Strategic Situation Analysis and Tool †Free Samples to Students

Question: Discuss about the Strategic Situation Analysis and Tool. Answer: Introduction Blackmore Limited is an Australian Company, which manufactures and markets the healthy and diet supplements. This report examines the internal and external analysis of the Blackmore Limited Company. Internal analysis of the company is conducted by analyzing the resources and capabilities of Blackmores. It highlights some of the quality of its management and other resources. Porters five forces analysis and PESTLE technique are used for analyzing external environment of this organization. Furthermore, it includes the SWOT analysis to find out its strengths, weaknesses and opportunities and threats. This report discusses the current situation of Blackmores Limited in the industry. The graphs indicate the financial performance of the company in previous five years. Blackmores Limited was a naturopathic organization in Australia, which was founded by Maurice Blackmore in Brisbane in the year 1938. Now, the company has grown to be a household health and vitamin supplements. It has been a market leader for more than 70 years. Currently, it is offering more than 150 products and serving all the areas in health and vitamins. It distributes the products primarily via supermarkets, retail pharmacy and food shops. In the year 2011, the size and profit of company are growing continually. Balckmores has continuously increased its operating revenue over past few years, due to its large demand from the China for high quality vitamins. The products of company are considered superior by the Australian consumers. Recently, it has developed its product range to mix the infant formula (DataGroup Stifung, 2017). This technique has been proven successful for many New Zealand and Australian based manufacturers. In financial year 2015, the revenue for Blackmores wa s more than $471 million. There was a 34% increase year by year. This growth in the revenue for company is common for the company because it has average rate of 16.6% year on year increase over the period of previous six years, i.e. financial year 2010 to 2015. There are so many competitors in the minerals, vitamins and supplements industry. The major vitamin supplement providers in the industry are Cenovis, Swisse, Berocca and Natures Way (Steiner, 2010). These are the most famous companies for the health and vitamin supplements in Australian market. Consumer preferences and Market Trends As the consumers are becoming more conscious about their health, so they prefer to take the vitamins and other dietary supplements. The sales of Blackmores Company have more than twice in period of 2013 to 2016. Profitability also followed this trend and increased over 300% in same period. The below given graphs show the trends in sales, gross margin, gross profit etc (Financial Times, 2017). The chart indicates that this company has managed its growth effectively by using additional operational volume to support the growth (Financial Times, 2017). The graph shows the revenue, generated by Blackmores in different segments. The senior management of the company is better than other companies in the industry. There is the stable leadership from last 30 years. Marcus Blackmores retains more than 30% stake in the company. The people at top management are committed to core values, like; leadership, trust, best performance and natural approach to health. HR management of the company is very effective. They are focusing on the recruitment and section process, training and high quality staff. Due to this, company was awarded for the best employers award in the year 2005-06. Company is having quality control teams to ensure the highest quality of the suppliers (Kraja Osmani, 2015). The major and significant resources and capabilities, which can be recognized and those provide this company with the viable competitive advantage are like; internal culture, trained staff, research and development of new and existing products, assured quality, brand reputation and awareness (Blackwell Eppler, 2014). It is the primary policy of Blackmores to provide the high quality products to its customers. This constant standard of the quality has clarified trough into reputation of Blackmores. This company has culture, which has developed great relationships among employees and top management. Blackmores is an undoubted leader in the healthcare research and development (Agarwal, Grassl, Pahl, 2012). It is continuously refining its existing products and producing new products. There is innovation in the operations of the company, which is providing it with the more viable competitive advantage. Furthermore, brand reputation is a critical factor to success of firm. According to a market research, Blackmores is the most trusted health care brand in this market. The capabilities in the RD provide it appreciated intellectual capital and knowledge, which is difficult for other companies. SWOT analysis Strengths Blackmores Limited has strong brand name in the Vitamin and supplement industry in Australia. It is the most trusted brand of Vitamin and health supplements. It is one of the oldest brand of vitamin and diet supplements in Australia Supply chain of the company is highly effective and efficient. Consumers can deal with the warehouses of the company directly. 11 years of successive growth in sales Having strong market position can make able to price its products at premium level Weaknesses Blackmores operational strategy is not clearly defined. It uses very common operational strategies. Distribution channel of the company is limited. There are only three retail stores, which sell 57% of products of Blackmores. There is decrease in the bargaining power from major distribution channels. Over-diversified products without any specialization Lack of appropriation product to fit the different market High expenses in research and development Opportunities Blackmores company has opened its online retail store, which may increase in sales of the company It has launched the products the products related to biomedical market and pet care Increased awareness of health and lifestyle issues Shifting demographics of the population in Asia and Australia Threats There are so many competitors in the market, who are deriving intense competition for the Balckmores Company. The chemists can ask for lower prices for implementing discount strategy. Highly regulated market Competitors are using more aggressive strategy High pressure of sale price and cost limitation from retailers and customers Competition from substitutes, for example; liquid vitamins Media and research against the supplements PESTLE analysis There are some political factors, which impact the growth of Blackmores organization in Australia. Political factors generate both opportunities and threats for the company. There are some changes to the government being more liberal, which