Introduction
This is the analytical evaluation of the strategies of boost juice Ltd. The main purpose of this study is to highlight the company’s arrears of strengths and weaknesses as well opportunities and serious threats for the company. This paper has mainly focused on the related years of the case study. At first, the past strategies of the company have been indicated with special reference to the company’s motives and objectives. Then, the new strategies in response to the change in the environment of the industry, including socio-economic factors, have been selected for the company to aid in achieving goals and objectives.
Then Quantitative Strategic Planning Matrix has been developed to indicate the SWOT matrix after the evaluation of EFE and IEF matrices, which has been discussed to indicate the strengths, weaknesses, opportunities, and threats in the company’s strategies. In addition to indication and selection, all of these strategies have been given specific value so as to attract the attention of the company to the core and sensitive issues so as to convince the company for modifying strategies in their areas of weakness. Similarly, the functional, corporate, and competitive strategies have also been indicated in this part of the paper in which SWOT analysis has been drawn for the company so as to enhance the company for further growth. The basic purpose of this part of the paper is the strategic evaluation of the company in terms of the competitive advantages of the company in the context of SWOT analysis. The changes in the company and the whole industry have been defined so as to understand the profile of both. Then, a conclusion has been drawn at the end of the paper in which the comparison of all the strategies of the company has been made on the basis of internal and external analysis.
External environment
Political: – Political factors will affect the company because it will have to adjust and fit into the political situation of the foreign country. Some of the political barriers will be vastly governments that have bad officials who award businesses with corruption to the highest bribers instead of the lowest bidders. Other governments will impose high tariffs to protect their home industries. A poor political environment will make the countries place many regulations on the entering country to scare it off. The political environment is also inclusive of laws, government agencies, and pressure groups that will form a barrier to entry into a particular country. There is however hope because some political factors can also create some opportunity for countries. The company must therefore know all the major laws protecting competition, consumers, and the society of the country that it wants to enter before they decide to expand into the country.
Economic – Interest and Exchange have an impact on consumer spending and could affect the profitability of the venture. There are many economic indicators that determine the environment of the business. This includes;- effects of affluence, depression, inflation, shortages of product in the market, effects of research expenditure, research costs, buying power index, consumer ability and willingness, price elasticity, and cost of distribution affects the business (Thomson, C. and Rampton, L.,2006).
Social factors:- Looking at the social-cultural factors ethnocentricity is a major factor especially if the new marketplace is in a country with diverse cultures. This is a major challenge because most of these people hold so much to these cultures that it is very difficult to make them adopt your product and your marketing strategies. Boost juice had health and dental care plans for its full-time employees. Its part-time employees could also enjoy some health care services. The business also extends insurance services to its employees. The management of Boost also treated its employees very well compared to other competitors which give its employees low wages. Some employees had worked for Boost for many years and this means that the business regards its employees. The business also has programs where it gives back to the community through employee volunteerism. The business also believes that its employees are its most important asset. It regards its employees as being the best in the industry; the business gives its employees rewarding challenges.
Technological factors: – the business shall be offering simple workouts like body massage, skin treatment, weight management, and hair cut. The new venture shall ensure that a regular improvement on the quality of services offered is maintained. The company shall buy all the required equipment to be able to offer advanced hair care services (Allard, M., 2005). The introduction of computers and other machines has made marketing and production of a product to be easier (Keller, K. L., 2002).
Porters 5 forces
The five forces have emulated by porter have an effect on this industry. These forces include the barrier to entry into the industry, the threat of substitutes to the company’s product, buyer bargaining power, the degree of rivalry among industry players, and supplier bargaining power.
