Why Has Albani Company Fair Chances of Remaining at the Top of the Rival Chain - Case Study Example

?Sustainable Solutions Paper, Part I In the modern competitive business environment, rating of a business depends on various factors that can either be classified into external and internal business environment. Being a leading company in the perfume industry, Albani can be ranked as a successful or unsuccessful company through considerable consideration of its business environment. This will require the use of appropriate and up to date business analysis tools including porter’s five forces, general force analysis tools, SWOT analysis and detailed value analysis. Despite the company’s success, it has been difficult to cope with the ever-increasing demand resulting from the growing popularity of the company’s products. This indicates a challenge that the company faces in its supply chain business. This paper represents an analysis of the company using traditional strategic thinking tools. Stakeholder Identification and Value Analysis Stakeholders refer to organization, persons, or groups of persons who may be affected by a company’s decision. Customers are the main stakeholders of the company. This is because the company has a responsibility of meeting their perfume and fragrance requirements. Thus, any decision made by the company concerning the nature of the product is likely to affect the customers. The customers define the corporate-level strategy of the company. This is because customer’s satisfaction indicates `Albani’s main business. Business-level strategy is the other significant enterprise level strategy. The strategy defines the company’s competitiveness and sustainability in the perfume industry. The company’s employees have contributed to the company’s sustainability through the creation of high quality products. The company’s lenders and promoters have also contributed to the company’s growth and sustainability by ensuring that the company has sufficient capital. Albani promoters and lenders fulfil the functional-level strategy of the business. Finally, the company has a social responsibility that is beyond making of profits. These responsibilities define the role of the organization and the basic perception of the public towards the organization. The society, which is a bigger set that contains the company’s customers represent Albani’s public image. Culture: Organizational culture refers to “a collection of values and norms within an organization which are shared by all stakeholders and they determine or control how people interact (Macmillan, 2007). According to the article, Albani’s organizational culture can be classified as “bet your company culture.” The company’s decisions have a major impact on its customers. Thus, big decisions are taken after considering the views of all the stakeholders. For instance changing the brand name of a particular perfume will require the approval of the customers and other relevant stakeholders. Such decisions require market research that might take a long time to materialize. Integrated Concepts from Readings According to the previous documents, the success of a company depends on various factors. Each of these factors has a role to play in determining the overall nature of the company’s external or internal environment. The enterprise level strategies define the role of the business and its perception according to the society. Thus, enterprise strategies are concerned with the corporate social responsibility of the business. The company’s culture and enterprise strategies are congruent despite not been closely related. This indicates that a company might have mission statement that is not aligned to its enterprise strategies. However, the company’s vision should be congruent to its enterprise strategies. Otherwise, its vision will not be significant to its operations. General Force Analysis General forces are factors that affect all business operating in a certain industry. This indicates that the general forces define the overall business environment. General forces relate to the society and the country’s economy towards the business (Macmillan, 2007). From the company’s perspective, the society is divided into customers, non-customers and potential customers. The country’s economy also plays a significant role determining the company’s progress. Secondly, the demand for the company’s products is influenced by the people’s culture. Albani’s targets the European market, which is segregated alongside nationalities. This segregation presents the main difference between European and American market. Economics: the country’s economy has an effect in the company’s success and sustainability. Although the company is not a direct subject of economy, economic pressures affect its influence in the highly competitive market. Economic indicators such as unemployment and inflation reduce people’s purchasing power, which affects the company’s profits. Other economic aspects that are likely to affect the company’s profitability are the influence of economy on international trade. The French economy and economies of other major European countries has been decreasing steadily. This indicates that Albani Company is likely to experience a steady reduction in its annual revenues due to decreasing purchasing power. Technology: the external and internal environment of the company is dependent on its ability to utilize available technology. Its production line and communication networks rely on appropriate use of technology. The company’s online marketing strategies demonstrate the company’s ability to utilize technology. Its highly interactive website is also an indicator of the role of technology in the overall development of the company. Demographics / social / culture: social and demographic structures also play a significant role in determining its marketing strategies. Its marketing strategies are also based on the needs to