Analyzing Market Structure for Business Expansion

This assignment involves analyzing the market structure of Australia using Porter's Five Force model and PESTLE framework. It also requires developing strategies to reduce bargaining power, threat of substitutes, and competition from existing players for Holland and Barrett's business expansion.

Business organisations
and Environments in a
Global Context

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Overview of the Holland and Barrett..........................................................................................1
TASK 2 ...........................................................................................................................................3
Australian country's business environment.................................................................................3
TASK 3 ...........................................................................................................................................6
3.1 Impact of opportunities and threats.......................................................................................6
3.2 Application of an appropriate analytical approach...............................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business organisation is defined as an individual or a group of persons who are working
together for achieving the preset objectives. In other words, it is a commercial enterprise who
wants to provide better goods and services to their customers with an objective of meeting with
their requirements. Present assignment is based on the Holland & Barrett which is a UK based
Multinational company and deals in healthy food products. It was founded in 1870 by Major
William Holland and Alfred Slapps Barrett. This assignment will discuss about the business
organisation along with its locations, objectives and product or services. Holland and barrett
wants to expand its business in Australian country so exploration of FDI opportunities in that
country will also covers in this report. Pestle and porter's five forces model also discussed in this
report.
TASK 1
Overview of the Holland and Barrett
It is a multinational company who deals in healthy food products across the world. It has
more than 1200 outlet in 16 countries. It has 7000 employees in these countries who are
providing their services in the firm from a long time. The organisation was established in 1870
by two individuals Alfred Barrett and William Holland. Its headquarter in Nuneaton, United
kingdom. Their products are provided in various countries such as Netherlands, India, China,
UAE and many more. The company is dealing in various products such as vitamin, food, sports
nutrition etc. Its popular products are Jacob Hooy + oil, Boombod 7 day achiever 21 sachets and
many more. They have achieved many awards such as the queen's award for enterprise for
international trade, the speciality retailer of the year in 2016, Natural beauty retail awards 2016
etc.
The company is believe in inventing new products so that, their customers are always
attracted towards their offerings. Peter Aldis, CEO of the company is holding the position of
president in health care association of UK from last five years (Adeoye, and Elegunde,2012).
They have their own charitable trust whose name is ' Healthy hope' the main objective behind
this foundation to serve people with focusing on their health and well-being and spreading
awareness for the healthy products in them. The company is more contributing in the protecting
1

and improving the environment. Company have their own website which is fully integrated and
designed for providing ultimate experience to their customers.
Mission- They want to increase the well-being of their customers across the globe
through providing better quality products. Their objective is to provide nutritional products due
to which, they brings happiness in their customers.
Vision – its vision statement states “To become world's largest healthy food supplier”
Size – Company has employed more than 7000 employees among which 6300 worked in
the company of UK itself. It has earned £640m in the year of 2017 which increases their size of
operations (Craig, and Campbell,2012).
Scope- They have a huge range of health food products which consists frozen and sports
nutrition products along with an extensive range of organic beauty products due to which they
can sustained in the market for a long time period.
Major competitors – Company's main rivals are real foods, vitabiotics, beanfreeks etc.
who are providing tough competition to Holland and Barrett in the marketplace.
Legal structure- company is dealing in private sector therefore, they have to follow the
rules and regulations which are created by the government. Company have paying attention
towards their stakeholders and pays tax duties on the regular basis.
Financial position
Illustration 1: Financial position of Holland and Barrett
Source : Financial position of Holland and Barrett, 2017
2

