understand the industry lifecycle stage. Entering in mature industries
can be more challenging due to market saturation than industries at the growth stage. Moreover,
the business performance of Nykaa com A Passion for Beauty. is also in uenced by the extent to
which the host country government has spent on core infrastructure development. A well-
developed infrastructure facilitates the business environment and increases the growth potential
of the gold industry in the respective country.

2 In ation/employment/interest/exchange rates

The GDP growth rate will determine the Nykaa com A Passion for Beauty.’s ability to pursue its
long-term growth strategies. High GDP also signals the consumers’ ability to spend more on
o ered products. High unemployment signals the availability of surplus labor at comparatively
lower wages. Operating in such a market can lower the production cost of Nykaa com A Passion
for Beauty. The organization should also carefully consider the interest rate and its in uence on
borrowing ability and attitude towards investment. The high interest rate will encourage the
attitude towards investment and increase growth opportunities for Nykaa com A Passion for
Beauty. Finally, the exchange rate uctuation can also in uence the pro tability and international
trade. The high uctuation on local currency can be a cause of serious concern for Nykaa com A
Passion for Beauty.

3 Labor market conditions

The demand and supply of labor determine the wage rates and supply of skilled workforce. Nykaa
com A Passion for Beauty. must study and predict the labor market conditions to understand how
it can attract talented workers and leverage their skills to improve business performance. When
labor markets are exible, Nykaa com A Passion for Beauty. can take advantage of higher labor
productivity. Whereas, operating in rigid labor markets may cause labor wage and other issues
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 raised by powerful labor unions. Nykaa com A Passion for Beauty. should also carefully analyze
the availability of skilled human capital as a shortage of skilled labor can a ect business e ciency
and make talent attraction and retention more challenging.

4 Financial markets e ciency

The global expansion strategies of the Nykaa com A Passion for Beauty. are in uenced by the
nancial market e ciency as operating in highly e cient nancial markets leads towards
improved liquidity position and strengthened ability to enter new markets. The health and
e ciency of nancial markets will determine Nykaa com A Passion for Beauty.’s ability to raise the
capital at fair prices.

5 Economic structure

The business practices of the Nykaa com A Passion for Beauty. are in uenced by the prevailing
economic structure. The economic and regulatory environment in a monopolistic or oligopolistic
structure will be di erent from the monopolistic competition and perfect competition.

3 Social factors

2.3.1 Importance of social factors in the PESTEL

framework

Organizational culture derives strong in uence from the societal norms, values and trends.
Understanding the demographic trends, power structures, consumers’ spending patterns and
shared beliefs can help Nykaa com A Passion for Beauty. design e ective marketing messages
and ful l corporate objectives through informed PESTEL analysis. The marketing department of
Nykaa com A Passion for Beauty. can use the information retrieved from social, environmental
analysis to target the consumer groups and increase the appeal of o ered products to potential
buyers. Nykaa com A Passion for Beauty. must consider the following social factors to conduct
macro- environmental analysis.

2 Social factors that in uence Nykaa company

A Passion for Beauty.

1 Demographic trends

Changes in demographic patterns like aging population, migration trends and socio-economic
variables have paramount importance for international business organizations like Nykaa com A
Passion for Beauty. Studying the demographic characteristics can help Nykaa com A Passion for
Beauty. in choosing the right market segment/segments with high growth potential. The business
and marketing strategies are also in uenced by migration. It is important for Nykaa com A
Passion for Beauty. to understand the people’s general attitude towards migration as it can
in uence rms’ ability to bring international managers to host country.

2 Equality and power distance

The power distance within any society shows the acceptance of hierarchy and income inequality.
Nykaa com A Passion for Beauty. must adjust its business management practices while entering
in markets with high or low power distance. The growing inequality in many countries is altering
the power structure, which has serious implications for international business organizations like
Nykaa com A Passion for Beauty.

3 Gender Roles

Nykaa com A Passion for Beauty. need to study the traditionally assigned gender roles to align its
marketing and communication practices accordingly. Marketing and human resource strategies in
a traditional, patriarchal society with clearly distinguished gender roles will be di erent from
societies with low gender stereotypes.

