Essay: Evaluation Of Blackmores Limited's Business Environment

You are to conduct an environmental analysis of Blackmores Limited, an Australian health product manufacturer, through the strategy lens.

The report will 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.

Background of Blackmores Limited

Australian pharmaceutical industry is evolving through continues changes in their manufacturing capabilities. With the development of advanced technologies, pharmaceutical industry in Australia has grown in a significant manner. The report focuses on evaluating the internal and external business environment of one of the leading pharmaceutical brands in Australian market namely Blackmores Limited. The organization was founded in 1932 with the objective of providing superior quality of pharmaceutical products in Australia (blackmores.com.au 2017). Currently, Blackmores holds 17% of the total market share of vitamins and dietary supplements (VDS). It also holds 7% of consumer health related market share in Australia (Doyle 2014). However, Blackmores have continuously focuses on including new and diversified pharmaceutical products for achieving continues growth in the global market. During 2013 financial year, Blackmores have launched 120 new products across the Asian market. Moreover, Blackmores have expanded its reach in different Asia market like Malaysia, Thailand and Singapore. The report will focus on analyzing the internal capabilities of Blackmores. It will try to highlight the resources and capabilities Blackmores have along with the quality of the senior management. On the other hand, the report also includes both micro and macro environmental analysis of Blackmores to identify potential market related challenges.

The corporate strategies of Blackmores have focused on diversifying its product range even further for the fulfilment of all business objectives. For that reason, the senior management of Blackmores have focused on enhancing the quality of reformulation and innovation activities in an effective way. The aggressive product development strategies have created massive impact on capturing major share of the Australian market (Um et al. 2014). Blackmores have focused on developing strong corporate value chain activities in order to ensure all the responsibilities associated with the operational procedure can be completed within given period of time. The value chain activities of Blackmores are as follows:

                                                                                           Figure 1: Value chain analysis

                                                                                            (Source: funds Monash 2012)

Internal Business Environment Analysis

The above figure has illustrated the fact that the senior management of Blackmores is focusing on developing systematic procedure for effective fulfilment of the business objectives (Paris and Belloni 2013). For that reason, Blackmores have developed its storage, distribution and production facilities at Warriewood campus in Sydney. The senior management of Blackmores have always focused on utilizing up to date technologies such as pick to light system and RTL’s voice picking RF that handles distribution activities of the pharmaceutical products in a comprehensive manner (Khalil 2012). As a result, it has helped the operation procedure of Blackmores to create strong synergy between customer service and supply chain. The internal business process of Blackmores have focused on using less recognizable distinctive resources and capabilities, which has allowed the organization to emerge as the largest brand in Australian market. Effective utilization of resources and capabilities has allowed Blackmores to achieve competitive advantage in specific areas, which are provided as follows:

The prime policy of Blackmores focuses on ensuring high quality products for creating greater impact on the overall health condition. For that reason, Blackmores have focused on collect ingredients from all across the world so that it can fulfil the requirements of the market. Blackmores have never focused on compromising the quality of the products for achieving greater profit level in the market. As a result, it has helped the organization to create a separate position in Australian market (Duckett et al. 2013). Moreover, the leadership structure of Blackmores has kept the employees motivated and satisfied with the provided roles and responsibilities. It has allowed the organization to achieve service excellence in the market. Therefore, the organization has captured significant portion of the market share in Thailand, Singapore and Malaysia market as well. The market share of Blackmores in different countries is as follows:

                                                                                   Figure 2: Market share of Blackmores across globe

                                                                                                       (Source: Britt et al. 2013)

Value Chain Analysis

As per the article by Ragupathy et al. (2012) appropriate development of organizational culture is essential for fulfilling business goals and objectives. For that reason, the senior management have focused on developing strong relationship with all level of employees so that they can feel good about themselves. Moreover, the management has focused on developing such work culture where efforts of the employees are recognized with the intangible and tangible rewards and facilities appropriately. In 2006, Blackmores have provided 50 shares for all the permanent staffs in order to keep them satisfied and happy with the provided roles and responsibilities. In addition, Blackmores have focused on developing effective teamwork for enhancing the quality of the operational procedure. In addition, senior management have also focused on providing different training and development facilities to all the employees so that it can increase the current level of skills and knowledge in an effective manner. It has allowed Blackmores to use employee empowerment strategies for maximizing the revenue across global market.  

