Neptune Gourmet Seafood
Neptune Gourmet Seafood is ranked as the third-largest seafood manufacturer in North of America. The corporation has earned itself a first-class status among its customers. It has positioned itself as the best sea food producer in the region.
Neptune Gourmet Seafood gets in touch with many of its diverse customers through an assortment of channels. With about 30% of its revenues, which happen to stand at $820 million per annum, being generated through selling frozen and processed fish products to the US grocery chains, the company is stable.
Role of business audit in strategy
Strategies are major initiatives assumed by corporate executives to help a corporation positions itself in a way that makes it fair well against the antagonism from its rivals as noted by Camillus(1986, p. 210). Devoid of a strategy, expensive resources will be watered down, the labour of workers will be unfocused, and distinctiveness will not be achieved.
The external surroundings appraisal provides any big business with a significant connections and understanding. Appraisal of the external environment helps an organization to make connections or understand relations between its competitors, customers, and the commodities/services it presents (Kazmi, 2008, p. 255).
Kazmi (2008), in addition, notes that policy audit entails evaluating the definite course of a business and comparing that route to the direction necessary to be successful in a changing atmosphere. In the case of Neptune Gourmet Seafood, there are a number of actions the company can undertake, in order to place itself in a strategic position.
A better understanding of strategies the company can employee can only be arrived at based on a business audit. Neptune is audited in this paper based on porter’s five forces model, PESTEL model and a Swot analysis.
Porters Five Forces Model Analysis
Competitor Rivalry
Neptune operates in a very competitive market or industry. In order to remain aggressive in a changing competitive environment, a company is required to make modification in its prices from time to time, or the quality of product it manufactures (Della et al, 2005, p.124).
In the same approach, the authors notes that there is need for a company to change its market distribution channels as well as keep pace with changing fashions and trends of products it specialise in. Neptune Gourmet Seafood can make use of this force to enhance its strategic position, and as a result keep it competitors at bay.
By cutting down the price of it product, Neptune will benefit by winning a large share of customers and in the end improve its revenue. Similarly, Neptune is supposed to come up with a more effective distribution channels to facilitate a smooth distribution of it product to its customers.
Threat of New Entrants
In case the market is doing well, more companies will be tempted enter. Although, there are no clear threats of new entrants in the case, the industry in which Neptune operates is very attractive. Fortunately, establishment costs are high meaning a huge entry barrier that continues to bar entry by other players.
In case there are any new entrants, this will eventually increase competition and as a result reduce the returns. To overcome such threat, a company can lower it price to discourage more entrant. Neptune Gourmet Seafood can make use of this strategy to benefit from maximised profit as a result of few competitors.
Threat of Substitutes
Companies often do not just have to contend with competition from companies offering same kind of products but also companies offering substitute products. In this globalizing world, with the internet, people are able to access information thus identify substitutes easily.
Often, cost leadership and competitive pricing is helpful in dealing with challenges or problems of substitute offerings. In cutting its prices by a half, Neptune Gourmet Seafood will discourage chances of being substituted, and as a consequence benefit from improved sales of its products. Away from pricing is adopting quality production processes thus anchoring on quality and value to win customers.
Buyer power
Neptune’s buyers are very sophisticated i.e. they have great interest in quality and improved services. The availability of other options gives them relative power over Neptune.
Being able to maintain current customers and attract potential buyers will enhance the competitive position of any company. By offering competitive prices, Neptune, will be able to consolidate its current potential customers and at the same time attract more, hence benefiting from improved revenue due to extra sales.
Supplier power
The last force of porter’s model entails the power of suppliers in influencing the competitive position of a company. To benefit from a competitive position a company is supposed to deal with those suppliers that supply it with products at a reduced rate.
Such rates can be achieved through buying products in bulk. Similarly, Neptune can as well enhance its strategic position by dealing with those suppliers that can provide most of commodities, such as fishing devices at a reduced cost. This will eventually lower down it production cost, and consequently improve its profit.
PESTEL analysis
For one to comprehend efforts made by Neptune to achieve its current position, it is necessary to analyse the company position using the PESTEL model. The PESTEL analysis is a helpful instrument for comprehending the market developments or decline. PESTEL is a short form for Political, Economic, Social, and Technological, environmental and legal factors, which are used to gauge the market for a company or organizational unit.
Technological Factors
To facilitate making decisions and plans for the future events, Neptune Gourmet Seafood has technologically improvised strategies that have made it possible for the company to be competitively placed compared to its rivals.
Some of these technological strategies include coming up with state-of-art fishing vessels installed with high scientific super freezers which make it possible for the vessels to harvest fishes and freeze them to extremely icing temperature, as low as -70 F compared to the usual -10 F or -23 F, within hours of capturing them.
The most remarkable part of technological strategies incorporated by Neptune is reflected on the manner in which these vessels have been designed, such that the boats can navigate themselves by using systematic devices that direct them to the most excellent fishing zones, where they manoeuvre the fishing apparatus in addition to confiscating the catches and eventually transmitting the required fishing information back to the receiving devices on the shore.