4 Societal norms and class distribution

Culture is considered an important variable by international marketing managers. Each society

has distinctive norms and values that play an important role in shaping consumer behavior. Nykaa
com A Passion for Beauty. should develop local teams and develop local partnerships for
understanding the societal attitudes and norms to tailor marketing strategies according to unique
cultural context. The observation of social class strati cation is also important for Nykaa com A
Passion for Beauty. O ering luxury products at premium prices to a market where the high-end
market is considerably small in number will require Nykaa com A Passion for Beauty. to adopt the
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 niche marketing strategies. Similarly, market segmentation based on social class may be
ine ective where social class strati cation is low.

5 Online shopping

The advent of social media and e-commerce has encouraged online shopping behavior among
customers. Nykaa com A Passion for Beauty. needs to understand the online shopping behavior
by considering the generational di erences as younger consumers are more inclined to shop
online than older customers. The growing use of mobile phones and social networking sites must
be considered when developing marketing and communication strategies.

6 Spending patterns and behavior

The consumers’ spending patterns are in uenced by their purchasing power of money. Studying
and forecasting the consumers’ purchasing power based on relevant economic indicators is
important to analyze the customers’ interests and spending patterns. In some societies,
consuming the o ered product is considered a status symbol, while, some people use the same
products for functional aspects. Nykaa com A Passion for Beauty. should invest time on
understanding the consumption motivations and social trends that de ne the consumption
behavior. Nykaa com A Passion for Beauty. should also attempt to understand the degree of
consumer ethnocentrism and consider the country of origin e ect to determine local consumers’
evaluation of foreign products. Lastly, Nykaa com A Passion for Beauty. should study the
consumers’ leisure interests and should focus more on enhancing the customer experience if
customers prefer experiential products over traditional product o erings.

4 Technological factors

1 Importance of technological factors in the

PESTEL framework

‘Technology' is the fourth factor of PESTEL analysis. The rapid technological advancement and
technological di usion across the globe have increased the importance of understanding
technological factors during the strategic decision making process. A detailed analysis of the
technological environment can help Nykaa com A Passion for Beauty. capture the technological
trends to achieve certain business advantages, such as- increasing pro tability, boosting
innovation process and enhancing the operational e ciency. Following technological factors can
in uence the business performance of Nykaa com A Passion for Beauty.

2 Technological factors that in uence Nykaa company

A Passion for Beauty.

1 Social media marketing

The development of information and communication technologies has led towards the adoption of
innovative marketing techniques to enhance collaboration with customers. Use of social media
has become common in a modern business environment. Nykaa com A Passion for Beauty. can
leverage the opportunities o ered by social media marketing to improve business performance.
Technological trends can be used to start the creative social media campaigns for developing
online brand communities.

2 Technological innovations and development level

Nykaa com A Passion for Beauty. should carefully consider the on-going technological
innovations to stay ahead of the competition. A close eye should be kept on analyzing the 5G and
determining its potential to deliver positive business outcomes through enhanced user
experience, increased speed and expanded access. Technological innovations like this can bring
major transformations in the industry and reset the success rules for market players. Moreover,
considering the development and maturity level of technology in the respective market is also
important. Entering in markets where technological advancement has not reached the maturity
means Nykaa com A Passion for Beauty. can increase the market share by focusing on emerging
technological innovations.

3 Research and development on technology and impact on cost structure/value chain

Nykaa com A Passion for Beauty. needs to consider the investments made by competitors on a
micro and macro level to understand how new technologies in uence the rm’s value chain and
prevailing cost structure. Research and development activities are highly important in an
environment characterized by creative disruption. In such an environment, Nykaa com A Passion
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 for Beauty. should invest in disruptive technologies to maximize the pro ts and re-invest the
pro ts for future disruptive technologies.

4 Shortened product life cycles

The adoption of new technologies has shortened the lifecycle of new product development.
Today, new products are developed quickly, and supply chain partners have also gained more
power. It pressurizes the Nykaa com A Passion for Beauty. to develop new products quickly,
increase product range diversity, integrate exibility into the value chain and develop healthy
business relationships with value chain partners.

5 Environmental factors

1 Importance of environmental factors in the

PESTEL framework

The growing environmental consciousness and changing climatic conditions have made
‘environmental analysis’ an important part of the PESTEL analysis. The environmental standards,
laws and regulations vary across di erent markets. The international presence of Nykaa com A
Passion for Beauty. require the organization to consider these di erences to avoid undesired
circumstances carefully. Detailed environmental analysis is imperative before deciding to enter a
new market or start a new product line. Some examples of environmental factors that Nykaa com
A Passion for Beauty. need to consider are given below.

