Instructions: The Executive Director for the new Asia Division, has been asked by Max Barney to put together, and present in a report to him, a business strategy that will be a guide for the next ye

Project 1 Asia Division Business Unit Strategy – Phase 1

Lori A

UMUC: BMGT 364 7983

Professor James Fisher

Introduction

Biotech is a family owned business that is committed to keeping the family history as the symbol of the company. The company’s vision is to help provide everyone with the healthiest life possible in the most natural of ways. Biotech does this by developing products that are safe, effective, affordable and natural with the customer’s health always their primary goal. Biotech intends to open a new cosmetics division in Japan which will be a strong entry into the international market. By using resources such as SWOT analysis, PESTLE analysis, and Porter’s Five Forces analysis, a review of Biotech’s future will be conducted.

Goals and Objectives

When setting goals for a business, S.M.A.R.T goals should be considered. [S] stands for specific: this is a goal that can be accomplished at a greater chance than a general goal. [M] stands for a measurable goal that keeps track of progress and gives incentives to keep going. [A] stands for an attainable goal that is realistic and not extreme. [R] stands for a relevant goal because when a goal is identified, there are ways to make them come true. [T] stands for a time-bound goal that establishes a sense of urgency and prevents goals from being overtaken by day-to-day crises.

The five goals to support the business unit strategy consist of developing products that are safe and affordable; seeking innovative, green and sustainable ways to deliver the product; developing and delivering cosmetics globally; motivating employees; and delivering a good and clear marketing strategy. Three objectives for developing products that are safe and affordable are quality, price, and go-to-market ("14 Types of Product Objectives," n.d.). Three objectives for seeking innovative, green and sustainable ways to deliver the product monitor market trends, utilization of natural resources, time and knowledge. Three objectives for developing and delivering cosmetics globally are reducing transportation costs, reduce shipping errors, and ensure compliance. Three objectives for motivating employees are defined as motivation, create an employee motivation strategy, and employee motivation strategies (Richards-Gustafson, 2011). Three objectives for delivering a good and clear marketing strategy are improving product awareness, establish Biotech in the cosmetic industry, and brand management (Kaho, 2011).

Competitive Analysis

In business, a SWOT analysis is a beneficial method used to evaluate the strengths, weaknesses, opportunities, and threats related to a project or business ("SWOT Analysis," n.d.). SWOT represents strengths, weakness, opportunities, and threats. Internal characteristics of the business include strengths and weaknesses. Opportunities produce external chances to improve performance in the overall business environment. Threats are the external elements in the environment that could cause trouble for the business. Knowing the information that the SWOT Analysis shows helps the company take advantage of their strengths and minimize the influence of threats and weaknesses which they may have. With using knowing the information from the SWOT analysis will help Biotech to develop a strategic plan of action to capture opportunities using their internal strengths and help avoid threats while addressing weaknesses.

Strengths for Biotech are resource availability, Research and development department, and market presence. Resource availability allows Biotech to obtain the resources needed to launch a new product line. Research and Development is a team of experienced and professionals that have developed several lines. Biotech already has a strong presence in the market and can introduce a new product without investing much company assets.

Weaknesses for Biotech are ingredient availability, production cost, and failure rates. Ingredient availability: with developing an all-natural ingredients cosmetic and food line, the length of time and effort needed to obtain the materials and ingredients may cause issues with production (Melody M. Bomgardner, n.d.). Production cost: all new product line has a projected budget which the production cost can exceed (Lister, 2012). Failure rate: when a company tried to break into a new market there is about a 50% failure rate in the first five years. Only 33% make it past ten years ("What Percentage of Businesses Fail - The Real Number," 2017).

Opportunities for Biotech are new demographics and system upgrades. Currently, Biotech consumer demographics shows that the company is in a position to meet customer’s needs and expand into new demographics. When starting a new line, this allows Biotech to upgrade their systems in production, technology and get an edge on the competitors ("How to Gain Competitive Advantage Using Information Technology," n.d.).

Threats for Biotech are limited shelf life and established companies. Limited shelf life: Natural resources and products have a limited shelf life and are costly to obtain. By keeping the products all natural, there are shelf life and preservative issues with the products ("Shelf Life Management Program Frequently Asked Questions," n.d.). Established companies: in the all-natural cosmetic field, there are already established companies. Biotech will be competing with these companies that have an advantage in the marketplace.

