AE-E0025 Publication 042013 Na

AE-E0025
Publication: 04/2013
Natura and the development of a sustainable
supply chain in the Amazon region
Dirk Michael Boehe1
Leandro Simões Pongeluppe
Sérgio Giovanetti Lazzarini

It was Tuesday, December 13, 2011, when Mauro Costa, eco-
relations manager at Natura,
and Raoni da Silva, eco-relations coordinator at the same
company, were heading to the rural
producers’ association in Moju, a quilombo community in
Brazil’s northern state of Pará
located around 90 kilometers from the Natura Benevides
Industrial Unit (UIB). The purpose
of their visit was to conduct the annual negotiations for the
supply of inputs from the
region’s biodiversity. Traveling in a cabocla, a boat common to
the Amazon Region, the two
chatted about the “sustainability” of Natura’s business model as
a way to continue
developing the communities where the company has operations,
but while also enabling the
company to gain advantages over its competitors.
1 Case study developed by Professor Dirk Michael Boehe,
Professor Leandro Simões Pongeluppe and Professor
Sérgio Giovanetti Lazzarini. This case study is solely for the
purpose of classroom discussion and does not
propose to render an opinion on managerial effectiveness or

ineffectiveness or to serve as a primary source of
data.
Copyright © 2013 Insper Institute of Education and Research
No part of this case study may be reproduced or transmitted by
any electronic or mechanical means, including
photocopying, recording or any storage system, without the
express written consent of Insper Institute of
Education and Research. Violators will be subject to the
penalties set forth in articles 102, 104, 106, 107 of Federal
Law 9610 of 02/19/1998.
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The UIB had been installed in the Amazon Region in 2006.
However, the growing
importance that inputs from Amazonia’s biodiversity played in
Natura products was

becoming a cause of concern for Mauro. According to the unit’s
practices in its relationships
with supplier communities, producers were guaranteed that a
portion of their annual
production would be purchased for at least three years. But
there was no exact estimate of
the potential acceptance of the final products (shampoos, soaps,
creams and others) by
Natura consumers.
Moreover, the Benevides team maintained a practice of
investing not only in training and
education, but also in transferring know-how and financial
investments, which strengthened
the communities’ ability to develop competencies in the
communities. However, since the
communities were not obliged to supply inputs exclusively to
Natura, this could attract
potential competitors. In fact, these communities had already
been approached by other
companies.
As they were pondering these facts, Mauro and Raoni debated
whether Natura could

indeed reconcile competitive advantages with the effort to
develop communities even
without exclusivity agreements for the supply of inputs.
The cabocla continued on its way up the large Amazonian river
and doubts about the
viability of Natura UIB’s business model continued to weigh on
Mauro and Raoni. Soon they
would go ashore at the Moju community for a meeting with
producers and submit their
supply and price proposals.
Natura
Natura was founded in 1969 by Antônio Luiz da Cunha Seabra
with the aim of combining
cosmetics and relationships2. Years later – in 1979 and 1983,
respectively – Seabra was joined
by two entrepreneurs, Guilherme Peirão Leal and Pedro Luiz
Barreiros Passos. The three laid
the foundation for what would become Natura Cosméticos in
terms of both the company's
structure and its beliefs and vision of the world.

Natura’s mission (“reason for being”) is based on pursuing
products that promote well-
being; the harmonious and pleasant relationship of a person
with one’s body; “being well”;
the empathetic, successful and gratifying relationship of a
person with others, with nature,
which they are a part. The company believes that “Life is a
chain of relationships.”3
In 2004, the company held its IPO on the Novo Mercado, the
listing segment of the São
Paulo Stock Exchange (Bovespa)4 with the highest corporate
governance standards, and in
that year posted sales revenue of R$2,472 million and net
income of R$300.3 million. From
2 Natura Annual Report, 2011, page 9.
3 Natura Annual Report 2011, page 3.
4 Natura Website: http://scf.natura.net/SobreANatura/
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2004 to 2011, the company registered growth in sales revenue

of 279% and in net income of
277%, which reached R$6,887 million and R$830.9 million,
respectively, in 20115.
Furthermore, from 2006 to 2011, it registered net margin
expansion of 4% and ended the
period with good levels of ROA (23.99%) and ROE (60.75%)
(Exhibit 1). The company was
elected one of the 21 most sustainable companies by Exame
magazine in 2010 and 20116. It
was also a component of various stock indexes for companies
committed to social and
environmental responsibility, such as the Corporate
Sustainability Index (ISE), the Special
Corporate Governance Stock Index (IGC) and the Carbon
Efficient Index (ICO2) of the
BM&FBOVESPA.
Brazil’s cosmetics market
Over the years, beauty and personal care products in Brazil had
become an attractive
market for companies, with intense competition for market
share gains among Brazilian and
foreign companies (Exhibit 2).