2 Environmental factors that in uence Nykaa company

A Passion for Beauty.

1 Recycling and waste management

The growing environmental pollution coupled with technological advancement has compelled
business organizations to adopt innovative recycling and waste management practices. In some
countries, recycling has almost become a business norm. Moreover, adopting e cient waste
management practices in organizational units that are located in or near urban areas is highly
crucial for Nykaa com A Passion for Beauty. Many countries have placed strict norms to protect
their urban areas through e ective waste management.

2 Renewable technologies

Some countries o er subsidies for encouraging investment in renewable technologies. Nykaa

com A Passion for Beauty. can bene t from it and invest in renewable technologies to ensure
long-term sustainability. This investment will also increase stakeholder satisfaction and expand
the customer base due to enhanced brand image.

3 Weather and climatic conditions

Changes in weather and climatic conditions can in uence business e ciency. For instance,
extreme weather conditions can increase the cost of operations and compel the Nykaa com A
Passion for Beauty. to make the value chain more exible. Such changes can also in uence the
consumers' spending patterns, causing the organization to revise its product and marketing
strategies.

4 Attitude towards eco-friendly products

There is a growing trend towards the use of green/eco-friendly products. Nykaa com A Passion
for Beauty. can take it as an opportunity and adopt green business practices to win the trust of
stakeholders. Regulatory bodies’ emphasis on ensuring compliance with environmental norms is
altering the product innovation priorities. It requires Nykaa com A Passion for Beauty. to prioritize
and focus on marketing the eco-friendly nature of their products over customary value
propositions.

5 Environmental regulations to avoid resource

depletion

Excessive resource depletion by Nykaa com A Passion for Beauty. can draw the negative
response from media, environment protection groups, customers and the general public. Nykaa
com A Passion for Beauty. must study the speci c environmental regulations of the country under
consideration to understand which resources (like water, electricity etc.) are considered rare or
which species are endangered whose excessive consumption can cause trouble for the
organization.

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6 Legal factors

1 Importance of legal factors in the PESTEL

framework

“Legal” is the sixth factor of PESTEL analysis. Nykaa com A Passion for Beauty. cannot enter a
new market without studying in detail the legal environment and regulatory structure of the new
consumer market. A careful evaluation of legal aspects is required to avoid getting into some
serious trouble. Ignorance in this regard can cause undesired circumstances for Nykaa com A
Passion for Beauty., such as- hurting competitive advantage as a result of intellectual property
rights violation and harmed organizational image due to violation of consumer/ employee/
environment protection standards. Nykaa com A Passion for Beauty. should consider the
following legal factors when exploring a new market.

2 Legal factors that in uence Nykaa company

A Passion for Beauty.

1 Employee protection laws (discrimination and health

and safety)

Nykaa com A Passion for Beauty. must follow the employee/ labor health and safety laws as some
countries have strict regulations to ensure labor safety. Providing a secure work environment for
the workforce is the ethical and moral obligation of Nykaa com A Passion for Beauty. Similarly,
anti- discrimination laws (like equal employment opportunity) also need to be carefully studied
when developing human resource practices as discriminatory suits against employer harm the
organizational image and a ect organizations’ ability to attract and retain the talent.

2 Consumer protection laws

The data protection has become an important issue due to consumers’ privacy and security
concerns. Nykaa com A Passion for Beauty. need to study data protection regulations to protect
the customer data. Moreover, there are laws to set the maximum price, ensure a certain quality
standard and protect consumers from fraudulent marketing claims. Nykaa com A Passion for
Beauty. must consider these factors to ensure compliance with consumer protection laws.

3 Intellectual property laws

Intellectual property regulations are designed to protect the companies' patents and valuable
ideas. Inability to protect intellectual property rights can result in losing competitive advantage,
which may weaken the positioning of Nykaa com A Passion for Beauty. against other market
players.

Concluding statement

To conclude, the PESTEL model is an important business tool that involves a detailed analysis of
macro-environmental factors that shape the business environment. Ranging from political factors
to environmental factors, each factor comprises various variables that in uence the strategic
decision making process of business organizations like Nykaa com A Passion for Beauty.
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