BGMT Project 3 -5 pages, COURSE MATERIAL ONLY
sunshinelolopop
Project1-.docx
1
Project 1 Phase 1
BGMT 364
Introduction:
Biotech has been working successfully since 1922 and has expanded its business into six countries all over the world. The company is renowned for the delivery of the best natural products. The demand for these products is not limited to the US or Europe. Demand for their current products is also high in China and Malaysia. Due to this, the company has decided to expand its product in these regions. Along with the expansion of their primary business, they have also introduced a whole new product range for infants. Therefore, the company is interested in pursuing an infant formula.
In this paper, the external and internal factors of this new product line are analyzed, so that favorable/unfavorable conditions that the company may face while introducing their new infant food line are examined. Furthermore, this paper presents a comprehensive view of SWOT analysis, PESTAL analysis, and Porter’s Five Forces analysis. All these analyses are summed up into goals and objectives that will be used in introducing this new product line.
PESTEL analysis:
Political
Currently, the company is free from any political barriers as it is successfully doing business in six countries. But expanding the business in China, which is known as the biggest economy can create a barrier for them. The changing regulation related to food standards and market actions may be a barrier for this new product line (Candela, 2019). The stability of the government in China also questions the risk as a part of the internationalization process. Furthermore, the changing global regulations due to economic pressure put the governments to adopt such practices that adapt them to different political forces.
Economic:
The economic factor is quite favorable for this new product if they introduce it to new countries like Malaysia. But the changing inflation rate, income level of people and economic growth rate will affect the buying of these products. These are the factors that influence the buying power of people. If these factors are under control, then there are many chances that this product sale will outperform. Furthermore, the changes in consumer budget give rise to cost-conscious consumers. Here, the increase in prices of raw material due to changes in the inflation rate also affect the prices of products.
Social:
The social factors are favorable for the company because the consumer attitude has changed as they prefer healthier products for their family and this product promises to deliver a healthy life for their infants. This product is available for everyone beyond the difference in cultural settings. Under the social factors, it is important to understand consumer behavior so that a personal approach to marketing can be ensured. Thus, the consumers view the firm as an agency that empowers their wider external environment.
Technological:
The technology environment is supportive for the company because the incorporation of the research and development department within the company help them to develop products that are demanded by consumers. Also, the countries, where the company operates are renowned for their technological impact on the world. Therefore, this technological advancement is supportive of the business operation of developing an infant food line.
Environmental:
The environmental concerns are high level all over the world due to the high rate of global warming (Candela, 2019). So the company always tries to incorporate sustainable environmental practices that provide the least damage to the environment. Furthermore, the Eco-sustainable commitments of the company towards India and Brazil where these natural pharmaceutical ingredients are produced promoted the company’s commitment towards the triple bottom line.
Legal:
The company must develop this new product as per the legal acts of supplements similar to what the company is already doing. All the companies who manufacture this supplement product are free from any lawsuit due to their strong adherence to these laws. As the company is already in this product line and know all the legal implications related to this new infant product line. So, the legal factors are also comfortable for this new product line.
SWOT Analysis:
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Strength The current strength of the company are listed below: 1. Competitive advantage is the greatest strength of the company that outstands them against others. This competitive edge is the reason for their immense growth. It is the strength of the company because they continuously focus on improving the health of people and try to solve their health issues with natural products. They are not focusing on only one age group but presented a diversified range of products for people of different age groups.
2. They also focused on customer need, and as per the need and demand of customers, they innovate new products that help them in curing their various health issues.
3. Biotech’s product range is not limited to medicine but with the use of natural ingredients protein bars and other items are also manufactured. Hence, their whole product range provides a better taste for people.
4. These natural and better taste products differentiate them from others, this is the reason why they are popular among the people
5. Now, they are targeting infants and introduces a whole new range of infant product line that is purely made from natural products. There is hardly any competitor who offer such am infant product range of natural products.
6. Moreover, the research and development department of the company is their greatest strength because owing to the extensive research they can introduce new products. |
Weakness Some of the loopholes that count in the weakness of the company are listed below: 1. Currently, the gross sales of the company are $45 billion. But their extensive investment in technology and raw material makes the investment cost high. This will automatically lead to high prices of products. But under the financial crises or high inflation and low economic growth makes the buying power of consumers less. Thus, they will not be able to buy these high priced products. Therefore, after carefully analyzing the financial condition of the company and future economic perspective they should invest in research and development.