However, 2011 was not as good as other recent years had been.
In 2011, the sector grew by
just 8.61%, much slower than the 13.68% in 2010 and 15.72%
in 2009. Consumer demand
waned due to past debts, while, on the supply side, problems in
the direct sales channel and
in implementing new information systems played critical roles
in the lackluster
performances of companies in the sector like Natura and Avon.
As a result of these problems, Natura’s consumer loyalty
declined from 53% to 52%, while
its overall brand assessment decreased from 81% to 73%7.
Meanwhile, Avon, one of its main
competitors that also opted for a direct sales model, saw its
sales growth slow from 20% in
2010 to 8% in 20118, also due to problems in its information
systems. The company even
became a takeover target by French company Coty, which
offered US$10.7 billion9.
This scenario favored companies that had opted for franchise
models, such as Boticário,

which registered double-digit growth during the period. It also
encouraged the entry of new
players, such as the meatpacking group JBS, which acquired the
brands Albany, Francis,
Francis Hydrata, Neutrox and Ox. The JBS group planned to
become the "Brazilian Unilever"
over the upcoming years10. Apart from JBS, Bombril, the
renowned steel wool and household
cleaning products brand, also entered the industry by acquiring
the brand Ecologie, seeking
to capture the synergies that existed between the beauty and
home care markets.
5 Natura Annual Reports.
6 Exame magazine, available at:
<http://exame.abril.com.br/meio-ambiente-e-
energia/noticias/21-empresas-
modelo-em-sustentabilidade-em-2011>. Visited on Sep 09th,
2012.
7 Natura Annual Report, 2011, page 53.
8 Avon Annual Report, 2011, page 32.
9 Euromonitor International "Beauty and Personal Care in
Brazil 2012," page 2.
10 Idem, page 4.

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The difficulties faced by Natura and Avon in coordinating their
sales information systems
also favored other competitors with retail distribution networks,
such as Unilever, Procter &
Gamble (P&G) and L’Oréal. The latter had developed a line of
products based on cacao.
Despite the relatively slower growth in 2011, Brazil’s cosmetics
and personal care industry
remained buoyant. In 2011, Brazil registered the highest growth
in certain market segments,
such as products for hair removal (21.12%), babies and children
(15.62%), hair care (7.15%)
and bath (5.56%), etc.
According to analysts11, until 2016, Brazil was expected to
maintain its leadership in
industry sales among BRIC countries12 to account for 46% of
total sales, ahead of China
(32%), Russia (12%) and India (10%). One crucial factor for the
country’s continued

leadership was the expansion of the consumer market driven by
the growing middle class
(the so-called “C” income group)13, especially in its North and
Northeast regions. The
forecasts for the industry’s sales are shown in Exhibit 3.
Moreover, consumers in Brazil and worldwide were showing a
growing propensity for
the consumption of premium cosmetic products. Between 2011
and 2016, the deodorants
market was expected to grow by 117.9% while the bath products
market was expected to
grow by 74.8%14. Furthermore, products related to biodiversity
appeared to enjoy relatively
good acceptance by consumers (see Exhibit 9): Natura’s Ekos
brand had the sixth largest
market share in the sector in Brazil, with a consistent share of
at least 1.5% over the previous
four years (2008-2011).
The Ekos line
The Natura Ekos line was launched in 2000. The main idea of
the line was to develop an

innovative model in the cosmetics industry, exploring the idea
that human beings and nature
are one and that this connection should be strengthened while
caring for beauty. As such,
personal care is much more connected to the relationship of
human beings with the
environment than technological research, which is the path
adopted by other cosmetics
companies. According to Marcelo Cardoso, Organizational
Development and Sustainability
Vice-President at Natura:
“So just how are we going to compete with L’Oreal, Unilever
and Avon, who invest
millions of dollars in research and development in molecular
research? [...] It was at that
moment [1998] that Natura decided to bet on Brazil’s
biodiversity as the centerpiece of its
investments.”
Brazil 2012", page 2.
12 The acronym “BRIC” means: “Brazil, Russia, India and
China”.