Interpretation – Above graph shows the turnover which is generated by the Holland and
Barrett from the year 2012 to 2017. Company has earned revenue of 461.4 million pounds in the
financial year 2017. therefore, company is attained a strong position in the market.
TASK 2
Australian country's business environment.
Holland and Barrett wants to expand its business operations in Australia so they have to
analyse the environment factors of country due to which they can easily identify opportunities
and threats of factors. PESTLE analysis of Australian country is briefly explained as under:
Political – This factors is controlled and regulated by the ruling government of a country.
As organisation wants to move their operations in the Australian country so, they have to
consider various factors such as the political situation of the nation, current tax policies, Fiscal
policy etc. Australia is the 6th largest country in the world in terms of area. It has a safe and stable
political atmosphere (Babatunde and Adebisi,2012).
Opportunities
 Australia has a great marketplace due to which, organisation can easily expand its
business activities.
 Nation has membership of G20 and WTO that is beneficial for the cited firm.
 Country has a very close connection with the USA which increases import export of
products. It also attracts companies for establishing their units in the Australian country.
Threats
 Country has facing number of issues such as human rights, treatment of refugee etc.
which will become a threat for the organisation.
 Various neighbour countries are criticizing their rules and regulations of deportation due
to which, country's attractiveness is reduced.
Economical- These factors are the ingredients of a nation's economy which influences
directly on the company's brand image. There are various elements includes in it such as inflation
rate, unemployment level, exchange rate etc. that can affect the purchasing power of individual
and sale of the offerings of a firm. Before expansion their business activities in Australia,
management of Holland and Barrett have to focus on these elements so that, they can make
suitable plans and strategies for them.
3

Illustration 2: Australia GDP Annual Growth Rate
Source: Australia GDP Annual Growth Rate 2018
Opportunities
 It is the 13th largest economy with a grew of 2.4% in 2017 across the globe. So, it may be
an opportunity for Holland and Barrett for moving.
 Tax rate of the nation is 27.5% which is less than other countries therefore, company can
easily establish their unit in this location.
 Company exports gold, coal, wheat, educational services etc. to other countries which is
making the growth of nation.
Threats
 The economic growth is slow in the nation which is impact on the growth of company so,
Holland and Barrett have to make suitable plan for this.
 The recovery from economic crisis is fragile which affect the income level of individuals
so, company have to make suitable strategies for it.
Social – These elements are connected with the social atmosphere of a marketplace
which includes market trends, perception of the customers etc. There are a large number of
government and private educational institutions due to which, various students from different
countries are come in Australia for education (Hilton, and Platt, 2013). Australia is the
multicultural country in the world as there are many indigenous residential living in it.
Opportunities
 Nation has best teams in sports such as hockey, cricket etc. Therefore, the sports nutrition
of Holland and Barrett will achieve a huge sale in the nation.
4

Threats
 Migration of individuals in the nation is a biggest issue which can become a threat for the
company in terms of local employees who left their job due to migration.
Technological – Australia is the largest technological advanced country across the world.
This nation is adopting new techniques at a quicker rate than other developed nations. Nation's
technology purchase has taking growth with a 63 billion $ in 2018. Small companies of the
country are investing more in adopting technological systems for meeting the requirement of
customers. Due to which, there is a huge innovation in their products and design.
Opportunities
 As it is a well developed country therefore, Holland and Barrett can increase their market
share in this country.
 Competition is low because there are less health product companies in the atmosphere of
the nation.
Threats
 Company have to adopt various advance tools and techniques before establishing their
plant in the Australia due to which, a huge investment is needed.
Legal – This element is connected with the legislations and rules of the nation. Australia
has various laws for business such as fair trading , competition and consumer due to which, any
company will establish their plants in this country.
Opportunities
 Legal entity is good of Holland and Barrett because they are paying their tax duties
timely so that, they can easily setup their units in effective manner in Australia (Smith,
2016).
Threat
 Labour law of country provide assistance to management of Holland and Barrett in
giving employment to employees. If there is any changes in rules and regulations of
labour law then it may be threat for the company in near future Due to which, company
have to bear loss of employees.
Environmental – Australia is the most beautiful country in the universe along with
beaches, mountain, etc. There are a million of species of animals and plants are founded in the
nation. Due to which, there are a large number of visitors are come regularly in the nation for
5