achieve satisfaction among its customers. Albani’s main products are classified as either men or female perfumes. This is a basic strategy in the industry since each gender has specific requirements for beauty products. This stratification also ensures that the company has considerable abilities to monitor the progress of each brand or line of products. However, the company has not been able to develop product that fits people across different age groups. Producing perfumes for different age groups stands as an opportunity that can develop into a threat if not utilized appropriately. Government: Albani’s products are also subject to the government’s control and regulation. The products must comply with government’s policies both in the domestic and foreign markets. The deteriorating European and American economies are likely to increase taxation and cost of foreign trade. This will reduce the company’s earnings and sustainability in the industry. Porter’s Five-Force Analysis Porter’s five forces are used to analyse the attractiveness of a certain industry in relation to other potential industries. Rivalry among competing firms is the first factor that determines an industry’s attractiveness. The main rival firms that threaten Albany existence are K Perfumes, Touchparfumee and the French perfume manufacturer SRB. Rivalries among these firms are moderate. This is because their products are differentiated with brands and each brand having its own line of customers. In the perfume industry, firms depend on the customer’s views towards their products. Perfume customers were found to have a strong attachment towards a certain scent or brand and therefore it is difficult for them to shift from one supplier to another. Power of buyers: Buyers in the perfume industry have relatively low power and hence a low effect on the prices of the products. In addition, buyers are attached to certain properties of the product that prevent them from shifting from one supplier to another. For instance, Albani’s perfume has that special scent that customers identify with the brand. Bargaining power of suppliers: Suppliers in the perfume industry supply essential products required in the production and packaging of finished products. Albani’s suppliers range from producers of fragrances to manufacturers of packaging containers. The industry has few suppliers and hence they have high powers or ability to control the market and profitability of firms. According to Pearce and Robinson (2003), product differentiation, capital requirements, switching costs, access to distribution channels and government policy are the main sources of barriers-to-entry in the perfume industry. Threats of substitutes: the industry has greatly differentiated products and hence minimal threats of substitutes. Customers in the industry have perfect knowledge of their choice product. This choice reduces the relevance of substitute or shift from on brand to another. The industry also has well-established brands that customers use to identify different products. Implications of Five Forces The perfume industry has tight competition and hence Albani’s success depends on its ability to establish a compact customer base. The main weakness of the company is its inability to handle stretching demands during the peak periods, which occurs in summer. Although this stands out as a major threat or weakness of the company, the company’s strategic management team has a chance of transforming this threat into an opportunity. This will depend on the level at which the company is able and willing to accept risks. This transformation will involve increasing its investment in the production unit. The company will also need to work on its supply chain management to ensure that its products are available throughout the year. Threats: the company is likely to lose its customers to suppliers whose products are available through the year, cheap cosmetic products and perfumes from emerging economies are likely to take a large share of its market. Opportunities: Albani is a well-established brand in the fashion industry, there is a growing demand for perfumes in the developing economies. Albani can also research for products that people would associate with winter or autumn. This is because most of the available products are aimed for the summer market. Detailed Value Chain Analysis: Internal Environment Chain value analysis refers to the sequence of activities taking place in a business in relation to its competitiveness and strengths (Macmillan, 2007). According to porter’s theories, activities of a business can be classified into primary and support activities. Primary activities refer to those activities that are concerned with the production and distribution of the main product produced by the company (Glenn, & Gordon, 2009). On the other hand, support activities refer to those activities that contribute to the value and efficiency of the main product. Customized Value Chain of Activities Albani’s success depends on its ability to build a strong customer relation with its existing and potential customers. This will require establishing strategies that will ensure the company maintains its brand name and competitiveness in the perfume industry. According to porter’s analogy, the company’s primary activity is in the production and distribution of perfumes (Garland, 2007). Its secondary products revolve around consumer’s education to ensure that they have the right attitude towards fashion and beauty products. In addition, the company is involved with activities that are aimed at outdoing its competitors. The main aspect that the company use to create a competitive advantage over its competitors is its sale promotion and online marketing strategies. The company’s website and online marketing service are incomparable to those of its competitors. This has enabled the company to thrive in the dynamic and competitive perfume industry without requiring