usually stays for the deregulations and lower rate of taxes for any business. This shows that next three years may bring favorable changes in the political atmosphere in Australia (Warner, 2010). Apart from this, there may some uncertainty and unknown changes by the liberal government. If there will be high involvement of government in the industry, the political changes may generate unfavorable market conditions for the industry. The devaluation of the Australian currency makes it more inexpensive for the foreign customers to purchase the products. It can make the Blackmores products more economical and competitive and give a potential for the development of its business in global markets. This point creates opportunity for the company. There is another factor, which poses threat to the Blackmores Limited. The main factor is weak economy of Australia, which is deriving out from the mining boom. It will lead to the recession and economic downturn. Because various vitamins and health supplements are considered uncompelled spending, this can obstruct the spending in Australian industry, which is the reason behind the 85% sales of Blackmores Limited (Market Report, 2017). Social factors are very important for this industry. The people are giving more focus on their health and there is trend of vitamin and health supplement intakes. The aging population of Australia and their health conditions are requiring more vitamins. It increases the sale of vitamins and other health supplements. Online shopping is viable, whereby the customers are trying to find out the cheapest products available. If the supplements are cheaper outside the Australia, then consumers may prefer to buy the product from outside buyers. There may be some technology factors, like; availability of international shipping and shipping costs are also decreased. It is making the online shopping more worthy. Although, Blackmores limited is taking the advantage of technology advancement (Hopkins, 2015). Blackmores LTD is very much based on the technology and efficient and helping the organization in staying competitive in pharmaceutical industry. The company has created an application for its products, which allows its target customers to get the information about the vitamin supplements. If an organization addresses the environmental issues, then it can be seen as an eco-friendly organization. Blackmores emphasized on this with the building of the company campus, which focuses on minimizing their environmental effect. It is using various techniques for minimizing the wastage of production. The company is continuously finding the ways to reduce the environmental impact of packaging of products and enhance the recycling rates. In Australia, there are various legal diameters and regulatory frameworks, in which the company is running. The companies are abiding by tax laws and policies, trade laws and other legal regulations, which impact the Blackmores limited. Micro-environment analysis Blackmores Limited is facing aggressive competition in Australia and in other countries. From all the companies, Swisse Vitamins is creating the biggest competition for Blackmores in Australia. In East Asia, Blackmores Limited is very small player, which is competing against well-recognized global and domestic brands. As the Vitamin and supplement industry is at the mature stage, so there is not much scope for the growth (Nelson Alkhafaji, 2013). The organizations are not able to differentiate their products, which directed to the price competition conflicts. W hereas the large organizations like; Blackmores is having the competitive advantage because of economies of scale. Small companies in this industry are having benefit of development in the technology by selling products and items online. The foreign manufacturers are also posing the competition by selling their products on cheap rates due to low overhead expenses. The buyers in Australia have limited options, as there are very few vitamin and supplement players in country. It is importing the products from Asia Pacific and generally perceived to buy lower quality products in comparison to Australian products (Grant, 2008). Moreover, recent introduction of online business, Blackmores Limited has to establish better relationships with the major buyers, who produce more than half of its profits. The people are able to buy the products from online stores. As the Blackmores is one of the biggest players the respective industry, so they are considered to have enough power to create long term contracts with the suppliers to reduce production and manufacturing costs. In addition, there are various small suppliers to select (Lynn, 2011). Most of the inputs, which are used by the Blackmores are not very much specialized, so the bargaining power of the suppliers keep on weak its expansion in Asian countries could too develop the choices for suppliers. The vitamin and heath supplement industry in Australia is at the maturity stage of its life cycle. However, there is a growing demand in the vitamins and other health supplements, which is enhanced by the boosted economic conditions in Australia and health awareness among the consumers. The major market share of this industry is covered by two large players, i.e. Swisse and Blackmores. It has made very difficult for the new entrants to enter in this industry. Furthermore, the major barriers to the entry to the market are bounded by requirements of different legal formalities (Thompson Martin, 2010). Threat of substitute products is very low for the Blackmores. Fresh food is the only option for substituting the vitamins and supplements but it is very difficult for the body of human being to absorb nutrients from the food (Hitt, Ireland Hoskisson, 2009). It is very difficult for the people, who are in older age and have weak digestive system. Increase in health awareness among people will enhance the demand for vitamins and health supplements. Conclusion This is hereby concluded that Blackmores Limited is a string leader in the vitamin and dietary supplement industry. The company is operating its business by using effective resources and capabilities. External analysis of the company shows that company has sufficient strengths and opportunities to overcome its weaknesses and threats. Using some effective strategies can improve its position in upcoming years. The graphs indicate the growth and sales of the company. It has maintained a better growth by managing all the operating expenses. The profitability and sales of company are also increasing continuously. The position in respective industry is very strong but now there are some competitors, who are posing intense competition for Blackmores. So, the company should use some aggressive strategies to grow in this competitive environment. References Agarwal, R., Grassl, W. Pahl, J, 2012, SWOT: introducing a new strategic planning tool. 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