The Internal and External Environment of Foster Group - Assignment Example

Part of a Marketing Plan Table of Contents Part of a Marketing Plan Table of Contents 2 3 Introduction 3 Situation Analysis 3 Analysis of the Internal and External Environment 3 SWOT Analysis 5 Strengths 5 Weakness 5 Opportunities 5 Threats 6 Marketing Objectives (SMART) 6 Conclusions 7 References 8 Bibliography 8 Abstract Business organizations across the globe are trying to leverage the benefits of globalization that has wiped out the geographical and political boundaries of nations. The present study would analyze the business strategies and the effect of market environment on the business prospects and viability. The organization selected for the study is Foster’s Group that is an Australian alcoholic beverage maker and has businesses spread across the globe. The report covers an extensive situation analysis of the company that includes an analysis of the internal as well as external environment on the business strategies of the company. In addition to this a SWOT analysis has also been undertaken to analyze the relative areas of strengths and weakness of the company as well as its areas of opportunities and threats. Finally the study concludes with the formulation of a set of SMART objectives that can help the company generate sustainable competitive advantage in the turbulent business environment. Introduction The present era of globalization has created a scenario of intense competition among the market players to grab a share of the market. The present study would analyze the business strategy of an Australian Trans National company with regards to the strategic aspects pertaining to business expansion. The organization selected for the study is Foster’s Group Ltd that is a multinational firm based in Australia. Foster’s is a company that is engaged in the manufacture and sale of beer and soft drinks. The company mainly concentrates on its brewing business and is known for being a reputed brand across the world for its quality and perception of the brand. The company since its inception in 1888 has presently grown to about 2300 employees alone in Australia having a dedicated presence in about 45 different nations across the globe. The company is also listed on the bourses of Australian Stock exchanges (Foster’s Group, 2011). Situation Analysis Analysis of the Internal and External Environment Environment plays a crucial role in the functioning and sustainability of any business organization. The mission of Foster’s group is to promote global enjoyment and fun (Funding Universe, n.d.). In this regard the company has a business model that enables in the manufacture and sale of quality beverages with a huge portfolio spanning across varied tastes. The company also has dedicated presence across nations that helps generate a fulfillment of the objectives and mission of the company on a global scale. (Fosters Group-a, n.d.). In addition to beer the company also manufactures other alcoholic and nonalcoholic products to target various customer segments and promote enjoyment. The company has maintained an optimum pricing strategy for its products with products available across various price ranges. The company also has an effective promotional strategy that is in tune with the mission of the company to bring about enjoyment. This is evident from the company’s strategy of promoting through sponsorship of various sporting events such as Grand prix in UK and Australia. The company’s supply chain strategy is essentially to have stores across various locations in the globe that are supplied by products made either locally or sourced from nearby production units of the company located at various places. The company largely serves retail customers across different segments including young adults as well as mature and older generation customers. Apart from access to financial resources the company also has an effective and well trained employee base numbering about 2300 employees in Australia. The company provides value to the customers in form of quality and perfection in its products to suit the tastes and needs and to promote fun and enjoyment (Foster’s Group-b, 2011). The external environment of any organization is largely affected by political, economic, sociological, technological, legal and environmental factors (Kay, 2009, p.25). The beer industry has been able to register a growth of 2 percent since 2009 with a CAGR of 3.3 percent. The trend largely represents considerable growth in developing nations led by Asia and followed by Africa and Latin America. However the markets in the developed nations largely shows signs of slowdown with the nations still reeling under the effect of the global economic recession that led to a negative growth of one percent in the developed nations market. The Australian domestic market is also shows a slower growth trend also due to the effect of dip in disposable income due to recession. Growth projections in the global market for beer are expected to be on the rise with signs of resurgence in developed nations. The main competitors of Foster’s in the global markets are AB-InBev, Carlsberg, Heineken and Carlsberg that hold over 46 percent of the global market share for the industry. Each of these companies has an aggressive marketing strategy that involves entering new markets and penetrating the existing market. Companies are also engaged in price wars apart from product differentiation and aggressive marketing strategies to capture each other’s market share and gain competitive advantage. Other than economic factors regulatory issues like government intervention and social issues like ill effects of drinking on health also have considerable effects on the business prospects of these market players in the industry segment. Economic aspects like recession have also impacted the level of disposable income that has led to downfall in sales volume. This is quite evident from the fact that developed nations that