Bsre301 Business Strategy And Environmental Assessment Answers

Answer:

Introduction

In the growing complexities of the management of global businesses, it becomes essential for a business organization to design and implement effective business strategies for reducing the growing impact of the environmental factors on its business operations, systems, and processes. This report will conduct the environmental analysis of Blackmores Ltd. by analyzing the external environmental and internal analysis (Hill, Jones, and Schilling, 2014). Pestle analysis will be used to analyze the macro environmental analysis. The internal analysis of Blackmores will be conducted with the help of VRIO model to analyze the strategic capabilities and core competences of Blackmores Ltd.

Internal Environmental analysis

VRIO model

VRIO model is a strategic model for analyzing the resource capabilities, competitive strengths, and core competences of Blackmores Ltd. that assists the firm to attain a sustainable competitive advantage in the industry. The VRIO refers to valuable, rare, inimitable, and organized resources to identify the competitive positioning of Blackmores in the marketplace.

The VRIO analysis of Blackmores Ltd. is identified from the following table:

(Source: VRIO Analytical table of Blackmores Ltd.)

From the VRIO analysis of Blackmores, it is identified that Blackmores Ltd. is one of the leading health and nutritional supplements providing pharmaceutical companies in Australia which has been operating its businesses for over 80 years in the Australian markets. It operates its business in Australia, New Zealand, and Asia (nine countries in Asia). The supply chain management and customer service operations provide the firm a sustainable competitive advantage in the industry. The organizational structure, brand portfolio, procurement function, and product diversification ensure the competitive parity of Blackmores Ltd. (Wheelen and Hunger, 2012).

Resource capabilities and core competences

Blackmores Ltd. has core competences because of its broad resource strengths and strategic capabilities to use the unique resources for providing the customized pharmaceutical service solutions to the customers. The resource strengths and core capabilities of Blackmores relate to the strategies such as product development, focused differentiation, hybrid production technologies, and advanced R&D efforts for maintaining the sustainable position in the dynamic pharmaceutical industry. It has strategic capability to provide the low-cost and differentiated pharmaceutical products to the customers by using the technological advancements, research laboratories and disruptive innovation (Research and Markets, 2016).

Blackmores deploys its financial, physical, and human resources in order to attain the competitive advantage in the Australian pharmaceutical industry. The resources of Blackmores includ humans, informational, technological, financial, capital, and natural resources that relate the strategy of the company with the organizational vision and mission for attaining the sustainable competitive advantage by offering the High-end solutions to the customers through offering the health and nutritional supplements with added quality and essential nutrients.

Table of Strategic Capabilities of Blackmores Company

Senior managers’ quality

The senior management of Blackmores Company is more committed to the organizational values through the customized service operations. The senior management including board of directors, CEO, VP, production manager, finance managers, senior sales managers, R&D managers, and customer relationship managers play their roles, duties, and responsibilities ethically and efficiently for the achievement of the organizational goals and objectives. The senior management of Blackmores is more focused on core principles, such as Asia Growth, customer centricity, product leadership, and operational excellence. The senior manager holds control and supervision on the performance of the middle-level and lower level managers (front line managers) by giving appropriate directions and guidelines to assist them in completing their tasks, and projects effectively (Blackmores Ltd. 2013). The senior management assigns the tasks, duties, and responsibilities of different organizational staff members including the middle-level managers, front line managers, executives, and labor staffs.

The senior management enhances the employee welfare and job satisfaction by facilitating the employee participation and engagement in company meetings and decision-making process, supportive and learning culture, safe and healthy working conditions, monetary and non-monetary benefits, workplace flexibility to enhance their morale, performance level, and motivation level. The senior manager executes effective strategies for maintaining the sustainable position of Blackmores in the Australian pharmaceutical industry. The senior management recruits the skilled, competent and experienced employees and managing the training and development programs for attaining good performances and productivity outcomes from them.

From the above financial performance graphs, table, and sales statistics reports, it is analyzed that Blackmores is the largest firm in the Consumer health industry in Australia that provides a range of nutritional or health supplement products to the health-conscious customers across the Australian markets. Blackmores Ltd. achieved huge sales for the six months to 31 December 2015 were $ 341.4 million, an increase of 65% from the sale of December 2014 ($206.4 million) and Group profit after tax was $ 48.3 million (2015) that was 169% increase of 2014 ($18.6 million). After looking the huge financial growth of Blackmores Ltd. in Australia, it is projected that it will across $800 million by the end of 2020. The revenues for Blackmores Ltd. were recorded $717 million in 2016 with 52% increase from $472 million in 2015 at an increase of 36% from $347 million in 2014 as well as 16.6% average growth over the past six years from 2010 to 2015.The profit margins for Blackmores Ltd. have increase 20.3% in 2016 from 15.4% in 2015 that was 11.6% in 2014 (Bracey, et al. 2016). The assets of Blackmores in 2016 were $434 million with the growth of 48% from $293 million in 2015 with 25% growth from $237 million in 2014. The net income was more than $100 million with more than 200% growth from the income $46.5 million in 2015 and $25.5 million in 2014.