13 According to ABEP (Brazilian Association of Research
Companies) criteria, “C” Class (assuming C1 and C2) has
an average income of U$693,00 (R $ 1,416.00). Source:
http://www.abep.org/novo/Content.aspx?ContentID=835
Brazil 2012," page 18.
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By revitalizing, revaluing, transmitting and preserving Brazil’s
biodiversity, the Ekos line
aimed to connect the brand to a unique vision by highlighting
that human interactions give
meaning to nature through local traditions and cultures and gain
meaning by coming into
contact with natural products. By underscoring this interaction,
Natura sought to reconnect
consumers to their relationship with nature and involve them
with the communities that
supply the biodiversity inputs (Exhibit 4).
However, investments in research on biodiversity, developing
relationships with local

communities and implementing sustainable practices for
managing these inputs, as well as
the costs of sourcing these inputs, led Natura’s products to
incur substantial costs (Exhibit 5).
For example, the costs of andiroba and murumuru almond were
R$2.53/kg and R$5.64/kg,
respectively, while the cost of cupuaçu butter was R$17.95/kg.
On the other hand, most
competitors used only palm oil in the formulas of their
products, which cost on average
R$1.83kg (Exhibit 6). One important factor was that Natura also
used a large amount of palm
oil in the base paste used to make soaps. It was estimated that
biodiversity inputs
corresponded to about 2% to 3% of the total inputs in the
formula of the Ekos line of soaps,
but the company planned to increase the use of oils derived
from the Amazon’s biodiversity
to between 3% and 5%.
Natura also charged a higher price than its competitors for its
Ekos product line (Exhibit
7). For practically all product lines (shampoos, moisturizers,

conditioners and soaps) the
prices per milliliter of Ekos products were higher than those of
competitors. In the case of
shampoo, for example, in 2012 the price per milliliter was 50%
higher than that of its
competitors: R$0.140/ml, compared to R$0.055/ml for the
nearest player (O Boticário).
Despite its higher costs (Exhibits 5) and prices (Exhibit 7), the
historical evolution (Exhibit
8), expansion and acceptance of the Ekos line were high, such
that it enjoyed the sixth
highest market share of all body care and beauty product lines
(Exhibit 9). However, the
viability of the Ekos line demanded constant interaction with
the communities and the
presence of the UIB was fundamental for building these
relationships.
Natura’s Benevides Industrial Unit
The UIB was responsible for nearly 50% of the supply of
biodiversity oils for Natura
products and for the base paste of Ekos soaps. Natura launched
operations at Benevides,

Pará in 2006 and, by 2011, the unit had managed to establish
relationships with around 15
supplier communities and approximately 1,551 families (Exhibit
10), representing a 253%
increase over four years. According to its 2011 annual report,
Natura overall maintained
relationships with 32 supplier communities and 3,235 families,
demonstrating the
importance of the UIB to the viability of the Ekos line.
However, the relationship of Natura’s UIB with these
communities did not follow the
traditional model of “buying and selling” in the spot market.
The unique characteristics of
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the Amazon region and the inexistence of a regular market for
products such as murumuru,
andiroba, cupuaçu, cacao and acai, among other biodiversity
inputs, made the purchase and

sale of these products difficult. In the words of José Renato
Cagnon, manager of the
Benevides Industrial Unit:
"I challenge you to go to the Amazon with five million in your
pocket and try to buy
something. You’ll see that you won’t be able to buy anything."
To help in the sourcing of these essential inputs for the Ekos
line, the UIB and Natura
developed a methodology of dialogue and relationship with the
supplier communities in the
Amazon Region.
Local partnerships
One of the earliest problems faced by the Natura UIB was: how
to find potential suppliers
in a region with a lack of logistics, information and
communication facilities. And how to
retain the suppliers that it managed to acquire.

To be able to implement this business model, UIB needed the
assistance of local partners
that knew the region very well, already had contacts with the
associations and, above all,
enjoyed legitimacy in their relationships with these
communities. One of these partners was
the Federation of Organizations for Social and Educational
Assistance (Fase). Created in
1961, Fase was an NGO based in Rio de Janeiro with a Marxist-
leftist ideology. Its mission
was “To contribute to building a democratic society through a
sustainable development
alternative.”15 Its policy had always been, according to its
leaders, to combat "neoliberal
policies"16. The NGO had a history linked to rural and riverside
communities and, since the
1970s, had been involved with the rural worker movements in
Brazil’s North. It had a
regional office in Belém (Para) to manage its operations in the
Amazon region.
Contact between Natura and Fase started in 2000 but was not
fully satisfactory to warrant
a partnership. However, with the passage of time, the dialogue
with Natura evolved such

that, in 2007, Fase noticed that both institutions shared the same
objectives regarding
development, autonomy and sustainability. According to a
director at Fase, the difference of
a partnership with Natura:
"[lies in] the development viewpoint, which means he [the
farmer] remains in the
cooperative, remains in the association [...]. Our viewpoint
matches that of Natura by
maintaining the viewpoint of collective work, so the
cooperatives become stronger, which is
something that sets the relationship apart in the region.”
15 Fase website, available at:<http://www.fase.org.br/v2/>
Visited on: Sep 09th, 2012
16 Idem.
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This partnership with Fase gave the Natura UIB an opening for

initiating dialogue with
Amazonian communities. The joint development of
relationships and the transfer of
information among these communities, Fase and Natura brought
benefits for all three
parties. The communities were strengthened with the income
generated from the sale of
biodiversity inputs. The work of Fase was strengthened with the
offering of courses and
leadership training in the communities. And the company could
source inputs from the
Amazon’s biodiversity for use in its products. Natura also hired
former Fase employees to
work on its team.
Partnerships like the one between Natura and Fase enabled the
company to penetrate a
region where, at times, even the government did not have
access. However, the viability of
the business depended not just on the company’s initial
penetration, but also on maintaining
its relations with partners and supplier communities.
Non-exclusivity and purchase guarantees

