Analyze the Market Environment of Blackmores †Free Samples

Question: Discuss about the Analyze the Market Environment of Blackmores. Answer: Introduction: The importance of business strategy in ensuring organizational success cannot be overstated. It should be noted that even if an organization works towards the accomplishment of a pre-determined set of objectives, it will fail to achieve the same, if its objectives are not backed up by effective strategies. An organization that lacks an organized, strategic approach towards its business problems will fail to sustain itself in future. While often mere management of business activities are being confused with business strategies, it is important to note that business strategies help an organization to distinguish itself from competitors, rather than merely conducting business. Thus, any effective business strategy adopted by a company enables it to explore a variety of business opportunities beyond its standard business practices. Blackmores, founded more than eighty years ago, is being deemed as ne of the most trusted and valuable healthcare brands of Australia. Founded by Maurice Blackmore, the company ensures the health and well-being of its consumers, by offering a mixture of the goodness of traditional herbs and the latest, scientific knowledge of nutrition. The company, since its inception, has not only been able to expand beyond Australia, in New Zealand and selected parts of Asia, but it has also grabbed and maintained its position for eight long years as the Australias Most Trusted Brand for vitamins and supplements. However, since a last few months, the organization has been encountering a sharp decline in its sales (approximately 26%), and hence it would be important to critically examine its strategies, and recommend new strategies for its future growth (Donaldson 2017). Discussion: Key Concepts of Business Strategy As discussed before, a strategy is like an action plan that helps a company identify its long-term objectives, and help them guide resource utilization in order to achieve long-term sustainability in future. However, before setting the business objectives, and adopting an innovative strategy, it is important to analyze the business environment of the organization. Hence, a SWOT Analysis of Blackmores is being conducted, as follows: SWOT Analysis: Strength: The company is operating in the Australian health industry, that considering the huge number of old people in Australia, shows a general trend of higher profitability (53%) (Brandt et al. 2014). Despite being a pharmaceutical company, it offers a diverse range of products- nutritional oil, weight management products, as well as health and skin care products. Huge brand recognition in the Australian market. Weakness: It requires incurring huge expense in the field of research and development activities. 85% of its business operations take place in Australia, and the companys over-reliance on the domestic market can be troublesome (Johnson 2015). The vitamins and supplements produced by the company are considered discretionary spending, and thus many people might not invest in these products. Opportunity: The company can expand globally, and especially the Asian market has huge prospects for it. The economy of Australian market is expected to grow, and thus its domestic market will benefit from the growth. It can acquire some of the leading health care companies of countries like China, which enjoy opportunities for R D activities. Threat: Encounters tough competition from companies like Cenovis, Natures Own and Microgenics. The increase in labor cost. The pharmaceutical industry of Australia is witnessing the arrival of new entrants. In order to assess and analyze the external business environment of Blackmores Limited, it is equally important to assess and analyze the business environment of the company through the PEST Analysis as follows: PEST Analysis: Political Factors The shift to a Liberal government in Australia clearly implies lower taxes and deregulation that can favor the growth of the company in Australia. The political and financial instability of Malaysia and Thailand can pose a threat to the growth of the company. Economic Factors The Mining Bloom of Australia had a huge negative impact on the economy of Australia. Thailand however, is the fourth richest nation enjoying the second largest economy of South East Asia. Social Factors In the South East Asian region, improvement in overall standard of living can hinder the business growth of the company. Australia has a huge elderly population, making its consumers compelled to buy more and more of vitamins. Technological Factors There is a good scope of R D activities in Asian countries, especially Malaysia and China. People are more interested in online shopping that the company is yet to develop in future (Reid 2014). As it can be seen from the above table, despite its strong brand reputation, Blackmores is encountering problems in retaining its position, owing to huge competition from rival products, confined market and its over-dependence on the Australian economy. Just like the external business environment, the internal business environment of an organization also deserves special mention. Hence, he internal environment of the organization is conducted below: Internal Analysis of Blackmores: Senior Managers Quality: One of the major reasons why Blackmore has been able to achieve competitive advantage over other organizations, is that it the company hires senior managers who are highly qualified and experienced in the field of business administration. With a strong brand marketing strategies, the managers has helped the company achieve a remarkable sales growth of nearly $350 million last year (Evans 2015). The experienced business leaders have helped the company diversify and expand, invest in BioCeuticals and transform its cost profile. Resources: Goodwill and brand recognition are the two of the most important assets of the organization. It has already been awarded as the most trusted brand in Australia for vitamins and supplementary products. Since it offers nutrition products to its consumers, it is able to gain competitive advantage over the artificial medicine suppliers. Besides, the human resources of the company have equally played an important role (Page 2014). Besides, the essence of innovation underlying each strategic decision of the company, such as the development of a new recyclable polypropylene pack for larger bottles of capsules and tablets has also helped the company achieve sustainable growth. Capabilities: The most important