To begin with barriers to entry, into the industry exists when it is easier for a company to enter into the business threatening the market share of the existing competitors, this will affect competition among the industry players, and this industry in question is easier to enter into the business thus boost juice are under threat of losing the market share because they are likely to have a new competitor if they have enough money. This will reduce competition. According to porter, it is only in theory that a firm can enter and leave the firm. In reality, there is some uniqueness within the industries which protects the profitability of the firm and hinders new entries to the market but this can be affected because the juice industry can be entered easily by rival or substitutes producing companies such as the manufacture of sodas and alcohol.
Barriers to the entry of the market will ensure the market is equilibrium however if it is breached the equilibrium of the market will be adjusted downwards. If the industry profits are high as in this case, they will be shared among companies thus reducing the profitability of existing companies. When the profitability goes down some companies are expected to opt out of the business and one of the companies that may opt-out of the business is Boost juice. Usually, profitability goes down when new entities enter into the business due to falling price levels, discouraging the existing industry players from going on into the business. The setup costs for a new entity into the industry are high but the market is already in existence, any investor in Australia with enough money will think of entering into the market. If firms independently keep the prices low as a strategy of keeping away new entrance into the market, then prices will become a barrier to entry into the market. In the Australian juice industry, this is a major factor stopping the entry of a new entry to the industry. This fact reduces the rate of joining the industry but it doesn’t stop the entry of new firms into the market.
Another force as emulated by porter is the force of bargaining power of suppliers in Australia, the supply of raw materials, labor, and other suppliers that are used in the manufacture of juice are controlled. There is a minimum wage rate that is known to control the prices. To counter this force, Boost has extended its products and international relations to other companies. They have also decided to engage in any other activities which are diversified.
Another force is the threat of substitutes, these substitute products refer to products in other industries. To the economist, a threat of substitutes occurs when a product’s order is influenced by the price adjustment of a substitute product. A close substitute product constrains the capability of firms in an industry to raise prices. The rivalry engendered by a Threat of Substitutes comes from products outside the industry.
At the same time as the threat of substitutes naturally impacts an industry from side to side price competition; there can be other concerns in assessing the threat of substitutes. For instance, the substitutability of different types of TV transmission: local station transmission to home TV antennas via the airways versus transmission via cable, satellite, and telephone lines. The new technology offered and the varying structure of the entertainment media is contributing to competition among these substitute means of connecting the home to entertainment. Apart from remote areas, it is unlikely that wire television could compete with free TV from an aerial without the greater diversity of entertainment that it affords the customer (Porter, 1998).
Another force is the power of buyers. This is the impact that consumers have on a producing industry. In general, when buyer power is powerful, the relationship to the producing industry is close to what an economist terms a monopsony – a market in which there are many suppliers with only one buyer. Under such market circumstances, the buyer decides the price. Inauthenticity few uncontaminated monopsonies are real, but often there is some disequilibrium between a producing industry and buyers.
If competition among firms in an industry is low, the industry is considered to be disciplined. This obedience may consequence of the industry’s history of rivalry, the role of a leading firm, or informal compliance with a generally understood code of conduct. The unambiguous agreement generally is against the law and not an alternative; in low-rivalry industries, competitive moves must be constrained informally. On the other hand, an odd one-out firm looking for a competitive benefit can put out of place the otherwise disciplined market.
Competition analysis
There are many established competitors of the industry in Australia. These companies are operating in many countries but their products and services have a greater advantage as compared to new companies that are entering the market now. Since the industry where the company will be operating with companies that have already achieved their objectives, a new entrance into the market will have difficulty in attaining their objectives. There are competitors from within and without. This provides great competition to any entrance in the market. This will call for a company to use differentiated marketing that is operating several markets segments and designs and using different marketing programs for different customers. They will analyze the potential of the market for more profits in the future by looking at factors like size of the population, the purchasing power of the population, the growth rate of the population, the profitability of companies operating there, the economics of scale, and the risks involved. The potential of competition will be analyzed on the basis of long-term profits that can be attained by the company.
