Part 1 (External analysis)
Business background
Noosa Chocolate Factory is an Australian local company with the head office located in Brisbane producing range of handicraft chocolate with the products such as cocoa-dusted peanuts, chocolate-coated cranberries, semi-dried chocolate coated cranberries, chocolate coated South Australian pesticide free Almonds, and chocolate coated Queensland ginger. The company was founded by Chris Thomson and Amy Sargeantson in 2009 which specializes in producing coated chocolate products (Noosa Chocolate Factory, 2018). Noosa Chocolate Factory claims all the products the company produces are sold within the seventy-two hours of the production. The company’s growth rate since its establishment has been of 435.85 percent with the revenue of $3.33 million in 2015. Noosa Chocolate Factory has been awarded the “Smart50 Awards 2015” in 2015 as one of the fastest growing small and medium-sized enterprise in Australia (Smart Company, 2015). It was ranked at number seven considering the increase in revenue for the past three years. The company has been growing in terms of employees and business from its establishment and has four retail outlets throughout the Queensland with the business factory located in Noosa. Aside from the physical outlets of the company the products of Noosa Chocolate Factory can also be ordered through the online shop of the company’s website.
What industry is it?
The company produces a range of handcrafted chocolate within the chocolate industry. The chocolate industry is a global business which has been growing steadily with the business centered on the production and sales of the chocolate as the main product. The chocolate industry is one of the biggest industries with the business of around $50 billion a year. The industry is a global business has its major presence in Australia as well. In the chocolate industry, the chocolate is the main ingredients used for producing different products. Within the chocolate industry, the manufacturers produce a wide range of chocolate products ranging from bras, fudge, crème egg, truffle balls and so on. The projected growth rate of the Australian chocolate is to be above 7 percent from 2018 to 2023 (Techsci Research, 2017). There is high demand for chocolate and chocolate-based products in Australia and the milk chocolate product has registered for the biggest share of the market in 2017. The increasing awareness about the benefits of consumption of chocolate has expanded the size of the market of chocolate in Australia. Companies such as Nestle, Unilever Group Strauss Elite, Krafts Foods, Hershey Foods Corporation, Mars Inc, Shirin Asal Company are some of the key manufacturers in the chocolate market of Australia.
General Environment Analysis
General environment analysis provides the information regarding the macro environment factors such as economic factor, physical factor, socio-cultural factor, technological factor, political/legal factor, demographic factor, and global actor. Through the analysis of these factors, the company can understand the environmental factors that affect the business operation and sustainability of the company (Squicciarini and Swinnen, 2016). Out of these factors, political, economic, socio-cultural and technological aspects have the high chance of affecting the business of Noosa Chocolate Factory.
Economic factors encompass various economic elements such as the economic growth rate, interest rate, inflation rate and so on which determines the economic performance of the company. Noosa Chocolate Factory’s economic activities are highly impacted by the economic status of the county as it determines the purchasing power of the consumer.
Political factor includes the situation or political condition of any country. A stable political situation helps the business and industry in any country to expand itself (Duch and Stevenson, 2008). The stable condition of Australia can help the business of Noosa Chocolate Factory.
It encompasses the social elements alongside the cultural elements such as demographic, cultural trends, population analytics, and norms and so on. Understanding these can help to grow the business of Noosa Chocolate Factory during the festive season in the country.
Technological factors are the state of technology and rate of technological development in the environment. The innovation of technology and the proper implementation of the advanced technology can favor the business of Noosa Chocolate Factory in Australia.
Industry environment
Industry environment, in general, is the overall condition such as supplier power, potential entrants, rivalry among competitors, buyer’s power, and substitute products that affect the all the firms and organization in an industry. Factors like lifestyle shifts, demographics, and economic cycles may be experienced by a firm’s business operation (Hossien, 2011).
Supplier power
It is the capability of the supplier to drive the change in the prices of goods and services which are determined by the factors such as a number of suppliers, the uniqueness of these products supplied and the cost to switch between the suppliers. For Noosa Chocolate Factory it better to have different supplier ready as the fewer numbers of supplier can move the power in the hands of the supplier.
Potential entrants
The potential entrants of new competitors highly affect the power the company holds in the market. There is a high chance of company losing the power in case the time and cost of entrance in the market are significantly low. If the industry has a strong barrier for new firms to enter in the market it can favor Noosa Chocolate Factory.
Buyer power
It is the capability of the customers to bring the change in the price of the goods and services. In the case of Noosa Chocolate Factory things such as a total number of customers the company serves, cost the customer has to incur while switching to other company and so on determines the buyer’s power.
Substitute product
The availability of products and services that can replace or used as the alternative for the products of the company acts as a major threat to the company’s business. Since there are a high number of companies producing chocolate related products Noosa Chocolate Factory has to make its product stand out among the competitors.
Rivalry among competitors
The number of competitors and competition among them is encompassed in the rivalry among competitors. If the number of competitors is high alongside, the number of alike products and services in the market the power of Noosa Chocolate Factory can be affected negatively.
Competitive environment
Other chocolates producing firms such as The Margaret River Chocolate Company, Whistler’s Chocolate Company Swan Valley, Zokoko Chocolates and companies offering chocolate related products are the major competition for Noosa Chocolate Factory. These companies need to be closely analyzed to know the capabilities of each relevant firms in terms of business so the Noosa Chocolate Factory can prepare itself for the competition in the market. As the number of firms producing chocolate related products in Australia is high, the competition between them is also high. Furthermore, the existence of big brands such as Nestle, Unilever Group Strauss Elite, Krafts Foods, Hershey Foods Corporation, Mars Inc and so on makes the competition even harder for a local business like Noosa Chocolate Factory. Since these global companies have more capital, skilled manpower, advanced technology at their disposal they can better tackle different threat the market and their competitors’ poses against them (Fold, 2002). The huger number of competitors increases the power of competitors as the rivalry among them will be high and the availability of substitute goods for the customer will be easy which will present itself as the major threat for Noosa Chocolate Factory.
