BUS301 Global Business Strategy- Value of Strategic Capabilities
Analyse the internal business environment and its external operating environment and will make a conclusion about the performance and outlook of the company. The analysis must be about the company now, not 5 or more years ago.
Answer:
Business strategy is nothing but a plan created to achieve organizational goals as well as boosting financial performance of the company. It other words it can be said that business strategy is a plan which have various roots that helps in strengthening the financial performance of the organisation. Those roots are future thinking, strategic intent, planning, analysis, evaluation, corporate culture as well as types of strategies to be followed. However in the following will focus on the internal and external analysis of Blackmore’s Ltd organisation. It is one of the leading natural health firms of Australia. Further the company is known for its quality range of products which includes mineral, vitamins, and nutritional supplement etc. for humans as well as for animals (About Blackmore Ltd. 2017). Internal analysis will include information about quality of senior managers and also about the company’s resources and also the capabilities. Later the report will also include external analysis of the micro and macro factors by using PESTLE analysis tool. It covers political, legal, technological, social, environmental etc. factors.
Internal analysis is done to identify and evaluate certain internal features of the company. The major reason behind such factors is to know about company’s competitive advantage that can bring the organisation into favorable business position (Stacey, 2016). The way in which the specified business enterprise coordinates and configures its key value adding activities.
Strategic Capabilities- Due to increase in the competition level these days every kind of organizations requires to prepare new strategies and innovations for attaining as well as retaining the customers for long term. And so Blackmore is required to do the same to be at profitable side of the market. So the companies are required to have strategic capabilities to overcome the competitors or attain competitive advantage (Jenkin
s and Fife, 2016). Roger Montgomery is one of the major competitors for Blackmore Ltd. Capabilities.
There are various type of strategy, first is resource based strategy that is RBV. The following strategy states that superior performances as well as competitive advantages of Blackmore Ltd can be explained by its different capabilities. RBV in case of Blackmore can be determined with the help of internal resources which are human, physical, and other organizational resources. Talking about the resources as well as competencies. Resources can be defines as an asset such as Blackmore suppliers and partners etc. And competencies are also considered as assets those are effectively deployed and used by Blackmore.
Resources and competencies are the components of strategic capabilities.
Resources- Resources are considered as assets because it is used in various activities of company. It can be tangible or intangible in nature. Resources can be obtained internally or either externally. The can be specific or non-specific. Specific resources are or evaluating those used in highly specified activities and adds value to the company (Prajogo, 2016). There are various categories of resources like human, physical, financial, informational as well as technological. Blackmore is required to go with the auditing of resources to identify control system, quality, quantity, performance, extent of employment etc.
Capabilities are industry specific skills and are highly intangible in nature. However, they are gee rally obtained internally by collaboration within the firm. Some of the capabilities are common in global industry in between the competitive business enterprises.
Core competencies are distinctive capabilities which include combinations of the capabilities as well as resources unique to its particular organization and helps in creating competitive advantage (Jenkins and Fife, 2016). There can be various sources that lead the Blackmore towards core competencies or attaining competitive advantages. Such as architecture, strategic assets, reputation and innovation. In order to evaluate its core competencies the Blackmore is required to go through different criteria’s:
- Complexity- Under this respective health care firm is required to go through its resources as well as capabilities which may have core competencies. That further leads to attain the competitive advantage over its various competitors.
- Identifiability- Under this the company is required to analyze why it is difficult or what are the reason behind lacking in identifying core competencies of the health care enterprise (Wales, 2016).
- Imitability-Third criteria are imitability that shows how much difficulties the Blackmore is facing to imitate its core competencies.
- Durability- If one doesn’t work then how long it can be replaced by another alternative.
- Superiority- Under those Blackmore Ltd is requited to find out that which of its capabilities or competencies is superior (Vitasek and Vitasek, 2016).
How strategic capabilities contribute to competitive advantages and superior performances
In order to assess the capabilities VRIN model is being applied on Blackmore Ltd.
V- Value of strategic capabilities, in this respective firm works in order to takes the advantage of opportunities, reduce the amount of threats, and add consumer value to realize valuable return.
R- Rarity- Blackmore is a well-known and recognized organisation and possesses these kinds of capabilities very rarely only in case having patented products.
I- Inimitability, these are capabilities that Blackmore find difficulty to imitate. In these competitive advantage is developed on different or unique resources and advantage is sustained accordingly.
N- Non-Substitutability, that is if there is a treat of substitution than Blackmore cannot achieve competitive advantage.