Internal environment
As far as the internal and external environment of Boost juice. is concerned, the company introduced some new strategies which facilitated the company for continuous growth. The increase in the number of outlets as well as differential packaging units has helped to capture various market segments. This has also produced massive profits for the company and also augmented its competitive advantages. It was also the distinction of the company that it introduced the first automatically-operated vending machine, which provided customers with easy accessibility to the products of the company. The deployment strategies have been revised to target the maximum customers and to explore the new markets for attaining its goals. In addition to the refurbishment in the deployment strategies, the company’s products are covering a maximum range of customers.
During the years 2007 and 2008, the company was facing serious threats of prices of supplies and environmental troubles and that is why the company changed its strategies. The new advertising policies ranked the company among the leading in the industry because the promotion of the products enforced the strength of its brands among the customers. The negative media role demanded some vibrant changes in the marketing policies and the real direction of awareness among the consumers. The industry was going on the rise among the leading profit-gaining industries. However, some socio-economic disasters produced serious threats to the economy of the industry. At the same time, it was the fortune of this industry that the customer demands could not be demolished with such disastrous environments. The unrest in the social scenario of the world, somehow, caused hindrances in the further growth of the industry. However, the company’s competitive advantages sustained its rank in the whole industry and the continuous growth of the company rejected all the threats to the industry.
SWOT analysis of Boost Juice
Opportunities
- Growth by increasing market share through mergers and acquisitions
- Develop new products which link to changing peoples lifestyles of the people
- Incorporate new technologies to stay ahead of the competition
- Enter overseas markets.
- Launch other products not available in supermarkets and stores
- Sign celebrities to market our products
As presented, industry players have really stretched the products they offer. The Australian values and objectives of comfort and convenience prevail and these outfits have attempted to cash in on the failures of other players without necessarily offering everything, but specializing and individualizing the experience.
Threats
- Keeping control in the family – Lack of knowledge, Investors unhappy
- Economy – Expensive borrowing caused inflations
- Expansion, Mergers, and Acquisitions – could lead to failure
- Competition – other major companies entering the market could affect their revenue
- Rules and Regulations of different states
- The main threat is direct competition with other industries. The company may beat them in service, but they will be beaten with the numbers.
Strategies to reduce weakness
The company has tailor-made its products by picking up local brand items. It will be important to develop the parameters of our operations.
Strengths
The company has seen growth in all sectors among the industry players. They are first to launch new products annually thus customer confidence high
- Low product costs – integration between some branches
- Highly experienced management and staff
- Growth by increasing market share through mergers
- Able to promote several products in one place
- High operation margin, no risks relating to profitability
Weaknesses
- Barriers to Entering Foreign Markets
- Licensing problems in countries.
- Highly competitive market
- Inflation in the market
The industry is dominated by these giants. Even in areas and hot spots where saturation is high, it’s still relatively low compared to the players. It appears that consumers are making a conscious effort away from mass commercialization and inexpensive albeit juicy products. The weakness is that the company won’t have the learned experience of the giants.
Current strategies
According to David (2007), the techniques for formulating strategies can be integrated into two stages, which are the Input stage and the Matching stage. The Input stage includes the External Factor Evaluation (EFE) Matrix, the Competitive Profile Matrix (CPM), and the Internal Factor Evaluation (IFE) Matrix. Besides these stages, various levels of strategy will be involved, which are functional, competitive, and corporate strategies. According to Wheelen and Hunger (2007),
‘Functional strategy is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. It is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a competitive advantage. Each company or business unit has its own set of functional departments, each with its own functional strategy. Because the orientation of each functional strategy is dictated by its parent unit’s business strategy, functional strategies must interrelate if they are to be successful.
Functional strategies are objective-oriented decisions and actions of various functional departments of the organization and Competitive strategies inform about the competition tactics of the organization for keeping pace with other competitive organizations. Corporate strategies are mainly concerned with business-level strategies and are usually designed by the board of directors. Coulter (2002) has defined corporate strategy in such words,
‘that strategy concerned with the broad and long-term questions of what business(es) the organization is in or wants to be in, and what it wants to do with those businesses… The corporate strategy establishes the overall direction that the organization hopes to go. The other organizational strategies—functional and competitive—provide the means or mechanisms for making sure the organization gets there.