In Business, PESTLE analysis is a concept in marketing principles. PESTLE is a tool to help the company track the environment they’re operating in or are planning to operate in. This is a more comprehensive analysis than SWOT. The [P] represents Political. Political factors may include tax policies, Fiscal policy, and trade tariffs. These factors determine if the government may influence the economy or certain industry. The [E] represents Economic. Economic factors may include inflation rates, interest rates, foreign exchange rates, foreign direct investment (FDI), and economic growth patterns. These factors determine the market’s performance that directly impacts a company and could cause long-term effects. The [S] represents Social. These factors include cultural trends, demographics and populations analytics. The [T] represents Technological. These factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably. The [L] represents Legal. Legal is factors that include consumer laws, safety standards, and labor laws. These factors are both internal and external. The [E] represents Environmental. Environmental factors include but are not limited to climate, weather, geographical locations, global changes in climate, and environmental offsets. These factors influence the surrounding environments particularly tourism, farming and agriculture ("What is PESTLE Analysis? A Tool for Business Analysis," n.d.).

Using the PESTLE analysis here are the factors that affect the environment for Biotech. Political: the government support is beneficial to companies but have strict regulations on products and need outside approval before they are allowed on the market. There are restrictions on trade with certain countries. This may provide materials and ingredients issues and can impact the cost in the future. Economic: there are continuously fluctuating interest rates and market changes that can quickly damage a company. Social: an increase in population growth is a concern. Any product that has a positive health benefit influence the population (King, 2013). Technological: upgrading technology will allow Biotech to speed up production to meet supply and demand. Legal: the laws and regulations made by the FDA and government are always changing ("Regulation of Biotech Plants | USDA," n.d.). Environmental: climate changes and global water crisis are affecting supplies throughout the world.

In business, Porter’s Five Forces analysis is used to understand the competitiveness of the business environment and identifying the strategy’s potential profitability. The five forces are a competitive rivalry, supplier power, buyer power, threat of substitution, and a threat of new entry. Competitive rivalry takes a look at the number and strength of the competitors. Supplier power is determined by how easy the suppliers can increase their prices. Buyer power is how high or low pricing can be. If the company has few customers, the customer has more power, if the company has many customers, then the company has more power and can control the price. A threat of substitution is the customer finding a substitute product than the company is providing. If the substitute product is easier and cheaper to make, then this threatens the company’s profitability. A threat of new entry in an existing market that has little money and effort in the market, it will be easier for the rivals to enter the market and weaken others position ("Porter's Five Forces," n.d.).

Competitive rivalry for Biotech is undifferentiated products, diverse competitors, and high fixed costs. Undifferentiated products are if a company sells identical products the customer’s choice may be based on price (Luenendonk, 2016). This may force Biotech to lower their prices. Diverse competitors have their own way of competing which may force Biotech to change the way they compete. When demand decreases, fixed costs will need to be lowered to keep customers interested in Biotech’s products (Porter, 1979).

Supplier power for Biotech is production concentration, a degree of differentiation and uniqueness of products provided. Production concentration: currently there are countless nutraceutical industries that are competing with Biotech. Biotech cannot be distracted by this and remain focus on their products. A degree of differentiation: Biotech needs to come up with products that other companies currently do not produce and is hard to copy, then Biotech could lead with a great profit (Claessens, 2016). The uniqueness of products provided: for Biotech to stay in a powerful position in the markets, they need to keep their products unique and make sure there are no other alternatives available to customers.

Buyer power for Biotech is price sensitivity, need for constant innovative products, and size of the order. Price sensitivity: customers are sensitive to any price change and may switch to a different company if the prices go up. Need for constant innovative products: a customer is willing to try new products and will buy from the company that is introducing new products. Size of the order: customers have a bargaining power depending on the size of their orders. The larger the order, the most likely Biotech will give them a discount (Wilkinson, 2018).

A threat of substitution for Biotech is attractive price substitutes and quality of products. If the price is too high and the customer is more likely to find a substitute from a competitor at a lower price. Along with price, the customer will purchase the product that has a higher quality. Quality sometimes out weight price with customers.

A threat of new entry for Biotech is customer loyalty, access to distribution channels, government regulations, and cost benefits. Customers are loyal to a competitor that has been in the market for a while, so Biotech will face challenges with getting these customers to try their products. With opening a plant in Japan, Biotech may have difficulty in access to distribution channels. Difficulties usually occur in quality and controlling requirements of ingredients throughout their supply chain (CBI Ministry of Foreign Affairs, 2016). Government regulations may require Biotech to apply for licenses and permits for product developments. Cost benefits: some competitors are willing to reduce their prices to keep their customers with them. Customers prefer to pay less for the same products.

References

14 Types of Product Objectives. (n.d.). Retrieved from https://simplicable.com/new/product-

objectives

CBI Ministry of Foreign Affairs. (n.d.). Through what channels can you get natural ingredients

for health products onto the market in Europe? | CBI - Centre for the Promotion of Imports from developing countries. Retrieved from https://www.cbi.eu/market-information/natural-ingredients-health-products/channels-segments/

Claessens, M. (2016, May 25). Factors influencing Intensity of Competition in an Industry.