How to diagnose strategic capabilities- In order to diagnose Blackmore Ltd capabilities benchmarking technique can be utilized. Benchmarking helps in understanding hoe comparison is made within the competitors; there are two approaches for conducting benchmarking. One is industrial and other is best in class benchmarking. Under industrial benchmarking Blackmore is required to compare itself with other firm working in the same industry. And best in class benchmarking Blackmore is required to make comparison with firm working into other industries as well. Here to attain competitive advantage over its competitors the Blackmore can go for industrial benchmarking.
How to manage the strategic development- There are again two ways of capability development, one is internal and other one is external. When there is transfer of capability form one part to another of Blackmore then it is required to go with leveraging while when the company is coming up with new products then starching capabilities are used (Vitasek and Vitasek, 2016). Further to manger and develop the human resources the Blackmore is required to provide training and development programs, changing the staffing policies, organizational learning as well as developing or improving the people awareness. Also the company is required to conduct internal and external audits to attain its records accurate and efficient by the end of the accounting period.
An external analysis is basically a process of evaluating and scanning the negative as well as positive trends of various external environmental factors that may directly or indirectly affect the performance of company (Strategic Analysis Tools, 2017). For analyzing such factors in respect of Blackmore’s company PESTLE is required to imply with. PESTLE analysis assist in analyzing micro and macro factors such as political, economic, social, technological, legal as well as environmental (Lay, 2016). Macro Environment factors are external forces that is not in control of the company. Whereas, Micro Environment are the internal factors that are under the control of organisation.
Applying PESTLE on Blackmore’s Ltd.
- Political- This factor includes the influence of government. Changes in the rules and regulations by the government may have negative or either positive impact over the business. Major issues include political instability, trade regulations, tax guidelines, safety regulations and also the employment laws (Johnso and McCormack, 2016).
- Economic- It is another factorwhere various economic issues affect performance and sales of the company. Factors may include interest rate, inflation, economic growth, unemployment rate, business cycle etc.
- Social- Social factors include cultural limit, education, consumer or client demographics and lifestyles attitude (Meinlschmidt and et.al., 2016). Company is required to be update in these as it might lead to competitive advantage. Organizations are required to understand the needs and requirements of the clients.
- Technological- Advance technology, increase the role of internet etc. factors is to be considered I n this. It may have positive or negative impact over the companies.
- Legal- Under this the company is required to take care of certain laws related to employment, safety, health, employment etc (Shaukat and et.al., 2016).
- Environmental- In this the company is required to take care of workforce health and safety, proper room temperature, resource management, climatic change etc. The organisation consist different layers of environment and changes in which may lead to affect the company in positive or negative manner. It includes industry, various macro environments, competitors as well as markets.
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OPPORTUNITIES |
THREATS |
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Political |
Changes in political factors for example lowering the tax rate will be a good opportunity for Blackmore Ltd. |
Whereas, if it situation is totally opposite and tax rates are high that will be a unfavorable market situation for the respective firm. |
|
Economic |
It leads to economy stability, for instance if the value of Australian dollar decreases. That will further lead towards increase in the purchasing power of the consumers of other nations and result into increase in the sales of Blackmore products (He and et.al., 2016). |
However, if situation arises where the value of Australian dollar increases then in that case the purchasing power will reduce and will result into decrease in the turnover. |
|
Social |
These days people are becoming more health conscious and this is a favorable condition or market situation for Blackmore. |
But also these days online purchasing is trend and as the customers get product cheaper on online (Aithal, 2016). That me result in decrease of services as the costumer will choose cheaper products over Blackmore’s supplements and vitamins. |
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Technological |
Advancement of technology such as online website, online deliveries and payments etc. makes it more convenient for the consumers. And also provides opportunity to company like Blackmore’s to attain competitive advantage over its rivals. |
On the other side if competitors take advantage of such technologies than it can be a disadvantage for the respective healthcare firm (Wang, Y. and et.al., 2016). |
|
Legal |
If the company takes care of the employee welfare, safety etc. than it might result into decrease in the attrition level. |
If Blackmore is unable to take care of such factors then it might lose its talented employees. |
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Environmental |
Same case applies with the environmental factor as that of legal factors. In order to maintain the human resources within organisation the Blackmore is required to take care of working environment of organisation premises (Aithal, 2016). |
But in case if it doesn’t take care than it may lose its employees. |
Along with above factors there are three more factors that are to be considered in order to focus various changes.
- Megatrend- It leads to shape the other social, economic as well as political trends. Say for example the megatrend of ageing population may influence other trend in social care or housing.
- Inflexion points- It is when the megatrend goes in the direction of upward or downward.
- Weak signals- These are considered as future signals and helpful in determining the inflexion points.
Competitors of Blackmore’s Ltd
Majorly Bellamy Mutely Fool, Swiss are the competitors of the Blackmore’s Ltd that affects the share price of the Blackmore’s Ltd.