Fase was highly concerned with the emancipation, autonomy
and development of the
communities in accordance with democratic and sustainability
principles. According to the
NGO’s directors, this emancipation occurred via a unique
source of income and by avoiding
individualized relationships between farmers and large producer
companies, as is the case in
the production of palm oil (dendê), which is a commodity with a
more developed market.
Fase also believed that pursuing diversification in production
and consequently in income
sources was fundamental to the independence of the members of
the community. According
to a Fase director at the Belém office:
"Diversifying production gives you various prospects, rather
than just a single prospect,
like in the case of palm oil."
Aligned with these precepts, one of the key measures taken by
Natura was to ensure the

security of the communities in the purchase of biodiversity
inputs while at the same time
avoiding their dependence on a single producer or company. In
this regard, in accordance
with Fase’s orientation, Natura sought to sign contracts with
“purchase guarantees” that
estimated at least three years of supply and guaranteed the
prepayment of receivables to the
communities. However, to preserve the independence of
producers, these contracts did not
require suppliers to work exclusively with Natura.
The lack of barriers on sales to other agents was a potentially
attractive factor for Natura’s
competitors wishing to develop new products using biodiversity
inputs. Consequently, this
could generate a potential risk for the company, whose
investment could be taken advantage
of by its competitors. For example, according to reports from
Fase management:

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"We just now received a contract from the people of Cametá [a
city in the state of Pará]
with an Italian company for the purchase of inajá [a native palm
tree in the region of Pará] [...],
but the contract was completely irregular."
A similar view voiced by the Natura UIB team:
“There are companies such as Beraca [a Brazilian company with
seven units in Brazil and
one in France] that sold to L’Oréal, L’Occitane and other large
cosmetics manufacturers
around the world. But it’s known that these companies do not go
directly to the Amazon to
buy inputs, but rather prefer to deal with local intermediaries
for supplies.”
But, according to Mauro Costa:

"Trust in relationships is based on maintaining close
relationships with the communities,
monitoring supply together with them and checking for any
potential barriers that could
emerge during supply.”
This policy of maintaining open relationships with suppliers
was usually accompanied by
constant interaction between the company and these
communities. The Natura UIB managed
to maintain a strong presence within supplier groups, while
helping the people and
developing agro-extractive associations. This model, which the
Natura team referred to as
“engagement”, consisted of the company’s constant presence in
the communities, whether in
the form of technical training on the extraction and handling of
inputs or raising people’s
environmental and social awareness regarding the importance of
forest preservation and
community development. This constant interaction with the
community was referred to by

the Natura UIB team as the human “leg” of the relationship
(Exhibit 11). This “human”
aspect was perceived by the managers at Natura in the following
manner:
"There is no way how we can obtain [exclusivity]. The only way
would be to work with
exclusivity contracts or tell them ‘if you sell to competitors, we
won’t buy any more from you’
or something like that. But I don’t believe that meshes with the
issue of sustainability… So we
have to create an environment in which this loyalty arises
naturally. And that’s where this
engagement process comes in, with a very strong human
relationship with a high level of
presence (…). When you go out into the field you end up going
to these regions where there
are no hotels, no electricity, no toilets and you get involved
with the community. It’s an
environment that promotes loyalty building.”
And, according to Mr. Candinho, the leader of the Farmers’
Association of Moju, Pará:

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"Our relationship with Natura is one of friendship. They come
here, talk to us, help us
and sleep here. We’re like a family."
Apart from the human, social and environmental pillars, another
factor that was essential
to the feasibility of the Natura UIB’s dealings with the supplier
communities was related to
the financial aspect: the pricing of biodiversity inputs.
Joint price setting
Most of the biodiversity inputs sold by Natura were not traded
in organized markets.
Therefore, many of them did not have a quoted price or an
estimated value for acquiring

them. To ensure the supply of these inputs, Natura developed a
mechanism for pricing raw
materials. This pricing mechanism took into consideration the
commercial feasibility of
products in the Ekos line so that they remained competitive in
the final consumer market for
beauty and personal care products, while also adequately
remunerating suppliers.
The Natura UIB sought to hold annual meetings with the
community to set the price to be
paid for the extraction and sale of biodiversity inputs. At these
meetings, the managers from
the unit presented in a transparent way the costs they would
incur in transporting, storing
and processing the inputs and also heard from the community
the difficulties and time
needed to gather the inputs. The entire negotiation process was
conducted with everyone in
the community or association, with Fase also participating.
Even for the three-year contracts,
prices were renegotiated every year to ensure satisfactory
compensation for the
communities. The Fase director said:

