In the contemporary business dynamics, strategic management can be identified as one of the fundamental aspects of developing the business. In the reported study, the key concepts of business strategy have been illustrated defining the role of strategic options in the business growth model. Precisely, modern organisations have utilised the best strategic interventions in the context of business to draw competitive edge as well as the growth of the firm in the longer term (Appannaiah, Narayana Reddy and Ramanath, 2009). By using substantial management decisions available in the concept of strategic management, leading business enterprises can influence the productivity of the employees and market share in the target market location.
In this particular study, the strategic management of Blackmores Limited, one of the leading Australian health product manufacturing companies, has been demonstrated providing the internal and external business analysis of the firm. Encouraged by the visionary leader, Maurice Blackmore, Blackmores Limited has been passionate about developing and manufacturing natural health products for the wellbeing of the community (Blackmores.com.au, 2017). In the internal analysis, the quality of senior managers, resources, and capabilities of the firm have been described. Alternatively, the external environmental analysis has included PESTEL, SWOT, and Porter’s Five Forces analysis to discuss the impact of external factors on the business of the firm. To finish the reported study, the existing business performance and outlook of Blackmores Limited have been defined providing evidence.
The internal analysis of Blackmores Limited has included the quality of the senior managers, the resources of the firm, and the capabilities leading to strategic management of the business. Each of the factors has been described herein below:
Senior Managers Quality
In the management hierarchy of Blackmores Limited, the quality, experience, and business expertise can be identified as one of the leading factors influencing the management of HRM and the product marketing concepts. The managers have possessed in-depth knowledge of the industry to motivate the workforce. Precisely, in the R&D team, the expert research managers have identified the most efficient naturopaths, pharmacists, and biotechnologists to formulate the best healthcare products suitable for business growth (Blackmores.com.au, 2017). Apparently, comprehensive review and testing of the products have been done under the supervision of the senior management officials to maintain quality and safety of the products.
Alternatively, the quality control process of Blackmores Limited has been efficiently managed by the qualified managers to maintain high-quality standards in manufacturing the products following the regulations and guidelines. Thus, the senior manager’s efficiency and quality of management have been considered as the leading internal factor influencing the business environment of the firm in a positive direction (Tasker, 2017).
In the internal analysis, Blackmores Limited has got two major resources leading to business sustainability. First of all, the efficient human resources and dedicated R&D team members of the firm can be identified as the major resource contributing towards the development of the business in the entire Australian market (Smit and Trigeorgis, 2008). On the other hand, technological resources available to the market have immensely helped the brand to manufacture the health products based on naturopathy. Apart from the two resources, the financial resources coming from the investors of the firm have also largely contributed to the development of the infrastructure (Alexander, 2017). Blackmores Limited has efficiently utilised each of the resources available to the organisation to get substantial values. In this way, the resources have delivered a competitive edge to the company in the market region.
Blackmores limited has a good financial background and high growth rate that increases the capability of the company to compete in the current market scenario. On the other hand, the high investment on research and development directly influences the capabilities of the company to meet the future needs of the consumers (Barry, 2017). Though the revenue of the company is increasing, the expenses of the firm are also increasing leading to low profitability as compared to sales. By considering the financial statement presented in Appendix 1 and 2, it can be seen that the high investment of research and development directly impacts the profitability of the firm (Blackmores.com.au, 2017). On the other hand, Blackmores Limited has the capability to expand its business in the global market due to the growing demand.
In terms of growth of the business, identification of the external factors affecting the productivity and performance of the firm can be termed as evident to gain competitive advantage. In this particular section of the study report, PESTEL, SWOT, and Porter’s Five Forces analysis have been illustrated through market research to evaluate what are the leading aspects Blackmores Limited must consider in developing further strategic management to attain long-term sustainability in the target market.
The PESTEL analysis for Blackmores Limited has been presented herein below:
The changes to liberal government provide tax benefits and fewer issues of regulations in terms of doing business in the Australian market. On the other hand, the chances of uncertainties due to changes made by the new government remains constant that acts as a threat for the business of Blackmores Limited (Hitt, Ireland and Hoskisson, 2017).
The fall in the value of Australian dollar increases the demand for the product of Blackmores Limited in the international market. On the other hand, the weak Australian economy will come up with several challenges for the company in the upcoming future (Hitt, Ireland and Hoskisson, 2017). Hence, the downfall or recession in the Australian economy will impact the sales of Blackmores Limited in the recent years.