2. As the company is operating in different counties and nutritional standards of each country are different so, manufacturing a product as per the dietary standards is difficult. The lack of research in this segment make them in manufacturing this product and promote it across the borders as well.
3. The company is in intense competitors with many multinationals like Nestle, whose products are penetrating in the market due to their effective marketing strategies but the company has no marketing plan that will introduce their new product in the market. Thus, marketing is the weakest point of the company on which they have to work.
4. Static sales in the domestic market are also the weakness because if their sales are not increasing in the domestic market and the management of the company fails to increase sale. Then, it is difficult for them to promote sales in other countries. |
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Opportunities There are a lot of opportunities for the company that they can explore. Some of the opportunities are listed below:
1. The positive external factor of the company is favorable for growth or expansion that they can use to overcome their weakness.
2. They can incorporate more technology and applied advanced research techniques in the manufacturing of natural supplements. Through this innovative research techniques, they can explore more about natural products that they can add in their products.
3. New ideas and innovation lead to the development of a new product like they want to develop the infant product line. This allows them to keep their existing customers and grow with more customers as well.
4. This expansion of business into China and Malaysia is a great opportunity for them where they can take advantage of these economically strong markets.
5. The world’s population is increasing day by day, and also the interest of people on a natural product due to health consciousness allows them to serve this highly populated market.
6. As all the competitors are manufacturing infant products from processed food. This is the only company that introduces natural infant product. Thus, it allows them to meet the needs of most of the people and increase their sale.
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Threats The external and internal threat that company face is summarized in the following points: 1. The intense competition and presences of multinationals in more countries are the main threat as the company is in direct competition with them.
2. The buyer has greater power due to the presences of choices and lower loyalty.
3. Due to the change in economic condition, there is a change in prices due to which the price of raw material varies. This variability leads to a change in the price of the product. Sometimes, this rapid change in price disturbs the profit of the company. Hence the CSR initiatives of company disturb.
4. The dynamics in the external environment affects the decision making of the company, and it also heightened the competition.
5. The rapid technological change and rapid advancement drive innovation-related challenges within the company.
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Porter’s Five Forces Analysis:
Threats of new entrants:
There is no legal barrier applied to the new entrant. Hence, the threat of new entrants is high because of high innovation and new ways of doing business give opportunities to enter this industry. Due to globalization, the door for new companies all over the world is open so that they can invest in this industry. Thus, it creates competition due to new value proposition to customers, lower pricing strategy and reducing cost are some of the strategies that new entrants applied for penetration into this market. As the company is operating more than 50 years, hence, they know how to tackle these challenges, and effective barriers are also adopted by the company to safeguard its competitive edge.
Bargaining power of suppliers.
There are several suppliers of the company from where they buy product some raw material they also imported from different parts of the world as there are limited suppliers of raw material. Hence, they are in a dominant position that decreases the profit margins of the company. These suppliers use their negotiation power and charge high prices form the companies. Therefore, the cost of raw material is high. These suppliers impact the overall profitability of the company.
Bargaining power of Buyers.
Buyers always want to buy the best products at a low price, and they always demand a lot. It affects the profitability of the company in the long run. Due to the presences of competitors, the company cannot charge their own desired prices, but they have to set the prices as per the prices of their competitors. The extent to which the customers are more powerful the greater will be their bargaining power. Hence, they have a higher ability to seek offers and discounts.
The threat of substitute product:
The industry profitability suffers when the new products and services meet a similar customer need in different ways (Candela, 2019). For example, infant products are already offered by competitors. Therefore, the threat of substitute is high. But it is also a fact that they made this product from processed food and the company made this product from natural ingredients. This is the difference between the substitute products and company products. This differentiation between the two available products brings the graph of the high threat of substitute to normal because of the natural ingredients that are used in the infant product line.
Rivalry among the existing companies:
Rivalry among the existing companies is present, but this rivalry is not that much intense that put the prices of products down of overall industry and whole industry suffers. This intense competition does not toll over the long term profitability of the organization. Goals and objectives:
Goals and Objectives;
Goal 1:
Offers healthier and tastier choices for infants.