Retrieved from https://marketing-insider.eu/factors-influencing-intensity-of-competition/

How to Gain Competitive Advantage Using Information Technology. (n.d.). Retrieved from

https://www.profitableventure.com/competitive-advantage-information-technology/

Kaho, M. (2011, August 25). Examples of Marketing Objectives. Retrieved from

https://smallbusiness.chron.com/examples-marketing-objectives-20231.html

King, T. (2013, January 31). New Marketing Ideas for Existing Products. Retrieved from

https://smallbusiness.chron.com/new-marketing-ideas-existing-products-61272.html

Leonard, K. (2010, July 19). Environmental Issues That Affect Business. Retrieved from

http://smallbusiness.chron.com/environmental-issues-affect-business-4175.html

Lister, J. (2012, January 4). Product Costing vs. Cost Accounting. Retrieved from

https://smallbusiness.chron.com/product-costing-vs-cost-accounting-37642.html

Luenendonk, M. (2016, March 11). Competitive Rivalry | Porter's Five Forces Model. Retrieved

from https://www.cleverism.com/competitive-rivalry-porters-five-forces-model/

Melody M. Bomgardner. (n.d.). The long road to all-natural preservatives | July 31, 2017 Issue –

Vol. 95 Issue 31 | Chemical & Engineering News. Retrieved from https://cen.acs.org/articles/95/i31/The-long-road-to-all-natural-preservatives.html

Porter, M. (1979, March 1). How Competitive Forces Shape Strategy. Retrieved from

https://hbr.org/1979/03/how-competitive-forces-shape-strategy

Porter's Five Forces. (n.d.). Retrieved from

https://www.mindtools.com/pages/article/newTMC_08.htm

Regulation of Biotech Plants | USDA. (n.d.). Retrieved from

https://www.usda.gov/topics/biotechnology/how-federal-government-regulates-biotech-plants

Richards-Gustafson, F. (2011, July 27). Lesson Objectives for Motivating Employees. Retrieved

from https://smallbusiness.chron.com/lesson-objectives-motivating-employees-15506.html

S.M.A.R.T goals. (n.d.). Retrieved from https://courses.lumenlearning.com/boundless-

management/chapter/planning-tools/

Shelf Life Management Program Frequently Asked Questions. (n.d.). Retrieved from

https://www.gsa.gov/buying-selling/purchasing-programs/requisition-programs/gsa-global-supply/supply-standards/shelf-life-management-program-frequently-asked-questions

SWOT Analysis. (n.d.). Retrieved from https://courses.lumenlearning.com/boundless-

management/chapter/internal-analysis-inputs-to-strategy/

What is PESTLE Analysis? A Tool for Business Analysis. (n.d.). Retrieved from

https://pestleanalysis.com/what-is-pestle-analysis/

What Percentage of Businesses Fail - The Real Number. (2017, October 11). Retrieved from

https://www.successharbor.com/percentage-businesses-fail-09092015/

Wilkinson, J. (2018, September 18). Buyer Bargaining Power Definition | Buyer Power |

Porter's Five Forces. Retrieved from https://strategiccfo.com/buyer-bargaining-power-one-of-porters-five-forces/

Feedback:

Development of SWOT Analysis: The design of the SWOT is to identify potential impacts to the company in which to capitalize.  Focus should be on Biotech’s current business and how they will move into the cosmetic industry.  Rational should be provided to explain why the selections were made and should be supported with sources and information from the company’s profile.
Development of Porter's Five Forces:

Utilized proper analysis, additional research, and critical thinking when discussing the five forces to examine competition in the cosmetic industry.  Good explanation and evaluation in discussion of the competition Biotech will face as they move into the cosmetic industry.  

Goals: The most commonly used process to establish organizational goals is to use the SMART method.  Specific; Measureable; Attainable; Relevant; and Time Bound. 

Set specific goals by presenting clear and well defined goals that are not vague or generalized.

Set measurable goals that focus on dates, amounts and so on. For example, if a goal is to have low expenses, how is that measured?  There must be a way to measure the success of the goal.

Set attainable goals does not mean to set easy goals; but rather set hard goals that can be attained.  Each goal should have a map on how the goal can be attained to achieve success.

Setting relevant goals should be relevant to the mission of being successful in the cosmetic industry while still providing a product line that is green and sustainable.

Set time-bound goals by providing a timeline for the achievement of these goals.  This would provide a sense of urgency to complete the goals and become successful in the new industry.
Objectives: Objectives blended in with goals.

Objectives were not very clear or organized.  Requires further refining to ensure objectives are well defined and that they are not vague or generalized.  

 
Attention to Instructions: Missing quadrant graph for SWOT and PESTL