Educational Development Centre And Product Essay

Question:

Discuss about the Educational Development Centre and Product.

Answer:

Introduction

Blackmores Limited is considered among one of the leading healthcare products manufacturing companies in Australia. It produces a wide range of products that includes minerals, vitamins, nutritional and herbal supplements. The company generically supports the environment and community and that is considered as the sole reason for which it has evolved as the leader in the market for natural health products. The company is listed publicly in the ASX 200 and presently employees more than 100 employees across Australia, New Zealand and Asia. It serves the customers from 17 different countries (Blackmores.com.au. 2017). This paper will briefly evaluate the external and internal strategic environment of Blackmores Limited. In the internal environment the SWOT analysis of the company will be conducted which will certainly point out the strengths and weaknesses before the company. On an added notion the quality of the senior management as well as the resources and capabilities of the company will also be analyzed in this section. The next section of the paper will focus on the external environment of the company. The external environmental analysis will be performed through using a few specific strategic tools such as PESTEL analysis and Porter’s five force analysis. This will help to determine the key factors that affect the operability of the business.

The dividend estimates and actual values of Blackmores Ltd depicted in the figure below reveals the fact that in 2016 the company reported a dividend of 4.10 AUD which in turn represents a 101.97% increase over the last year.

The following features are identified to put the company in a beneficial situation. These features are presented one by one below,

Blackmores Limited is considered as the most successful and leading company in the healthcare industry. This fact can be supported with the help of earnings and estimated earnings data of the company,

The company reported earnings of 5.76 per share in the financial year 2016. While the annual growth rate of the company touched 21%. The company has depicted significant business growth since the last eleven years. Blackmore is highly committed towards providing its customers with high quality natural healthcare related products and services. This has helped the company to become a highly recognized brand which also possesses experience of 80 years. Stronger marketing positions in Malaysia, Thailand acts as a key strength before the company as it helps to enhance the branding image of Blackmores Limited. This can be substantiated with the facts and figures presented in below. The market wise share of the company is presented there. The efficient and experienced management of the company is another strength that designs a long sighted management approach for the growth of the company (Anwar and Hasnu, 2016).

On the contrary there are some other features as well which seem to weaken the situation of the organisation. The current economic ups and downs have affected the business of the company in many different ways. This involves various factors which range from fluctuating interest rate, level of inflation, global outlook of the economy as well as the confidence of the consumers (Saxena et al., 2016). Another weakness of the company is the decreasing bargaining power against its key suppliers, which are Woolworths, Coles and Chemist Warehouse. The expansion of the company in the Asian market has not been tailored according to the specific market structure and presently is widely dependent on the partnerships with the local firms. The business model followed in Australia is not considered as an optimal one in the Asian region. A different type of business model is required to conduct profitable business in those regions (Tyl et al., 2015).

On an added notion, the current situation of the company has put it in a beneficial condition. The acquisition activity of Blackmores Limited is leveraging the company to acquire significant growth opportunities. For instance the acquisition of FIT Bioceuticals has helped the organization to flourish in the health care business segment and thereby achieve organic growth in this sector as well.

The revenue estimates as depicted in the figure above portrays the fact that the company has accrued revenue worth 322.13 million in 2017. This is however a bit lower than that of the revenue in 2016.

Changing demographic nature of the Australian as well as the Asian countries as well as the increasing health awareness is also another opportunity before the company.The wider distribution channels available before the company provide the company with much wider potential. The departmental stores, pharmacies and health food stores may act as the potential distribution channel. Blackmores Limited’s partnership with the Eu Yang Shang (HK) could certainly be beneficial for the company as this may open up a wider knowledge base of the traditional Chinese medicine so that products can be aligned in a better way with the corresponding market.

The increasing regulatory framework for the society as well as the implementation of new legal frameworks may affect the business through the reduction in the level of sales volume. In South Korea a regulatory change took place in 2012 and that gave rise to short term product delays. With the passage of time, the level of competition in the industry is increasing which poses significant threat before Blackmores Limited. The low cost producers are leading to margin erosion and thereby providing the products at a cheaper rate (King, 2013).The increasing competition in the VDS sector of Australia is also another threat before the organization as Blackmores generates the lion’s share of its revenue from this segment. Moreover, the rise of substitute products such as the liquid bottled vitamins in the Asia may lead to a decrease in the sales volume. Discount chemists and the traditional retailers are competing with each other for gaining higher market share and this is affecting the margins of Blackmores limited (Sch?z, 2014).