Appropriate use of all the resources and capabilities has reduced the cost associated with the operational procedure. Therefore, it has helped Blackmores to use effective pricing strategy for capturing maximum portion of the market (Van Boeckel et al. 2014). As mentioned earlier, Blackmores is currently the biggest brand in Australian pharmaceutical market. It provides 20 different types of weight loss, infections, muscle pain and other health related products. For that reason, it has allowed Blackmores to achieve certain level of bargaining power in the Australian market. Therefore, it has helped the organization to maintain high profit in Australia compared to other countries like Malaysia, Thailand and Singapore.

                                                           Figure 3: Market Share of Australia prime pharmaceutical brands

                                                                                       (Source: (Karanges et al. 2016)

The above figure has highlighted the fact that Blackmores have already created strong brand image or reputation in Australian market. Specifically, Pan pharmaceutical debacle has increased the brand awareness regarding the quality of supplements and medicines. Thus, it emphasises the fact that appropriate use of internal resource and capabilities have created desired impact on Australia and global market.    

External Environment Analysis

As described by Paris and Belloni (2013) research and development is probably the most important department of any pharmaceutical company. It allows companies to fulfil different changing needs and wants of the markets in an effective manner, Now, Blackmores invest maximum amount in the R&D department compared to any other companies. As a result, it has allowed Blackmores to introduce new and innovative products in Australia and global market continuously. Blackmores also have used joint venture strategy with the Southern Cross University for fulfilling their research and development needs in an effective manner.  Therefore, it eventually created positive impact on the overall revenue level of the organization.  

According to Braithwaite (2013), proper evaluation of the external environment is critical for any business entity in order to achieve sustainable growth in the market. External environmental analysis help businesses to identify different market related risk factors. As a result, it provides firs the opportunity to develop effective counter strategies in order to achieve continues growth in the market. Now, continues research and development activities have created different challenges for the business procedure of Blackmores in order to remain competitive in the global market. The external environment of Blackmores is illustrated as follows:

Pharmaceutical industry generally has to deal with different types of political pressure on regular basis in order to achieve sustainable growth in the market. For instance, Australian government has induced pharmaceutical companies to keep the price level low for different essential pharmaceutical products in order to ensure proper health condition of the entire society (Carpenter 2014). Therefore, it has restricted the high pricing strategy of Blackmores to a certain extent. In addition, Blackmores also have to face different challenges at the time of importing or exporting specific drugs. As a result, it often increases the expenditure of the organization that can create impact on the overall revenue level. Now, increasing demand of different pharmaceutical products is also influencing the government to produce more units for the fulfilment of the market demand.

As described by Pearson et al. (2015) healthcare and pharmaceutical are the only sector that has not face any adverse impact of global economic crisis. In fact, the expenditure on health related services have increased in continues manner. Therefore, it has allowed Blackmore to achieve sustainable growth in terms of revenue for past few years. However, fluctuating value of Australian dollar have affected the profit level of the organization in global market. It has affected the international business expansion perspective of Blackmores in a major way. Moreover, as the supplements and vitamins are considered discretionary spending in Australian market, it can hinder the expenditure pattern in Australia.

Challenges in the External Environment

Over the years, Australian people are becoming more health conscious. As a result, it has increased the market demand of supplement intake in a major way. Therefore, it is likely to provide greater market share for Blackmores in near future (Hussainy, Styles and Duncan 2012). In addition, Australia possesses aging population that increases the prevalence of different health conditions. Hence, it will also increase the market demand of vitamins in Australian market. However, increasing popularity of online e-commerce platform has enhanced the threat level for Blackmores regarding the availability of cheaper VDS products.

Appropriate use of advance technologies is necessary for pharmaceutical companies in order to fulfil the requirements of the market in an appropriate manner. Traditionally, Blackmores is the trendsetter in pharmaceutical market regarding the introduction of new and advance technologies. Appropriate use of advance technologies has allowed Blackmores to achieve cost advantage in the market. As a result, it has allowed Blackmores to maintain consistent growth over the past few years.

                                                                  Figure 4: Profit margin of Blackmores across years

                                                                                (Source: blackmores.com.au 2017)

Maintaining the environmental condition at the desired order has become essential for all the business entities in order to achieve consistent growth in the market. Blackmores have to deal with different environmental restrictions at the time of producing different pharmaceutical products. Blackmores have provided more focus on the using environment friendly packaging products in order to ensure lesser adverse impact on the environment (Clarke 2013). Moreover, Blackmores have also tried to enhance the effectiveness of the operational manufacturing facilities, which reduces the requirements of different natural resources in an appropriate manner.