"It’s a dialogue [...]. You go there to talk and discuss the
prices instead of arriving with a
set predefined price."
The price formation model was built in the following way: each
year, the Natura UIB
team met with the communities to negotiate the supply of
biodiversity inputs and the prices
for the following year. The Natura team first presented the
technical coefficients and then,
together with the suppliers, the prices began to be formed. Once
the prices were discussed
and set, the Natura UIB team returned to the company to pass
on these prices to the
procurement area. According to Mauro Costa:
"Once this price is discussed with them [community], it’s
‘closed’ at the meeting. We
return to the company and convince the procurement and
internal adjustment areas. This
team here ends up becoming an advocate for the biodiversity

suppliers.”
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Regulatory aspects
Apart from the high input costs, Natura also bore an extra cost
arising from
environmental legislation, in particular Executive Order (MP)
2186-16 of August 23, 2001,
which governed access to genetic heritage and traditional
knowledge, its protection and the
sharing of benefits. According to Sérgio Talocchi, community
relations manager at Natura:
"The law on sharing of internal rights is highly complex and
nebulous [...]. I don’t think
anybody else follows it, only Natura."

Much of this complexity arose from that fact that the MP, in
Article 24, states:
"Art. 24. The benefits arising from the economic exploration of
products or processes
developed from the sample of a component of genetic heritage
and the associated traditional
knowledge obtained by a Brazilian institution or an institution
headquartered abroad will be
distributed in a fair and equitable manner among the contracting
parties, in accordance with
governing law or regulations."17
However, there were doubts as to what exactly was “fair and
equitable” distribution. This
hindered the use of biodiversity inputs by Natura and by other
companies and research
entities. Nonetheless, the company paid this benefit sharing to
the communities, which
totaled more than R$1.5 million in 201118 alone. This
procedure further increased the final
cost of products due to not just the payment of this benefit, but

also the legal costs associated
with obtaining the authorizations to use the inputs. According to
Mauro Costa, manager of
eco-relations at the Natura UIB, this ended up becoming another
competitive advantage for
Natura, despite the costs:
"Today Natura has a legal area that takes care of this. Within
the legal area there’s a
biodiversity department. There’s an area called GT-GTBio at
Natura that centralizes
everything for these regulatory procedures. [...] There’s an
innovation funnel that considers: Is
the access already available? Does a protocol exist? [...] So all
this results in costs and
investments for the company."
The Genetic Heritage Management Council (CGEN), an agency
of the Ministry of the
Environment (MMA), lists the authorizations granted each year
to companies, universities
and research entities. To give you an idea, ten authorizations
were granted in 2009, of which

five were for Natura (Exhibit 12).
17 BRASIL, MP No. 2186-16 of August 23, 2001.
18 Natura Annual Report 2011, page 58.
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Back in the Amazon
It was close to noon and the cabocla continued on its way to
Moju. Mauro and Raoni were
getting closer to the community for the annual supply
negotiations meeting and began
discussing various critical issues. Would this business model be
able to generate competitive
advantages for Natura while also ensuring the sustainable
development of Amazonian
communities? If the company wanted to expand its supplier
base, would this model be
“scalable”? Given the sales potential of biodiversity products,
would they be able to supply

these inputs in a stable and competitive manner? Would it be
possible to replicate this model
if they wanted to find suppliers in other regions of the country
or Latin America? The cabocla
finally reached the banks of the river where the Moju
community lives. The meeting would
be long, but Mauro and Raoni knew they would have to
maintain a balance between the
"four legs” of the Natura UIB business model: financial,
environmental, social and human.