Objectives:
• The company aims to launch such food and beverages for infants that are made from natural products. These products are especially for mothers to be, new mothers and infants as well as children.
• The company aims to reduce sugar, saturated fat and sodium from these new products.
• These new infant products are enriched with vegetables, grains, rich fiber, nuts, and seeds that are added in beverages and foods.
• The company’s main objective to simplify the ingredients list that is used in new product range and no artificial flavor and color is added in it.
• These products are made under micronutrients fortification.
Most often, the products that are for infants are not healthier due to the integration of artificial products in it. As the taste of these products is also unpleasant for the infants. Due to which they resist. Hence, the goal of the company is to introduce such a product range for infants that are healthier and tasty.
Goal 2:
Inspire people to live a healthy life and feed their infants with nutritional products.
Objective:
• The main objective of the company is to explain and apply the nutritional information on the packs and at points of sale also.
• Proper guidance on portions of products is given.
• Healthy cooking, lifestyle and eating for infants are also promoted through marketing efforts.
• Empower the parents to foster healthy eating for their infants.
• The company aims to provide breastfeeding substitute products for those infants who cannot have this. Nevertheless, the company supports the ideals behind breastfeeding first.
• Promotes a healthier food option for infants through a wide range of natural products.
Nutritional products is a need for every one of us. Not only the adults need it, but it is imperative for infants. Therefore, the company aims to provide nutritional products that inspire and promote a healthy lifestyle. The same goal is promoted in the set objective of the company that they aim to achieve through this infant product line.
Goal 3:
Shares build and apply nutrition knowledge for strong growth of infants.
Objectives:
• The company aims to deliver complete knowledge to new mothers.
• Knowledge is aimed to deliver to mothers of the first 1000 days of infancy
• The company promote healthy products and ensure that these products are made from natural ingredients and also provides personalized nutrition as well.
However, merely providing a healthy nutritional product to customers is not enough. The goal of the company is to share, build and apply the nutritional knowledge for the better development of infants that they require in their first 1000 days of life. Through this goal, the aim of the company to provide complete knowledge about nutrition to mothers as well so that they can know the importance of this infant diet for their children.
Goal 4:
Makes refreshing foods and beverages that are affordable and accessible.
Objectives:
• The company aims to take collective action and also address these nutritional gaps.
• Deliver such product that reduces the deficiency level.
• Launching an organic version of products as per the age of the infant.
The price range of infant products is always high because of artificial products used in it. But the goal of the company is to make it accessible and affordable for everyone. Therefore, they aim to deliver this product range at affordable prices. Through this product the nutritional gaps are a deficiency of nutrients is properly addressed.
Step 6: Competitive Analysis
In the infant formula industry the three major competitors of the company are, Nestle, Protein, and Fitness – GNC and Glaxo. The products of Protein and Fitness – GNC includes food, beverages, and snacks. For example, super food organic beet powder, protein spread, and superfoods organic matcha powder are its premium products. Glaxo is a multinational corporation that manufactured medicines and infant food from different flavors. Furthermore, Nestle infant food is manufactured in different flavors, and it is worldwide famous and availability in more than 63 countries.
The strength of Nestle is its, worldwide presences and high demand along with affordable prices. These features make their infant food prominent. The target market of Nestle is not the developed countries but in underdeveloped countries, their products are equally famous, and demand is also high. Glaxo’s infant food is not that much famous because the company is known for infant medication. Hence, their infant food does not outperform in the market. As well as, products of GNC is concerned, this company is renowned for its premium quality products that are high quality and demand is also high.
From the competitor analysis, it is analyzed that although the three companies are the main competitors and their products are present all over the world. But still, the products of Biotech for infant outperform in front of them. This is due to their natural ingredients that make their product prominent among others. In other’s products, different vitamins and supplements are added that gives an artificial flavor, but the products of Biotech are 100% original in which no artificial supplements or color is added. Therefore, this infant formula will be better for the company that makes their product famous as their other products.
References
Candela, L. (2019, 1 1). External Inputs to Strategy. Retrieved from lumenlearning.com: https://courses.lumenlearning.com/boundless-management/chapter/external-inputs-to-strategy/