In the same context, David (2007) has defined CPM as,
‘… identifies a firm’s major competitors and their particular strengths and weaknesses in relation to a sample firm’s strategic position’.
Similarly, David (2007) has illustrated EFE audit as a tool which,
‘..allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information.
According to David (2007), ‘….. the critical success factors in a CPM are broader. These factors are also not grouped into opportunities and threats as in the EFE. In a CPM, the ratings and weighted scores can be compared to rival firms’. As far as internal analysis is concerned, Coulter (2002) has defined it in such words,
‘…an internal analysis is the process of identifying and evaluating an organization’s specific characteristics including its resources, capabilities, and core competencies… The whole reason for doing an internal analysis is to assess what the organization has or doesn’t have (resources) and what it can and can’t do (capabilities)—in other words, its strengths and its weaknesses.
In the years 2007 and 2006, the functional strategies of the company included the maximum expansion of the company by introducing new products. The main leading brands of the company were juices.
As far as the TOWS matrix is concerned, the internal and external analysis of the company entails that the company’s net profit increased with a specific ratio in relation to the previous years’ analysis. The profitability rose too high that it attained the figure of $25 million, which was 19.2 percent more than the previous year. Similarly, the net debt-to-capital ratio improved to 38.2 percent from 36 percent as was in the year 2007. That is why the year 2008 was declared as the year of cost control in the company’s profile. The other main strength of the company was its vibrant brands, which were recognized throughout the whole country.
The Quantitative Strategy Panning Matrix includes the internal and external evaluation along with competitive analysis. The internal key features of the company included enhancement of products, strengthening of brands with the introduction of new products, expansion, renovation of current operational software and hard-wares, and its safeguard policies. The external environment of the company included strategies, which we’re exploring the new markets for flourishing its business, the establishment of joint ventures, tremendous growth in the industry and the economic growth for Australia in the form of increased benefits and revenues, protection of the environment and introduction of alternatives for satisfying cost control needs. However, this strategy of the company also caused some weakness for the company because the company had to produce some macro-investments for further growth in the respective department, which caused a heavy burden on the company’s financial assets. Similarly, the strengthening of brands was also the company’s most prior strategy and it also enforced the company’s ranking in the whole world. By promoting its brands, the company managed to compensate its financial burdens in the form of massive investments in various new projects.
Possible Strategies
There are many possible strategies for companies to use while diversifying in the market. The strategies used include;-
Diversify products to meet the needs of people in all the countries they operate.
Expand products in all countries
Reduce the cost by outsourcing business activities to parts of the world where labor is cheaper in order to remain competitive in the market.
Enter into a joint venture or acquire rights in companies with similar products in various parts of the world to increase market share and reduce competition.
Companies should invest in technologies so that they can produce differentiated products.
The company should expand its product/services to various parts of the world
The company should adopt a differentiation strategy where there is cost leadership and product differentiation; this will increase revenue for the company and increase the market share.
Conclusion
Boost juice has devised some effective and pragmatic policies for its operation and that is why the company has maintained its status among all segments of the industry. However, some of its corporate strategies could not produce the forecasted results and produced a heavy burden on the financial assets of the company. The company’s strategy of enhancing its products should be appreciated but it was also mismanaged by the corporate management because of heavy investments in such new megaprojects. Similarly, the enhancement of the services also accelerated the growth of the company, because most of these products were new in the whole industry and these types of products attracted many customers from all over the country. Its operational strategies also devised some new plans for the company which also became the major cause for the healthy revenue collections. Similarly, the expansion of its operation also increased the outcome values and the net profit ratios.
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