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Exhibits
Exhibit 1 - Financial Indicators for Avon and Natura (2006-
2011)
Avon (Latin America) Natura
Year Revenue
(million
USD)
Profit

Margin
ROA ROE Revenue
(million
USD)
Profit
Margin
ROA ROE
2006 2743.4 15.46% 30.36% 53.64% 3298.9 8.75% 46.23%
59.72%
2007 3298.9 14.64% 29.92% 64.43% 2957.3 8.65% 29.08%
54.21%
2008 3884.1 17.77% 41.65% 96.91% 2978.7 9.44% 25.80%
62.77%
2009 4103.2 15.79% 26.83% 49.36% 3316.5 9.78% 23.66%
47.28%
2010 4589.5 13.18% 21.93% 36.15% 3788.1 10.39% 25.12%
54.96%
2011 5116 12.32% 22.97% 39.77% 3203.9 12.74% 23.99%
60.75%
Average 3955.9 14.86% 28.94% 59.71% 3257.2 9.96% 28.98%
56.61%

Source: Exame magazine “Maiores e Melhores” guide and
companies’ annual reports. Data calculated.
Exhibit 2 - Market Share of Companies in the Beauty and
Personal Care Products Industry
by NBO (2008-2011). Figures in percentages.
Company 2008 2009 2010 2011
Natura Cosméticos SA 13.5 14.3 14.8 14.5
Unilever Brasil Ltda 10.2 10.1 10 10.2
Avon Cosméticos Ltda 9.4 9.7 9.5 8.8
Procter & Gamble do Brasil SA 6.9 6.8 7.6 8.4
Botica Comercial Farmacêutica Ltda 6.5 6.7 7.1 8.2
Colgate-Palmolive Indústria e Comércio Ltda 6.4 6.6 6 6.1
Belocap Produtos Capilares 5.3 5.4 5.6 5.7
Johnson & Johnson Industrial 3.7 3.6 3.7 3.8
Hypermarcas SA 0.6 2.7 3.2 3.2
BDF Nivea Ltda 2.1 2.1 2.2 2.4
Niely do Brasil Ltda 0 0 1.5 1.6
Phitoteraphia 1.2 1.2 1.3 1.4

Bertin Ltda 1.1 1.1 1 0.9
Jequiti Cosméticos 0.2 0.5 0.7 0.8
Other 32.9 29.2 25.8 24.0
TOTAL 100.0 100.0 100.0 100.0
Source: Euromonitor International, 2012. Passport "Beauty and
Personal Care in Brazil, page 10.
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Exhibit 3 - Estimated Sales of Premium Cosmetics by Category
(2011-2016). Figures in R$
million.
Premium Category Products 2011 2012 2013 2014 2015 2016
Premium Products for Infants and
Children 3.8 4.1 4.1 4.4 4.4 4.8
Premium Bath Products 50.5 56.6 63.9 71.7 80 88.3

Premium Dyes and Cosmetics 131.6 147.3 162.5 177.4 192.8
208.2
Premium Deodorants 10.1 12.5 14.5 16.7 19.2 22
Premium Fragrances 809.6 851.3 906.2 971.1 1029.8 1097
Premium Hair Care 104 114.3 122.8 133.6 144 156.1
Premium Skin Care 692.2 731.2 776.8 820 863.4 908.7
Premium Sun Protection 349.8 378.4 411.9 446.4 477.8 506.2
Premium Kits 15.3 16.7 18.4 20.3 22.3 24.6
Premium Cosmetics 2166.9 2312.4 2481.2 2661.7 2833.6 3015.8
TOTAL 4333.8 4624.8 4962.3 5323.3 5667.3 6031.7

AE-E0025
14
Exhibit 4 - Advertisement for Natura Ekos "The Tradition of
Brazil-Nut Milk"
Source: Natura website. Available at:
http://www.naturaekos.com.br/rede-ekos/a-tradicao-do-leite-de-
castanha/.Visited on: Sep 01st, 2012.
AE-E0025

15
Exhibit 5 - Cost of Selected Biodiversity Inputs from Suppliers
at UIB (R$/Kg)
ITEMS CUPUAÇU
BUTTER
ANDIROBA
ALMOND
MURUMURU
ALMOND
Raw material cost 9.78 1.41 3.42
Production cost 1.4 - -
Raw material margin 1.677 0.21 0.51
UIB Freight 0.15 0.21 0.15
INSS contribution 0.22 0.03 0.07
PIS and Cofins taxes 1.66 0.23 0.52
ICMS tax 3.05 0.42 0.95
Raw Material Cost/kg (CIF UIB) 17.95 2.52 5.64

Source: Natura UIB, data provided by authors.
Exhibit 6 – Palm Oil Price, R$/kg (2007-2012)
Source: World Bank, Palm Oil, Malaysia Future Prices (first
contract forward) 4-5 percent FFA. Data
calculated.
AE-E0025
16
Exhibit 7 – Price Comparisons of Brands and Products (2012)

Source: Data compiled by the authors and research assistants,
from companies catalog sales.
AE-E0025
17
Exhibit 8 - History of the Natura Ekos Line
2000 - NATURA EKOS LINE IS BORN - Creation of a model
that is aware that nature
is the inspiration for relationships. Appreciation of the natural,
cultural and social
heritage of Brazil. Awareness that human beings and nature are
one. Creation of a
product line with 12 assets: andiroba, Brazil nut, passion fruit,
buriti, cupuaçu, pitanga,
guarana, lima-da-terra, macela-do-campo, madeira em flor,
folha fresca and flor d’água.
2001 - GROWTH OF LINE AND INNOVATIONS - Soaps made
of mate verde and
assets from the Atlantic Forest