Blackmores total franchise income accounted for17% of total revenue from its 1084 domestic franchises and 2085 international franchises. The competitors for Blackmores include GNC, MSCI ACWI, Vitaco, and Bellamy’s that cover most the market share of the industry. 

External Environmental Analysis

The micro environmental analysis will provide a framework to analyze the impact of the micro environmental factors on the business operations and activities of Blackmores. These factors include competitors, customers, suppliers, employees, shareholders, and Government and trade unions. The micro environmental impact for Blackmores Limited is following as:-

Employees- these are important stakeholders of the company that play an important role in achieving the sales targets, goals, and business objectives of the firm. The skilled, potential, and experienced workforce are required for handling different operations that demand for the attractive salary packages and welfare benefits. The specialized training and development programs are required for the development of the employees for enhancing their skills, and job competences (Grant, Butler, Hung, and Orr, 2012). 

Customers- The customers have significant microeconomic impact on Blackmores Ltd. because the customers demand for the fresh, quality, and nutritious foods products at low costs in exchanges of cost or money paid by the customers. The identification of the customers’ needs preferences, and demands and make changes in the foods products as per customer feedbacks for representing them the high quality of the packaged foods.

Competitors- The health and nutrition Australian companies, such as Harron  Pharmaceuticals, Sanofi-Aventis, and Nature’s Way affect the market share, sales revenues, gross profits, and clientele of Blackmores through their different product development, pricing, extensive market research, brand positioning, distribution, and promotional strategies. 

Shareholders or investors- The shareholders also have microeconomic impact on the business operations of Blackmores because the shareholders or investors expect the maximum possible profits or shares on their share or investment in the company (Motohashi, 2016).

Suppliers- The suppliers play an important role in supplying the raw materials for producing the prepared goods and services. Blackmores has fixed suppliers contracts to purchase the raw materials at competitive prices so that significant amounts of profits could be made by selling the large quantities of the branded foods items at cost-effective prices to the customers. 

Government and trade unions- The government spending and intervention, regulation barriers, taxation, trade implications, environmental legislations, customer protectionism barriers, and trade union laws affect the business activities, production processes, and external operations of Blackmores (Wheelen, 2012). For example, Fair competition act prevents the firm from the monopolies or monopolistic conditions.

Macro Environmental Analysis

Pestle analysis-

Pestle analysis is used for the external environmental analysis of Blackmores Ltd. that analyzes the influence of the external environmental factors on the business operations of Blackmores Ltd. Pestle framework analyzes the impact of the political, social, technological, legal, economic and environmental factors on the business performance of Blackmores Ltd. The impact of the macro environmental factors on the businesses of  Blackmores is following discussed as:-

Political Factor:

The political factors, such as government intervention and spending, political instability, liberalization, government regulation and control on the industry, uncertainties, industry trends, and market conditions are such as political demonstration and legal issues that affect the business operations and activities of Blackmores Pharmaceutical industry. For example, the heavy tax duties, tariff policies, acts of legislation, political and liberal changes adversely affect the business performance of the company (Xu, 2012). In opposite to this, lower taxes, favorable environmental conditions, government support through deregulation and low intervention, and changes to liberal government will support the business operations of Blackmores Pharmaceuticals positively. 

Economic Factor:

The economic factors, such as changes in interest rates, exchange rates or currency value, unemployment rates, and national GDP and taxation policies (e.g. sales tax, service tax, excise duties, and VAT) are such economic constraints that significantly influence the sales volumes, business profitability and gross revenues of the company. The economic factors affect the prices of supply of materials, leverage and labor costs, demand pattern, profits and pricing of products. The adverse economic conditions, such as high interest rates, inflation rates and unemployment rates and slow GDP enforce the procurement functions, production costs, and supply chain operations of the company to raise the prices of its products that will affect the customer purchasing activities and demand patterns. For example, the depreciation of the Australian Dollar will make it easy for the international customers to purchase at low costs compared to domestic markets that will enhance the sales performance and exports into the international markets.

Socio-cultural Factor:

Socio-cultural factors, such as demographic changes, cultural trends, population analysis, disposable income of the customers, life styles and distinct buying behaviors ageing population, prevalence of various health conditions, and growing health consciousness of the population are such socio-cultural dynamics that affect the product development, manufacturing operations, and expansion of the company. Due to socio-cultural risks, it targets all age groups of people as it provides the healthy and nutritional foods supplements for the people of aged 20-99 years by targeting the ageing population. It also provides the nutritional foods and health supplements for the woman aged 20-49 years.