to lower prices for its products. Table 1 Value Chain Analysis Business Process Your Organization Competitor 1 Competitor 2 Management Strategic Central strategic R&D Significant Less often Customer oriented HR Motivation &rewards Recruitment Strong workforce Procurement Negotiation tactics Allied suppliers Cost oriented Inbound logistics Active Active Less active Operations Manufacture Manufacture manufacture Outbound logistics Packaging Packaging packaging Sales Physical & e-market Physical Physical Service Advertising Information education Company Skills / Capabilities According to the table, it is evident that the three firms are in a tight competition race. This is due to the nature of their competitive service and degree of competitive advantage. For instance, the three competitors have active physical and online market from where customers can obtain their marketing information or products. However, the company outshines other competitors due to its outstanding skills and capabilities. The main skill that differentiates the company from its competitors is its ability to produce quality products. Implications of Competitive Analysis From the competitive analysis outlined in table 1, Albani Company has fair chances of remaining at the top of the chain. This indicates the company’s strategic management team needs to refurnish its competitive strategies in order to improve the company’s image and attractiveness to its customers. In addition, the competitiveness analysis implies that the company needs to implement its competitive strategies speedy in order to cope up with the escalating competition. For instance, the company needs to ensure constant supply of its products in the upcoming trading period. Strengths: well-established brand name, customer reward schemes, and strong marketing frameworks. In this case, Albani’s strengths were identified in relation to its operations in relation to those of other competitors. In addition, the identification of strengths was based on the company’s ability to sustain its competitive advantage in the industry. Weaknesses: inability to meet market demands during peak periods, coping with the shifting or dynamic fashion industry, low supply in August, in ability to utilize the low-sale season. Selection of the three weaknesses was based on the company’s competitiveness in relation to its competitors and the nature of the market. Its inability to cope with stretching demand indicates its main fault in the industry. This fault also indicates the high cost that the company requires to pay in order to sustain its operations in the highly competitive industry. Skills: the main skill that the company possess is its ability to match the needs of its customers with appropriate products. Harmonizing customer’s needs with appropriate perfumes makes Albani to remain a market leader in the competitive industry. For example, the company produces special perfumes for men and women. Identifying and harmonizing men and women perfume needs is the main principle that has contributed to its progress. Capabilities: the company has capabilities or things that it is able to perform or do better than its competitors. Unlike its competitors, the company is able to recruit new customers into its pool of customers. This is achieved through high quality products and effective sales strategies. SWOT Analysis SWOT analysis is a powerful analysis tool that provides the scope of both the internal and external environmental factors in a business. In this form of analysis, factors that influence the internal environment of a business are classified as strengths and or weaknesses while those that affects the external environment of the business are classified under threats and opportunities (Garland, 2007). The main strength of the company is its well-established brand name and wide customer base. In addition, the emerging market and winter perfumes stands as its main opportunities. The company can utilize its customer base to create initial market for its winter fragrances. In addition, the company can rely on its brand names to secure a niche in the emerging market. To enhance its sustainability the company should manage its weakness in order to overcome its threats. For instance managing its supply during the peak season will enable the company to cope with the invasion of cheap products from emerging economies. SCOT Factor Matrix Strengths Strong brand Wide customer base Weakness Stretching demand Summer fragrances Opportunity Emerging markets Winter fragrances Threats Cheap products Changing trends SO strategies: the company can use its manufacturing skill to exploit new markets in emerging economies by matching people’s requirements and products. ST strategies: using its ability to match certain fragrance with intended users, Albani can be able to resist products from emerging companies from penetrating the European and American markets. CO strategies: the company can use its influence in the market to create new perfume needs for the people this should be followed by the creation of a product that will meet people’s requirements. This strategy will enhance the company’s competitiveness. Implications of Analysis This analysis indicates that the company has immediate threats that it requires to address. In addition, the analysis indicates that the company has the ability to cope up with emerging threats by utilizing its strengths and opportunity. References Albani. (2012). “Albani Corp”. Retrieved from http://albanicorp.com/ Garland, E. (2007). Future inc.: How business can anticipate and profit from what’s next. New York, NY: AMACON. Glenn, J. C., & Gordon, T. J. (2009). 2009 State of the future. Washington, DC: The Millennium Project. Macmillan, T. (2007). Strategic Management. London: Oxford University Press. Pearce, J. A., & Robinson, R. B. (2003). Strategic management: Formulation, implementation, and control. Boston, MA: McGraw-Hill. Read More