2002 - INNOVATION: NEW AREAS TO BE EXPLORED -
Brazilian essential oils
scented with copaíba and cumaru. And transition to the slogan
"Well being well".
2003 - SHIFT TO PLANT-BASED SOAP LINE - Expansion of
soaps made with
murumuru, andiroba and passion fruit and the herbal bath lines
2004 - THE TRUE ESSENCE OF OUR NATION - New products
and expansion of
products made from priprioca, Brazil nut, buriti, among others
under the "Tempos" line
2005 - BRAND CONSOLIDATION - Inauguration of store in
France. Consolidation of
Ekos concepts and exclusive use of vegetable oils.
2006 - NATURA EKOS IN EXPANSION - International
expansion of the brand and
new facial care products.
2007 - SOAP WORKS IN THE SPOTLIGHT - Soap base
produced at the new UIB unit
2008 - YEAR OF MAJOR INNOVATIONS - Use of cacao and
strengthening of the
differentials of the sustainable chain
2009 - TRADITIONAL FESTIVALS IN THE SPOTLIGHT -

Products inspired by
Brazilian folk festivals and strengthening of existing products
2010 - SPECIAL SOAPS - 10th anniversary of the Ekos line
with new soaps made from
murumuru, cupuaçu, passion fruit and cacao. Growing
partnership with the
communities
2011 - BRAND RE-LAUNCH - "Science proving the traditions
of assets from Brazil’s
biodiversity"
Source: Natura website. Available at
http://www.naturaekos.com.br/valores-da-marca/linha-do-
tempo/. Visited on: Sep 01st, 2012.
AE-E0025
18
Exhibit 9 - Market Share of Brands in the Beauty and Personal
Care Products industry by

GBN (2008-2011). Figures in percentages.
Brand Company 2008 2009 2010 2011
Avon Avon Cosméticos Ltda 3.5 3.7 3.6 3.4
Gillette Prestobarba Procter & Gamble do Brasil SA 2.1 2.1 2.5
2.8
Seda Unilever Brasil Ltda 2.9 2.8 2.6 2.5
Dove Unilever Brasil Ltda 1.9 1.9 1.9 1.9
Lux Unilever Brasil Ltda 1.5 1.6 1.6 1.5
Ekos Natura Cosméticos SA 1.5 1.5 1.6 1.5
O Boticário Botica Comercial Farmacêutica Ltda 1.2 1.2 1.2 1.4
Natura Natura Cosméticos SA 1.4 1.4 1.4 1.3
Rexona Unilever Brasil Ltda - 1 1.2 1.3
Braun Oral-B Procter & Gamble do Brasil SA 1 1.1 1.1 1.3
Sundown Johnson & Johnson Industrial Ltda 1 1 1.1 1.3
Colgate Total
Colgate-Palmolive Indústria e
Comércio Ltda
1.1 1.4 1.2 1.3
Natura Tododia Natura Cosméticos SA 1 1.1 1.2 1.3

Sorriso
Comércio Ltda
1.8 1.5 1.1 1.1
Sève Natura Cosméticos SA 0.9 0.9 1 1.1
Johnson's Baby Johnson & Johnson Industrial Ltda 1 0.9 1 1
Colgate
Comércio Ltda
0.8 0.9 0.9 1
Pantene Procter & Gamble do Brasil SA 0.6 0.6 0.7 0.9
Axe Unilever Brasil Ltda 0.9 0.8 0.8 0.9
Elsève Belocap Produtos Capilares Ltda 0.7 0.7 0.8 0.9
Palmolive Naturals
Comércio Ltda
0.9 0.8 0.9 0.8
Boticário Botica Comercial Farmacêutica Ltda 1 1 0.9 0.8
Rexona Men Unilever Brasil Ltda - 0.6 0.7 0.8
Risqué Hypermarcas SA - 0.6 0.8 0.8
L'Oréal Imédia

Excellence
Belocap Produtos Capilares Ltda 0.8 0.8 0.8 0.8
Other Private Brands 9.7 8.9 9.3 10.3
Other 60.8 59.2 58.1 56
TOTAL 100.0 100.0 100.0 100.0
AE-E0025
19
Exhibit 10 – Supplier communities in Pará (UIB)
Source: Natura UIB, data provided.
Note: Circle with red border – UIB headquarters at Benevides;
circle with green border – supplier

community interviewed for this case study; circles with yellow
borders – all other supplier
communities managed by UIB.
AE-E0025
20
Exhibit 11 - Natura UIB Engagement Model
Source: Natura UIB, document provided by authors.
AE-E0025
21
Exhibit 12 – Total Authorizations for Access to Associated
Traditional Knowledge for
Scientific Research granted in 2009 by CGEN – Natura
Authorizations Highlighted