Opportunity and threat
Opportunity and threat are two factor which comes from the external environment of the business. The popularity of the Noosa Chocolate factory and the customer appreciation and satisfaction with their selling strategy and product quality provides the company with a great many opportunities. On the other hand, the big chocolate companies such as Cadbury and other possess the threat to the small growing business organization like Noosa Chocolate factory. One of the biggest opportunity that the company has is the expansion of the company. The economy of the company is relatively excellent and is making a huge profit. Within three operating years, the company has succeeded to increase its revenue by 136.1%. Thus the company has both capability and opportunity expand the business within the national territory or to overseas land.
Firm’s resources
The resources of an organization are usually divided into two groups which are tangible assets and intangible assets. Likewise, the Noosa Chocolate factory in Australia situated in Brisbane city also have its tangible and intangible assets. The tangible assets of Noosa factory are land where it has established the company, vehicles, plant and machinery, furniture and inventory (Saint-Onge and Armstrong, 2012). The Noosa Company does have lots of vehicles which is used for the transportation of its product and raw materials for production. On the other hand, plant and machinery include all those big manufacturing machines, inventory consists of all the stocks and the furniture used by the organization falls under tangible assets. The major use of the tangible assets of an organization is for the production purpose.
The intangible assets of an organization do not exist in the physical form whereas the tangible assets exist in physical form. The intangible assets of the Noosa Chocolate factory include the company trademarks, patents, franchises, goodwill, and copyrights (Drahos, 2016). The intangible assets of a company are also known as the intellectual property of a company. The company brand name is one of the valuable intangible assets which is very useful to influence the customer to buy the product or service once the company has established its name in the market. The intangible assets are not used in the production process however it helps the company to keep the product unique in the market and influence the customer to purchase the product or service. The intangible assets of a company cannot be duplicated, duplicating the tangible assets such as patent right, company brand name and other are illegal act as per the law. An organization values both tangible and intangible assets equally so as to achieve a good market value of the company.
Capability identification
In simple term, the organization capability is the mutual skills, expertise and the placement of the human resource in an organization. Generally, the capability of a business organization is articulated in terms of the company’s human resource, physical and material resource, financial resource and information resource. The core capability of the Noosa Chocolate factory is an innovative product selling approach. Then again, the hardworking and talented employee and the customer satisfaction are other capabilities of the Noosa Company. The company also have the strong financial capability to extend its business operation in the overseas country (Private Media Pty Ltd, 2018). The company has approached the selling process by recommending the customer to take the chocolate home and share with the family instead of using over packaged gifting products has been appreciated by the customers. The employee of Noosa Company also seems to be talented and innovative as recently one of the employees suggested the owner install the closed circuit television camera in the warehouse so that the customer could enjoy the live telecast of the production process. This idea can be considered as a good idea as it will entertain the visiting customer and on the other hand, it will create transparency which increases trust in the customer and helps to retain the customer. The capabilities of the organization play a crucial role in formulating the strategic plan and the development of the company or the extension of the company. Only if the capability of the organization is in a good state, the company can have a great growth. The Noosa Company possess talented human resource, innovative product selling strategy, own unique recipe and good finance which indicates the good set of competitive advantage of the company.
Core competency analysis
Core competency analysis is a business management tools which are utilized to identify the skills, knowledge, and capabilities of the organization. In the recent time, the concept of conducting the core competency analysis is getting popular among the business organization as it helps the organization to identify its core competencies. The identification of the core competencies is based on four specific criteria which are “Does it provide significant value? Does it help in increasing or dominating the market share? Can it be imitated by the competitors? And It provides a competitive advantage or not?” (Starkweather and Stevenson, 2011) All the capability identified in above paragraph which are a talented employee, innovative selling strategy, unique recipe, and good finance do fall under the four tests for a core competency. The unique recipe, talented employee and innovative selling strategy meet the criteria of significant value. The unique recipe and the talented employee provides the company with the competitive advantage and which the competitor company cannot imitate. Other competitive company can hire a talented employee and may develop a new recipe for the product but they can never imitate the same talent of the employee and the recipe of the product. However, the selling strategy of the Noose Chocolate factory is unique but it can be copied by the market competitors.
Suitable information system
There are different types of an information system such as transaction processing system, management information system, decision support system and executive support system which are developed with different purpose and importance. A single information system might not be able to satisfy all the needs of an organization but in the case of a small-scale organization, it might be able to do so. The transaction processing system is that which helps the organization to record the day to day operation data of every single department or the division of the organization. Every single department of the organization is interlinked by the transaction processing system so as to provide important data to the top level management. Management information system is a management tool that helps the managers in planning, directing, communicating and decision-making process (Laudon and Laudon, 2016).
For the Noosa Company, the executive support system will be good to implement as it helps the management to take strategic decisions that relate to the whole organization. This system provides the internal and external data for the decision making process.
Evaluation of the executive information system
The executive information system has the feature of providing the reliable information from the internal and external environment of the organization to help the top level executive in making strategic decisions. On the other hand, the Noosa Company is at peak of success thus it requires to make the strategic decision such as expansion and to make a proper decision regarding the expansion and other development activity, the executive information system can be of great help.