capability of Blackmores lies in its R D capabilities. It not only refines its products and creates new ones, but at the same time, Blackmores joint venture with a research team at the Southern Cross University places it at the forefront of research and development (Blackmores 2017). Strategy Options needed to be Adopted by Blackmores: A very important component of business strategy is the set of strategic goals and objectives that the organization should set up for it. Each organization has a distinct mission and vision that helps it understand the important strategic goals that it intends to achieve over the coming year as well as in future. While the Mission Statement of the organization states that the company intends to achieve its competitive growth by providing the best quality products to its consumers, its Vision Statement claims its dedication to adopt a holistic approach to consumer health and well-being. Being drive by its vision, Blackmores has been able to achieve competitive growth over its competitors, simply because it does not offer artificial medical products, but rather introduces a more herbal and natural approach to health care provision. However, the unflinching standard of quality as achieved by the company needs to be communicated to the audience in an effective way. Blackmores has usually been focused on traditional marketing strategies, and does not have a strong online presence (Tsimonis and Dimitriadis 2014). Since the company is deciding to venture into new markets of Asia, it should try its best to attract consumer attention by creating an impactful presence on social media sites. Instead of limiting itself to English marketing strategies, it should also opt for local language marketing as well. Another important strategic option available to the company that can facilitate its corporate growth is the diversification of its product range. It should also build new sources of revenue. Hence, although the company produces a variety of vitamin products, minerals and nutritional products, it should try to expand its business by producing new products such as baby care products, skin care products, chest and respiratory healthcare products as well as cough syrups and baby soaps. It s evident from the above environmental analysis that companies like Cenovis, Natures Own and Microgenics offer throat-cut competition to Blackmores, and hence in order to sustain itself, it must necessarily diversify its products (Grant 2016). Besides, an improvement in the healthcare in South East Asian region has also led to the reduced dependence of the consumers on vitamin producing companies. Hence, in future, the company may also consider the idea of investing in medical equipments and diagnostic products. The product differentiation is also an important business strategy that can help a company ensure long-term sustenance in a market. While a consumer is confused while making choice between similar products, a minor variation in one product can make him choose it over the other. Although the Asian market has emerged to be a huge revenue generating market for Blackmores, the company has been encountering tough competition from companies like Amway. For example, Amway in the Chinese market is the leading healthcare industry, and with its portfolio of diverse products it has been able to gain competitive edge over other brands, including Blackmores. Hence, Blackmores, in order to gain its competitive edge over Amway, it must offer innovation in its products. The company can achieve this, by making its vitamin tablets available in a variety of flavors such as strawberry and vanilla that can appeal to the young consumers. Besides, in the local as well as the foreign market, the company sho uld introduce innovative marketing campaigns. For example, it may donate money and free vitamins to the impoverished people. As a CSR strategy, it will help the company earn greater brand recognition among the masses in a new market, while also revealing their responsible approach to business, that will help them capture the attention of foreign consumers more easily (Kang 2014). International Growth Options for Blackmores: The foreign expansion policy of any company helps in enhancing its profit generating capacity, ensuring its sustainability in future. Although Blackmores enjoys a strong presence in Australia as well as in 11 markets across the Asia-Pacific region, the company needs to expand further, considering higher competition and the need for greater global recognition. While the company enjoys more or less impressive presence in the Australian and Asian markets, it can benefit considerably by expanding in Africa. The value of the African pharmaceutical market was worth $20.8bn in 2013, and is expected to reach approximately $US60bn by 2020, and thus it will be easier for Blackmores to engage in different research activities for further innovation. It is estimated that by the year of 2013, 1.1 billion Africans will be of working age, and the change in the lifestyle will lead people to suffer from non-infectious diseases such as diabetes and cardiovascular conditions, that will in turn be benefi cial for companies like Blackmores (Banalieva, E.R. and Dhanaraj 2013). However, in order to permeate the African market, the company can merge with Australian start-up healthcare firms, such as ClaimSync and MobiSure. The chief advantage of investing in Africa lies in the fact that the African healthcare market is yet to be explored by other healthcare brands, and hence establishing a dominance over the market, can help it gain competitive advantage. Conclusion: The business strategy of an organization can help it achieve long-term sustainability as well as immense business growth in future. Although Blackmores is already a company that has been able to achieve much recognition in the market, it should consider the strategic options stated above. It should not only diversify its product range, but it must also expand itself in new markets. However, along with its international expansion policy, it must ensure that the employees, especially the expatriate employees are sufficiently trained, so as to conduct business in a foreign business environment. References Banalieva, E.R. and Dhanaraj, C., 2013. Home-region orientation in international expansion strategies.Journal of International Business Studies,44(2), pp.89-116. Blackmores. (2017).2014 Natural Leaders Report. [online] Available at: https://www.annualreports.com/HostedData/AnnualReportArchive/B/ASX_BKL_2014.pdf [Accessed 18 May 2017]. 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