Environmental factors
In order to operate within the stipulated environmental set of laws that dictate the manner in which fishing should be carried on, Neptune’s fishing vessels have been mounted with other systems, along with more sophisticated fishing devices, which ensures that only the fully grown mature fish are caught, and that the nets are not overflowing to avoid damaging the heave.
As a consequence, Neptune has not experienced any problem with the authority, and has as a consequence increasingly landed only the top quality catches.
Legal factors
To attain their current position, Neptune Gourmet Seafood had to deal with legal modification, such as laws restricting fishing on the shore and rather recommending fishing to be carried on in deep seas. To triumph over such encumbrance, the company begun to rely on technology, and as a result launched fishing vessel installed with state-of-art technology that enabled Neptune Gourmet Seafood’s fortunes to grow in fold.
Economical Factors
Economically, the company has invested in diversifying their products, in order to incorporate customers of all financial backgrounds. One economic player that influences Neptune’s operation is the U.S. Association of Seafood Processors and Distributors. Its capacity to control industry activities and prices directly impacts on the strategic choices for Neptune.
Social factors
So as to overcome social hindrances, Neptune has expanded their market to cover almost the entire US. To attain this success, the company has used various to distribute its products to different regions in the country, where people with different social backgrounds reside.
This means that in case one brand or product is not fetching good price in one region due to cultural norms and expectations, such products can be transferred to other regions with different social views.
SWOT Analysis
In a competitive marketing environment like the one faced by Neptune Gourmet Seafood, a strategic plan will help the company to have a cutting edge on its competitors.
To thoroughly analyze the market and the different situations surrounding Neptune, it is necessary to perform SWOT analysis. SWOT is an abbreviation of strengths, weaknesses, Threats and Opportunities. A swot analysis on Neptune’s operations is as shown in the table below.
Identification and Critical Analysis of Past Strategies Used By Neptune Gourmet Seafood Have Used To Reach Their Current Position
A strategy is generally an approach, founded on comprehension of the broader situation in which a firm functions, its own strengths and weaknesses, and the problem the corporation is endeavouring to address (McDavid & Laura, 2006, p.340).
According to the authors a strategy gives a company a framework within which to works, clarifies what the company is trying to achieve and the approach it intend to use (McDavid & Laura, 2006, p.340). However, the authors note that a strategy does not spell out the precise activities.
On the other hand, McDavid & Laura (2006, p.340) observe that Strategic planning is mainly planning that facilitates the good management of a process. It takes a company outside the day to- day actions of its projects, and provides it with the immense picture of what the company is doing and where it is heading to.
McDavid & Laura (2006, p. 341), in addition, comments that Strategic planning gives a firm clarity about what it actually wants to accomplish and how to go about achieving it, rather than a plan of action for day to-day functions.
Neptune has positioned itself as the “The Best Seafood on the Water Planet.” To consolidate its position, it has segmented the market and curved for itself a niche in the upmarket.
This strategy that is anchored on focus i.e. targeting only a specific market segment, works well to help organizations reduce marketing costs while creating brand salience or brand value. Market segmentation arises from appreciation that the market is diverse and thus each different group or aspect of the group requires a special approach.
This approach to profitability requires that an organization discover the market segment it can serve best. Once the most profitable or manageable market segment has been identified, the organization devises marketing strategies that address the peculiarities of the given segment. Specialization is done basing on different factors; as per market characteristics.
This strategy has worked well for the company leading to a towering presence in the up market. However, going into the future, given it has increased capacity and it deals in perishable goods, Neptune has to consider possibility of entering new market segments so as to deal with production from increased capacity.
Neptune has also in the past anchored its strategies on resource development, which in turn helps towards improved quality products. The quality products help in differentiation the Neptune brand in the market. Competition is largely depended on product differentiation. Product differentiation is largely defined by the extent to which products distinguish companies or firms.
To the extent that a company’s products are distinct, competition is minimal. When competition is minimal, there is a higher likelihood of a firm’s profits increasing or growing sporadically. Therefore, this strategy has worked for Neptune in the sense that its quality products have enabled them to go for premium pricing thus charging higher than competitors but still attracting customers.
Despite the registered success, to penetrate into other markets, Neptune has to start seeking differentiation within its products. Based on this line of thinking, the idea of introducing a new brand for Neptune is a welcome consideration.
Finally, Neptune invests heavily in its production processes. One of its strengths is high investment in resources. A resource based approach to strategy is great in the sense that it proffers internal capability on an organization and can thus deal well with external threats. For instance, Neptune has invested in the best technology in the market but also in new ships.
This gives opportunity for increased production that may translate into economies of scale in the future. However, in the short run, Neptune thinkers have to consider how to translate the high investments into cost leadership. Going into the mass market might help towards full utilization of its capacity and this may yield it a competitive advantage based on cost leadership.
Explanation and evaluation of the role of strategic planning
Olsen (2006, p.16), notes that a strategic planning procedure is not something that can come to pass in an informal way, at an ordinary planning meeting or at some stage in a staff meeting. It requires thorough planning to set it up, so that the process is systematic and all-inclusive. Olsen (2006, p.17) in addition, remarks that strategic planning can incorporate both short and long term plans.