As per the article by Um et al. (2014) maintaining different legislative rules and regulations is critical for fulfilling all the requirements of the business procedure. Now, Blackmores business strategies have focused on following different acts like Pharmaceutical Benefits Scheme (PBS) for creating desired impact on the market. Moreover, Blackmores have also focused on maintaining the guidelines provided by Australian Register of Therapeutic Goods (ARTG) for creating desired level of impact on the market.

Conclusion

Conclusion: 

The above illustration has highlighted the fact that the business strategies of Blackmores have already created massive impact on the fulfilment of goals and objectives. Continues focus on product diversification has allowed Blackmores to achieve major share of the Australian market. Moreover, innovative product development has also allowed Blackmores to capture significant portion of Singapore, Malaysia and Thailand market. However, it have to deal with different market related restrictions or challenges on regular basis. For instance, the pricing regulations of Australia have limited the profit level of the organization to certain extent. For that reason, Blackmores will have to focus on developing innovative strategies for creating desired amount of impact on the global market.

References:

blackmores.com.au, 2017. Blackmores vitamins and supplements- Australia's most trusted. [online] Blackmores.com.au. Available at: <https://www.blackmores.com.au> [Accessed 15 May 2017].

Braithwaite, J., 2013. Corporate Crime in the Pharmaceutical Industry (Routledge Revivals). routledge.

Britt, H., Miller, G.C., Henderson, J., Bayram, C., Valenti, L., Harrison, C., Charles, J., Pan, Y., Zhang, C., Pollack, A.J. and O'Halloran, J., 2013. General Practice Activity in Australia 2012-13: BEACH: Bettering the Evaluation and Care of Health (No. 33). Sydney University Press.

Carpenter, D., 2014. Reputation and power: organizational image and pharmaceutical regulation at the FDA. Princeton University Press.

Clarke, P., 2013. The price is wrong: Pharmaceutical expenditure in Australia over the last decade and options for reform. CEDA, Healthcare: Reform or ration, p.48.

Doyle, J., 2014. Quality use of natural medicine: Blackmores institute-the evidence is clear. AJP: The Australian Journal of Pharmacy, 95(1124), p.16.

Duckett, S.J., Breadon, P., Ginnivan, L. and Venkataraman, P., 2013. Australia's bad drug deal: high pharmaceutical prices. Melbourne: Grattan Institute.

funds Monash, A., 2012. Blackmores wins nsW business award. AUSTRALIAN JOURNAL OF PHARMACY, 93, p.42.

Hussainy, S.Y., Styles, K. and Duncan, G., 2012. A virtual practice environment to develop communication skills in pharmacy students. American journal of pharmaceutical education, 76(10), p.202.

Karanges, E.A., Blanch, B., Buckley, N.A. and Pearson, S.A., 2016. Twenty?five years of prescription opioid use in Australia: a whole?of?population analysis using pharmaceutical claims. British journal of clinical pharmacology, 82(1), pp.255-267.

Khalil, H., 2012. Muscle relaxants for pain management in rheumatoid arthritis. Australian Pharmacist, 31(3), p.196.

Paris, V. and Belloni, A., 2013. Value in pharmaceutical pricing.

Pearson, S.A., Pesa, N., Langton, J.M., Drew, A., Faedo, M. and Robertson, J., 2015. Studies using Australia's Pharmaceutical Benefits Scheme data for pharmacoepidemiological research: a systematic review of the published literature (1987–2013). Pharmacoepidemiology and drug safety, 24(5), pp.447-455.

Ragupathy, M.R., Aaltonen, K., Tordoff, J., Norris, P. and Reith, D., 2012. A 3-dimensional view of access to licensed and subsidized medicines under single-payer systems in the US, the UK, Australia and New Zealand. Pharmacoeconomics, 30(11), pp.1051-1065.

Um, I.S., Armour, C., Krass, I., Gill, T. and Chaar, B.B., 2014. Consumer perspectives about weight management services in a community pharmacy setting in NSW, Australia. Health Expectations, 17(4), pp.579-592.

Van Boeckel, T.P., Gandra, S., Ashok, A., Caudron, Q., Grenfell, B.T., Levin, S.A. and Laxminarayan, R., 2014. Global antibiotic consumption 2000 to 2010: an analysis of national pharmaceutical sales data. The Lancet Infectious Diseases, 14(8), pp.742-750.