Technological Factor:

The growing technological advancement and innovation trends have affected affect the product development process and international business operations of Blackmores. The technological breakthroughs and awareness enforce the company to make significant investment into the market research, automation and innovation in technology, product development, scientific health research and laboratories, internet technologies, and other technological inventions for maintaining its leading position in the Australian health and nutrition industry. For example, Blackmores Ltd. makes changes in the products and technologies by inventing hugely on technological infrastructure for producing the health foods supplements as per market demands and customers’ needs. 

Legal Factor:

The legal factors, such as the Australian government trade laws and regulations, taxation policies, customer protection laws, labor laws, employees’ safety standards, and fair competition act are such legal constraints that affect the sustainable business performance of Blackmores at national and international level. For ex- The Australian Foods standards Agency forms a code of practice for the food retailers that issues regulations prior to information in advance regarding change in pricing or quality of products. Blackmores is the industry leader in the health foods industry that has been operating its businesses more than 80 years because of its strong commitment to follow the Australian industry standards and legislation norms (Hitt, Ireland, and Hoskisson, 2012). For ex- it provides equal opportunities for both female and male staffs as it has almost 70% female staffs in the operational departments.

Environmental Factor:

The growing environmental implications and awareness issues, such as industrial waste and excessive gas-emissions, climate changes, weather conditions, geographic locations environmental offsets, and green house effect are such environmental constraints that influence the business operations and activities of Blackmores in both positive and negative way. The environmental awareness and community legal issues put pressure on the firm to follow the environmental safety and social welfare programs for the protection of environment and as well as welfare of the communities. For ex- Blackmores is a health-conscious company that focuses on environmental friendly campaigns, such as Blackmores Campus and CSR and ethics into its business operations for minimizing the adverse environmental impact on its operations.

Conclusion

From the above discussions, it can be concluded that the external environmental factors (micro and macro factors) influence the business operations, planning, and strategy of Blackmores Ltd. positively and negatively. The micro environmental factors, such as customers, suppliers, competitors, employees, government and trade unions and shareholders influence the businesses of Blackmores. Along with this, the Pestle analysis was used to analyze the impact of the macro environmental forces, political, legal, economic, socio-cultural, technological, and environmental factors on the business operations and activities of Blackmores. Additionally, the VRIO model was used to analyze the strategic capabilities, resource strengths, and core competences of Blackmores Ltd.

References

Blackmores Ltd. (2013) Blackmores Limited. [Online]. Available at: https://hwasungyou.files.wordpress.com/2014/07/blackmores-equity-research.pdf. (Accessed: 7 April 2017).

Blackmores Ltd. (2015). Blackmores Company Information. [Online]. Available at: https://www.blackmores.com.au/about-us/company-information. (Accessed: 7 April 2017).

Bracey, A. et al. (2016). Blackmores Limited Financial Analysis. [Online]. Available at: https://selectlocations.com.au/wp-content/uploads/2015/09/MGSM840-group-assg_BKLvsGNC.pdf. (Accessed: 18 May 2017).

Grant, M. R., Butler, B., Hung, H. and Orr, S. (2012). Contemporary Strategic Management, Google eBook: An Australasian Perspective. USA: John Wiley& Sons.

Harrison, J. and St. John, C. (2013). Foundations in Strategic Management. USA: Cengage Learning.

Hill, C., Jones, G., and Schilling, M. (2014). Strategic Management: Theory: An Integrated Approach. Australia: Cengage Learning.

Hitt, M., Ireland, D. R. and Hoskisson, R. (2012). Strategic Management: Concepts: Competitiveness and Globalization. Canada: Cengage Learning.

Market Publishers Report Database (2017). Blackmores Ltd. Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis. [Online]. Available at: https://pdf.marketpublishers.com/bac_swot/blackmores_ltd_swot_analysis_bac.pdf. (Accessed: 7 April, 2017).

Motohashi, K. (2016). Global Business Strategy: Multinational Corporations Venturing into Emerging Markets. Australia: Springer Publication.

Motohashi, K. (2016). Global Business Strategy: Multinational Corporations Venturing into Emerging Markets. London: Springer Publication.

Research and Markets (2016). Blackmores Limited (BKL) - Financial and Strategic SWOT Analysis Review. [Online]. Available at: https://www.researchandmarkets.com/reports/1648594/blackmores_limited_bkl_financial_and. (Accessed: 7 April 2017).

Wheelen, L. T. (2012). Study Guide for Concepts in Strategic Management and Business Policy, textbook by Thomas. UK: Routledge.

Wheelen, L. T. and Hunger, D. J. (2012). Strategic Management and Business Policy: Towards Global Sustainability. Australia: Pearson Prentice Hall.

Xu, L. (2012). Management Dynamics-Blackmores. [Online]. Available at: https://prezi.com/acvizymxrsxa/management-dynamics-blackmores/. (Accessed: 7 April 2017).