In case of short term strategic plans, a company may make use of them trying to tackle a temporary problem which it may be experiencing or expecting to come across in future. Such situation may include countering an advertisement from a rival company, which could be intending to perplex the market with products reflecting similar characteristic as its own.
On the other hand, a company that comes up with long term strategic plans could be preparing to add more value to its customers than its rivals, and in the process attain a position of relative advantage (Hill & Jones, 2009, p.405).
Hill & Jones, in addition observes that these values could be added through key drivers such as cost leadership and differentiation of products. For cost leadership, Hills& Jones notes that, this is an approach endeavouring to become the lowest cost producer in the industry. Through production in bulk the company will benefit from reduced cost of unit production.
Just like Hill & Jones, Peng (2008, p.45) observes that the company can compete on price with any other producers in the industry hence earning higher profit per unit product produced.
On differentiation of product, Peng (2008, p.46) remarks that strategy calls for introduction of a product or services that offer characteristics that are both unique and highly valued by the end user. As a result, the uniqueness provided by the product may permit the company to charge a premium price for it commodities.
In the case of Neptune Gourmet Seafood, the company has come up with both short term and long term strategic plans in order to overcome most of the constraints that have emerged in the course of operation.
Short term strategic plans
Some of these short term strategic plans include the different brands of products that the company has introduced in the market. Example of such brands by Neptune seafood comprise of the Gold canned salmon, sardines, mackerel, tuna, and pilchard.
Advantages of short term plans
In case the brand receives good performance, the company can think of introducing the product into the market with more confidence (Ireland et al 2008, p.104) another advantage associated with the short term strategic plans, is that the plans gives a company enough room to critically analyze and monitor the performance of the products (Kaufman, 2003, p. 97).
Kaufman further observes that this prevents companies from incurring unnecessary costs experienced during their development.
Disadvantages of short term plans
Short term plans have a number of limitations, among them is the fact that this plans are usually improvised urgently. The urgency in their formulation usually denies the strategy makers enough time to carry out an elaborate research on their success, and hence most of them are implemented without the necessary prior test as noted by Kaufman, (2003, p. 97).
Kaufman (2003) further observes that short term plans are usually expensive to implement as some of them are formulated within a short notice. Most companies are therefore forced to look for financial sources to fund their implementations as they are usually not considered in the company budget.
Long term strategies formulated Neptune Gourmet Seafood
On long term strategic plans, Neptune Gourmet Seafood has implemented a number them. The most outstanding of Neptune Gourmet Seafood’s long term strategic plan is the embracement of state-of-art technology in it’s shipping vessels.
Advantages of long term strategic plans
Out of this strategic plan, the company has been placed in a better competitive position compared to it competitors. This incidence has helped the company to enjoy a large share of the market, which as a result has enabled Neptune Gourmet Seafood to register outstanding profits.
The other long term strategic plan implemented by Neptune Gourmet Seafood includes increasing and improving its channels of distribution.
Through these elaborate outlets, Neptune Gourmet Seafood products have been distributed to its customers all over the US at the right time and place. As a consequence, most of the company’s customers have developed unwavering trust on it, a result that has enabled the company to command such a huge share of the large market
Among the many benefits of long term strategic planning adopted by many companies and Neptune Gourmet Seafood in particular, is that most of these plans are usually thoroughly researched on, before they are implemented (Betz, 2002,p.47). Betz in addition explains that these create a sense of assurance to the company even before the plan is implemented.
Disadvantages of long term strategic plans
The most notable disadvantage of long term strategic plans is that coming up with these strategies requires the company to dedicate most of it time on them. This is reflected on the extensive research usually carried out to facilitate their success.
Similarly, the plans are extremely expensive to both formulate and implement. The high cost of their formulation and implementation is reflected on the huge figure of competent workforce required to successfully implement the plans.
References
Betz, F., 2002. Executive Strategy: Strategic Management. John Wiley & Sons, California.
Camillus, J., 1986. Strategic Planning and Management Control: Systems for Survival, Lexington Books Publishers: New York
Della, P., V., Low, M & Lyman, K., 2005. The Business Strategy Audit, Cambridge Strategy Publications: London.
Hill, C., & Jones, G., 2009. Strategic Management Theory: an Integrated Approach, Cengage learning publishers: New York.
Ireland, R., D., Hoskisson, R., E., & Hitt, M., A., 2008. Understanding Business Strategy: Concepts and Cases Study. Oxford university press: London.
Kaufman, RA, 2003, Strategic planning for success: aligning people, performance, and payoffs. John Wile y and Sons, California
Kazmi, J., 2008. Strategic Management and Business Policy. Tata McGraw-Hill: New York.
McDavid, J., C., & Laura, R., L., 2006. Program Evaluation & Performance Measurement: Sages publishers: London.
Olsen, E., 2006. Strategic Planning for Dummies. Wiley publishing Inc: New Jersey.
Peng, M., W., 2008. Global Strategy. Cengage Learning: New York.