Authorization for access to associated traditional knowledge for
scientific research – CGEN
Authorization 045/2009
Date: 30/07/2009
Institution: Federal University of Mato Grosso (UFMT).
Legal Instrument: Resolution 247
Publication in Federal Register: 23/10/2009 – Section 1 – Page
92
Date: 30/07/2009
Institution: Natura Inovação e Tecnologia de Produtos Ltda.
60

01/06/2009
Institution: Universidade Estadual Paulista Júlio de Mesquita
Filho (UNESP).
118
Date: 27/04/2009
Institution: Federal University of São Paulo (Unifesp).
94
Authorization for access to genetic heritage component for
bioprospecting and technological
development (Renewal) - CGEN Authorization 014-A/2009

Date: 27/04/2009
Authorization 014-A/2009
72
Date: 27/04/2009
AE-E0025
22
72

Date: 27/04/2009
72
Date: 27/04/2009
72
Special authorization for access to genetic heritage component
for building and integrating
off-site collection with the potential for economic use, such as

bioprospecting or
technological development - CGEN Authorization 02/2009
Date: 25/03/2009
Institution: Extracta Moléculas Naturais S.A.
55
Special authorization for access to and shipping of samples of
genetic heritage component
for bioprospecting – CGEN Authorization 01/2009
Date: 20/03/2009
Institution: Empresa Brasileira de Pesquisa Agropecuária -
Embrapa
Legal Instrument: Deliberation Resolution 237
55
Source: Genetic Heritage Management Council (CGEN) –
Ministry of the Environment (MMA).

Available at: <http://www.mma.gov.br/patrimonio-
genetico/conselho-de-gestao-do-patrimonio-
genetico/processos/item/7695>. Visited on Feb 19th, 2013.
Prof. Hazem Farra IS 443/543 – 54 – Database Design,
Implementation, and Administration
Hazem Farra
Information System Department
[email protected]
St. Cloud State University
1
Assignment 5
1. Create an example of a relation (containing several [5-10]
records) that is prone to update
anomalies. The relation can be about one of the following:
• University keeping track of records related to classes or
students, etc.
• A hospital keeping track of patients, prescriptions, doctors,
rooms, etc.

• An auto manufacturer keeping track of factories, raw material,
makes, etc.
2. Using the relation created in #1 above, do the following:
a) Describe an example that illustrates the insertion anomaly.
b) Describe an example that illustrates the deletion anomaly.
c) Describe an example that illustrates the modification
anomaly.
3. Depict full key functional dependencies, partial functional
dependencies (if any), and
transitive functional dependencies (if any) in the relation you
created above.
4. Show the result of normalizing the relation you created in #1
to 2NF.
5. Show the result of normalizing the relation you created in #1
to 3NF.
6. Consider the following tables definitions and data:
CUSTOMER:

Hazem Farra
[email protected]
2
PRODUCT
VENDOR
Hazem Farra
[email protected]

3
Write the SQL queries that accomplish the following tasks:
7. Display all records in the table CUSTOMER
8. Display the CusFName, CusLName and CusAreaCode for all
customers, sorted alphabetically by
CusLName
9. Display the ProdCode, ProdDescript, and ProdPrice for
products with a Product Price of $100 or
higher.
10. Display the ProdCode, ProdDescript, and ProdPrice for
Products whose VendorName is Gomez Bros.
Sort the results by ProdPrice.
11. Display ProdCode and ProdDescript, ProdPrice, and
VendorName for all products with ProdDescript
containing “saw”.
Submission:
Submit a MS Word document by the due date listed on D2L,
with the following requirements :
1) File name: Assignment5_LastName
2) Header:

a) Full Name
b) Class-Section
c) Assignment Title
d) Due Date
3) Page number in the footer
Q1)
Briefly discuss the conditions in which the 2030 Sustainable
Development Goals were launched, including the logic behind
the choice of goals and the main actors supposed to contribute
to achieving the goals. Choose three SDGs and briefly discuss
how multinational corporations could help achieve them.
Q2)
Re-read the Natura case. What are the main stakeholders
associated with Natura’s business model? Why collaboration
with each stakeholder could be a double-edged sword, involving
both benefits and risks?
Q3)
Choose a company in an industry that you know well. Describe
the sustainability issues (environmental and social, in

particular) related to that industry. What actions can the
company you chose implement (or is already implementing) to
address these issues? Are these actions also good for the
company’s performance and competitive advantage? How?

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