The increased health consciousness among the consumers increases the demand for the products of Blackmores Limited. On the other hand, with development of technology the preferences of the consumers towards window shopping have been increasing at a tremendous rate. Hence, the company needs to improve its e-commerce websites to seek hike in its revenue (Trigeorgis and Reuer, 2016).
With improving technology and decreasing cost of international shipping, the demand for online shopping has increased in the recent era (Tasker, 2017). On the other hand, the development of technology provides adequate opportunity to the company to introduce innovative products according to the need of the consumers.
The increased consciousness among the people regarding the environment enforces the health product manufacturing companies to focus on reducing their environmental impacts. On the other hand, several rules and regulations have been introduced by the Australian Government that must be considered to survive and operate in the current market.
The changing rules and regulations of the government has become a major challenge for the company. Hence, it is important for Blackmores Limited to consider all rules and regulations to operate smoothly in the Australian market and be safe from adverse legal implications (Hitt, Ireland and Hoskisson, 2017).
Porter’s Five Forces Analysis
The Porter’s five forces analysis on the Australian health product manufacturing industry has been described in the study to evaluate the different aspects affecting the business environment of Blackmores Limited.
In the current Australian market, the competition in the health product manufacturing industry is significantly high. As the consumers have included healthy products in their daily life schedule, more numbers of firms are getting involved in the industry (Panico, 2016). For instance, Unique Health Products Ltd, Superior Healthcare Australia Pty Ltd, and Eden Health Products Ltd, etc can be identified as the leading market players in the industry. Therefore, the company has to deal with high competitive rivalry in the Australian market.
Threat of New Entry
In the current market analysis, brand loyalty has been identified one of the fundamental aspects in healthcare product manufacturing industry in Australia. Precisely, customers are reluctant to accept new products from new brands. Also, the cost of the entry in the market can be an issue for new product manufacturers (Ethiraj, Gambardella and Helfat, 2016). Therefore, the threat of new entry is relatively low in the market.
Threat of Substitute Products
Due to development in R&D, Australian health product manufacturers have tried to introduce new items based on expertise, nutrients, and other components. As a result of the consequences, the products offered by Blackmores Limited can be replaced new products. Hence, the threat of new substitute products is significantly high in the market.
Supplier’s bargaining Power
In the existing market scenario, the suppliers are outnumbered in the Australian region. Therefore, the bargaining power of the suppliers in the target market is relatively low to medium (McGee, 2014). Decisively, it is an advantage for the business operations and profitability of Blackmores Limited.
Buyer’s bargaining Power
The buyers of the healthcare product manufacturing industry in the Australian market are significantly knowledgeable. Therefore, consumers are agreed to pay a significant price for quality products offered by the sellers. Hence, the bargaining power of the purchaser’s can be termed as a medium.
The SWOT analysis of Blackmores Limited has been presented herein below:
- Good Financial Performance: The financial performance of Blackmores Limited and its growth rate is strength of the firm. The company has increased its net profit by around 256 percent in the last five years, which is a good achievement for the firm (Blackmores2016.annual-report.com.au, 2017).
- Strong Management: Blackmores Limited has a strong management with adequate knowledge about the industry. The management of Blackmores Limited act as a strength of the firm.
- High Expenses in R&D: Blackmores Limited spends a huge amount of money on research and development that act as a weakness of the firm. Furthermore, it reduces the profitability that impacts the growth of the business.
- Low profitability: As compared to the revenue earned by the firm, the net profit is relatively too less. Hence, the low profitability of the firm acts as its weakness.
- Growing Demand: The demand for health products has been growing in the Australian market due to the changing preferences of the customers. Hence, the growing demand for the health products provides potential opportunity to the company to enhance its business growth (Martin, 2013).
- Global Market: With development of technology and reducing cost of international shipment, the demand for the products of Blackmores Limited has been growing in the global market.
- High Rivalry: The Company faces a high level of rivalry due to the presences of a huge number of competitors. Hence, the high rivalry in the current market is a threat for the organisation (Hitt, 2011).
- Rising Cost of Raw Materials: The rising cost of raw materials make it difficult for the company to carry on with its current pricing policy. Hence, the increase in the raw material price will further impact the sales and profitability of the firm.
By considering the above analysis, the strong management and high financial growth rate of Blackmores Limited are major strengths of the firm. On the other hand, the company faces several challenges in terms of high rivalry and growing cost of raw materials. Furthermore, the high level of investment on research and development reduces the profitability of the firm. Hence, it is important for the management of Blackmores Limited to make changes in its operations strategy. Conclusively, the company needs to adopt market expansion strategy and flexible marketing tactics in order to in order to survive, seek growth and provide better return to the stakeholders.
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