have been most severely impacted by the recession have seen dip in sales volume as compared to developing nations that have been less impacted by the effects of the global recession and are largely on a positive side as far as growth of volume is concerned (Sab Miller, 2011). SWOT Analysis SWOT is a tool used by business strategists that implies Strengths of a company, its Weakness, Opportunities and the Threats. This tool is being used by organization to assess their areas of strengths and weakness (Griffin, p.68). The SWOT analysis of Foster’s Group is provided below: Strengths The main strength of the company lies in its strong and formidable brand image, as the company is well established in the market with a good positioning in terms of quality in the minds of the target market audience. In addition to this a large variety of products that is designed to suit the needs of the target audience with various flavors also adds to the strong points of the company. The company also draws considerable strengths from its pricing strategy as it maintains a highly competitive pricing strategy and has a value for money pricing strategy that makes it a favorite among customers. Weakness In addition to the strengths there are certain weaknesses of the company that is mainly traced to its aspect of being slightly less active in the lucrative Asian market. Moreover the company has also been facing certain issues with regards to management of the company on a global market with issues such as consistency and supply chain being critical to the company’s sustainability. Opportunities Opportunities for the company exists in the form of untapped market in Asia and also in penetrating markets like Japan, China and India that have a considerable business potential to offer to the company. In addition to this opportunities also exist for the company in the form of the online marketing channel in which the company can gain considerable benefits and generate profits. Threats Threats to the company mainly arise from the aspect of high levels of competition in the domestic as well as global markets. The number of players has significantly increased since globalization and lifting of trade barriers. Moreover high taxes in certain nations also hold considerable threats to the margins of the company. Finally the ill effects of the product on health of individuals and the social perils of drinking continue to act as threats for the business prospects of Foster’s group. Marketing Objectives (SMART) SMART is an acronym for Specific, Measurable, Achievable, Realistic and Time Bound. SMART objectives are essentially framed by companies to generate greater accountability and ensuring attainment of these objectives (Richman, 2006, p.66). The objectives of Foster’s group are stated below: To penetrate into Asian Markets like India and China in one year Increase revenues from Asian region by 3 percent in 2 years Increase in advertising and promotional spending by about 5 percent especially in Asian and other developing nations Opening up a new manufacturing unit in China and India Introduce operational efficiency techniques like Total Quality Management in Australian units by 2 years Increase in research and development spending by 2 percent to improve and increase innovation and launch new products Develop a customer retention strategy in 6 months The above objectives are highly specific as they are clear in their purpose and the level of activities to be done. Attainment of specific percentage gives easy quantification of objectives that makes them measurable. Considering the potential and the resources of the company and in tune with the strategy of the management to take all the stakeholders into confidence makes the objectives largely achievable and realistic. The objectives stated above are also attached with a specific timeline that again males them largely time bound. In addition to these strategies the company can also have a mechanism like a Balanced Scorecard Technique to monitor and evaluate the objectives. The use of a Balanced Scorecard Technique would help in analyzing the financial as well as non financial strategies of the company so as to generate competitive advantage (Balanced Scorecard Institute, 2011). Conclusions The analysis of the topic of study shows that Foster’s Group has the potential to emerge as a global brand. However certain challenges like absence of a global management strategy and weak market presence in certain regions as well as the competitive forces can largely withhold the business prospects of the company. Implementing a proper international marketing strategy and focus on innovation and quality would always help the firm to not only take care of the competition but to also emerge as a formidable global brand in the future. References Balanced Scorecard Institute. (2011). Balanced Scorecard Basics. Retrieved September 27, 2011 from http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx. Foster’s Group. (2011). Overview. Retrieved September 27, 2011 from http://www.fostersgroup.com/about/overview.aspx. Fosters Group-a. (No date). Our Business. Retrieved September 27, 2011 from http://www.fostersgroup.com/about/the-business.aspx. Foster’s Group-b. (2011). Annual Report 2011. Retrieved September 27, 2011 from http://www.fostersgroup.com/common/files/1023060.pdf. Funding Universe. (No date). Fosters Group Limited. Retrieved September 27, 2011 from http://www.fundinguniverse.com/company-histories/Fosters-Group-Limited-Company-History.html. Kay, R. (2009). An APMP Primer. Robin Kay. Richman, L. (2006). Improving your project management skills. AMACOM Div American Mgmt Assn. Sab Miller. (2011). Global beer market trends. Retrieved September 29, 2011 from http://www.sabmiller.com/index.asp?pageid=39. Bibliography Gaspar, J.E. (2005). Introduction to Business. Cengage Learning. Kapferer, J.N. (2008). The new strategic brand management: creating and sustaining brand equity long term. Kogan Page Publishers. Read More