Swiss an Australian vitamin group has given competition on great scale to its rivalry organisation that is Blackmore Ltd. It was able to generate $49 of million in the very first 3 months of launch of its new owner Bios time International (Swisse vitamins sales revealed to rival Blackmore’s. 2016).
Share price of Blackmore’s from past 10 years is being given in figure 3. As per various analysts price target for Blackmore for 12 months have a median target that is of 103.50 having high estimates of 131.01 and lower estimate was of 98.82. Median estimates represent -3.24% reductions from the last year price which was 106.97 (Australian financial review for Blackmore’s. 2017).
Conclusion
In this report internal and external analysis has been conducted in respect of the Blackmore Ltd. Internal analysis includes various factors such as resources, capabilities as well as core competencies. Later PESTLE analysis tool is being used to determine and evaluate the micro as well as macro factors of the Blackmore’s Ltd. With the help of PESTLE various opportunities as well as threats have been analyzed in different situations under each factor. It the situation is favorable then it opportunity otherwise it turns to threat.
References
Books and Journals
Stacey, R. D., 2016. The chaos frontier: creative strategic control for business. Butterworth-Heinemann.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics. 171. pp.241-249
Jenkins, J. and Fife, T., 2016. 4. Designing for disruption: strategic business model innovation. International Perspectives on Business Innovation and Disruption in Design, p.75.
Wales, W. J., 2016. Entrepreneurial orientation: A review and synthesis of promising research directions. International Small Business Journal. 34(1). pp.3-15.
Vitasek, K. and Vitasek, K., 2016. Strategic sourcing business models. Strategic Outsourcing: An International Journal. 9(2). pp.126-138.
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies, operating concepts & business systems. Browser Download This Paper.
Roth, A. and Jonas, J. M., 2017. Stakeholder integration in service innovation-an exploratory case study in the healthcare industry. International Journal of Technology Management. 73(1-3). pp.91-113.
He, W. and et.al., 2016. Trends in international strategic management research from 2000 to 2013: text mining and bibliometric analyses. Management International Review, 56(1), pp.35-65.
Lay, T. A., 2016. Business Strategy, Strategic Role of Accountant, Strategic Management Accounting and their Links to Firm Performance: An Exploratory Study of Manufacturing Companies in Malaysia. Asia-Pacific Management Accounting Journal. 7(1).
Johnson, W. C., and McCormack, K. P., 2016. Supply chain networks and business process orientation: advanced strategies and best practices. CRC Press.
Meinlschmidt, J. and et.al., 2016. The role of absorptive and desorptive capacity (ACDC) in sustainable supply management: A longitudinal analysis. International Journal of Physical Distribution & Logistics Management. 46(2). pp.177-211.
McDermott, C. M., Prajogo, D. I., and Jayaram, J., 2014. The role of technological intensity in services on the capability to performance relationships–An examination in the Australian context. Journal of Engineering and Technology Management. 31. pp.58-72.
Schryen, G., 2013. Revisiting IS business value research: what we already know, what we still need to know, and how we can get there. European Journal of Information Systems. 22(2). pp.139-169.
Shaukat, A. and et.al., 2016. Board attributes, corporate social responsibility strategy, and corporate environmental and social performance. Journal of Business Ethics. 135(3). pp.569-585.
Velu, C., 2015. Business model innovation and third-party alliance on the survival of new firms. Technovation. 35. pp.1-11.
Wang, Y. and et.al., 2016. Big data analytics: Understanding its capabilities and potential benefits for healthcare organizations. Technological Forecasting and Social Change.
Online
Analysing resources and capabilities. 2017 [Online] Available Through: <https://fba.aiub.edu/Files/Uploads/MGT110044.pdf> [Accessed on 15th April]
Strategic Analysis Tools, 2017. [Online] Available Through: <https://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_analysis_tools_nov07.pdf.pdf> [Accessed on 15th April]
Swisse vitamins sales revealed to rival Blackmore’s. 2016. [Online] Available Through: <https://www.smh.com.au/%E2%80%A6s/swisse-vitamins-sales-revealed> [Accessed on 26th May 2016]
Blackmore’s Limited Share price. 2017. [Online] Available Through: 2017. <https://markets.ft.com/data> [Accessed on 26th May 2016]
Annual report of Blackmore. 2017. [Online] Available Through: <https://www.blackmores.com.au/about-us/investor-centre/annual-and-half-year-reports> [Accessed on 26th May 2017]
Australian financial review for Blackmore’s. 2017. [Online] Available Through: <https://www.afr.com/business/retail/fmcg/blackmores-slowly-rebuilding-but-suitcase-trade-softer-20170426-gvt2lf >[Accessed on 26th May 2017].
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