External Analysis

The external analysis of any business entity involves the analysis of the key macro and micro factors surrounding the business. The external analysis of Blackmores Limited will be performed by using a few strategic tools which are PEST analysis and Porter’s five forces analysis (Koontz and Mon, 2014).

The PESTEL analysis of Blackmores Limited will consider the four key macro environmental factors which are the political, economic, social and technological factors.

The prevalent political framework in Australia is affecting the healthcare industry continuously and the same is valid for the Blackmores Limited. Healthcare industry in Australia is managed by the federal as well as the state government as a joint venture. A poor working condition between these two governing bodies is leading to an increase in the cost of operation for Blackmores Limited. Since 2014 the harmony of work between these two governing bodies was not enhanced by the federal budget (Noe, 2013). On the contrary, the federal budget gave rise to a conflict between the State-Commonwealth relationships that torn an agreement. This lead to an situation when future funding for the healthcare sectors should be arranged by negotiating with the state governments of both the political parties. The result of the budget was a massive shift in the level of cost to the states and it also undermined the potentiality of the cooperative arrangements. This end of relationship between the Commonwealth and State affected the profitability of Blackmores Limited adversely (Stone, 2013). However, the current political situation in Australia is stable and it ensures that the businesses can operate at ease. Moreover, the government funding and the tax rates determined by the governing authorities also affect the business operations. Presently the tax rate in Australia is stagnant at a stable position which is also advantageous for the business organizations.

The economic factors mainly take into account the current health of the Australian economy. Presently the Australian economy has survived completely from the effects of previous financial downfalls. It has a stable rate of growth accompanied by a nominal rate of inflation. This ensures that people are earning sustainable income and thereby their purchasing power has not been affected. Hence it can be expected that with the same purchasing power people will tend to buy more of the healthcare products as the health awareness among them is increasing (Rubie, 2015). As the economy has recovered from the previous hard economic conditions it is presently moving towards boom and as a result it can be expected that the income of people will increase in near future which is again will be profitable for the business.

The social factors focus on the demographic features of the society that means the population distribution, age distribution or sex ratio. However, presently almost all the countries in the world are faced with a problem of ageing population (Cooper et al., 2013). Australia the distribution of age of the population clearly depicts that the number of people between the age group 45 and above are increasing. It is more likely that the need for healthcare products for the aged people will be more in comparison to that of the younger population.

In terms of technological factors Australia can be considered as an advanced country and it always stays a step ahead in this context. The investment in research and development is enormous as well as the company is expanding its business in the foreign countries as well (Suprem et al., 2013). This requires sufficient technical proficiency which helps in the business expansion. Therefore, in the context of technical factors the company is in an appropriate situation.

Competitor Analysis

The power of competitive rivalry arises when the competition between the existing firms within the same industry is higher and each of the firms competes with each other within the same industry with their unique set of strategies. In the context of Blackmores Limited the power of competitive rivalry is high and this is because the level of competition within the Australian market as well as out of Australia is significantly high. The biggest competitor of Blackmores Limited within Australia seems to be the Swisse Vitamins (Suprem et al., 2013). Moreover, as the other companies can easily formulate the products produced by the company the level of competition is fierce. On the other hand, in Asia the biggest competitor of the company is BKL however, it is a small firm it can affect the operability of the larger firms as well. However, the other main competitors are YPB Group Limited and Australia Post.

The power threat of new entry arises when a new firm with a unique product or strategy enters into the market. This power is low in the context of Blackmores Limited (Cooper et al., 2013). This is because the industry is already saturate with the existing firms and in order to compete with the existing firms a company will certainly require enormous amount of time and capital recourses.

The threat of substitute products is also low in the context of Blackmores Limited. This is because the company has gained enough trust from its existing customers and it has also made the Chinese products available in the Australian market (Suprem et al., 2013).

The supermarket sales as well as the emergence of online purchasing spree have leaded the company to maintain a good relationship with its existing buyers who simply generates the main portion of its revenue. Moreover, the higher officials of the company also believe that maintaining a good relationship with the existing customers will help to attract a wider customer base in future. Most of the inputs used by Blackmores Limited are not specialized and hence this does not privilege the suppliers to possess a higher power of bargaining.

Conclusion

On a concluding note, it can be said that the report has successfully emphasized over the environmental analysis of Blackmores Limited. It has been observed from the analysis that the company has been operating quite successfully. However, the recent political changes which are affecting the business could be mitigated quite easily. On the other side of the spectrum, as the competitive rivalry is high, the company should design certain products or services which will not be easily imitable by its competitors.

Reference List

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