enjoying its natural beauty. Therefore, there are many companies have established their business
units in the country.
Opportunities
 Huge quantity of plants may be helpful for inventing new health products due to which,
company can easily increase its market share in the Australia (Klem, 2013).
Threat
 Climate of nation is changes on the basis of regularity therefore, management of Holland
and Barrett have to consider such factor.
TASK 3
3.1 Impact of opportunities and threats
Political – Management build relations with the ruling party of the Australian country it
will increase their profitability whereas, they have to signed a contract law from the local
employees which will help them in make healthy relationship with the employees.
Economical - As the growth of economy is increases in Australia so, Holland and
Barrett have to make effective pricing policy due to which, they can easily establish their brand
image in some time. On the other hand, the nation's recovery process is slow therefore,
management have to make suitable strategies for it.
Social- Company have to provide better products to the Australian customers which will
build their growth and sustainability in marketplace. Mostly customers of the nation are focuses
on the quality instead of price so, management of Holland and Barrett have to manufacture
quality health products as per the need of customers.
Technological- Holland and Barratt have better option for choosing effective IT systems
because with the help of it, customers will easily attract to their offerings. For increasing their
number of customers in Australian market, management can formulate a website for the local
residential of the nation.
Environmental- As Australia have huge quantity of plants and animals which can
helpful in making new healthy products for the customers. Apart from that, management have to
formulate effective strategies for the climate of nation because it may provide harm to their
operational activities at anytime.
6

Legal – Before setup the plant in the Australia management of Holland and Barrett have
to consider the tax duties of new entrants and analyse the market structure of the health care
industry in the nation due to which, they can easily setup their plant in the country.
3.2 Application of an appropriate analytical approach
Management of Holland and Barrett has decided to move their business in Australia
country so they have to analyse the market situations in which they can use porter's five force
model which is briefly explained as under:
Porter's five force model is a strategy framework which is used for analysing the present
conditions of the market due to which, company can build a competitive advantage in the
marketplace. Some of the elements of this model are briefly explained as follows:
Threats of new entrants- New entering enterprises brings new innovation and low
pricing strategies due to which, the existing players have to bear the loss in terms of costs, sale
and many more. So that, the threat of new entrants in the health care industry is very high for the
existing players (Pulver, 2012). It can be overcome by some adoptions which are as follow:
 Through innovating new goods and services because new products attracts large number
of customers therefore, companies have to modify their products on the regular basis.
 Health care industry have to set a standard so that, new entrants have to maintain their
costs as per the decided standard. It will beneficial for the existing players.
Bargaining power of suppliers- There are a small number of suppliers who are
providing their services in this industry therefore, they can increase their margin at any time
which can affect the overall profitability of organisation. So that, It can be said that the suppliers
power is high in the marketplace. Organisation can overcome these threats by applying such
factors that are:
 Through building an efficient supply chain with number of suppliers due to which, power
of supplier will be reduced
 Company can design their products with reducing cost of the production which will help
them in changing their suppliers at the time of requirement.
Bargaining power of buyers- Every organisational growth is depends on the customer
furthermore, customers want to purchase the products at the minimum prices which makes
pressure on the manufacturer of the products. As Australia is a large country so, customer base is
7

very high that can affect the productivity and profitability of a firm. For reducing it, company
can use such elements which are as follow:
 By innovating new products in a lower cost, it will reduce the bargaining power of
buyers.
 In order to building a strong customer base organisations have to provide heavy discount
on the products to their customers which brings loyalty among them.
Threat of substitute – There are a large number of customers who are purchasing the
products from various sellers in order to satisfying their needs. If a company is selling its
products at high prices than customer will purchases similar products of it which will decrease
the sale of original product. For overcome the threat of substitute company can adopt some
factors which are as follows:
 Company have to make unique products so that, customers will attracted towards its
quality.
 Organisation have to understand the need of customers before making a product or
service.
 Management of Holland and Barrett have to analyse the market trends and make effective
pricing policies so that, they will attract more number of customers at their stores.
Competition from existing players- In present scenario, there is a huge competition in
the marketplace so, companies have to sustained their prices of product for a long time due to
which, they will take a long term probability in near future. Company can reduce the competition
through choosing effective ways which are as following:
 Through making a sustainable difference in the product.
 Collaborating with rivals increases the market size of the organisation which will become
profitable in selling the products (Sena Ferreira, and et. al., 2012).
CONCLUSION
It has been concluded from the above report that if a company wants to expand its
operational activities in other country then it has to analyse the market structure of the country.
For analysing they can use different methods such as pestle and porter's five force model because
it can helpful in measuring the current situations of the country and marketplace in well manner.
For establishing the plant in other country it is essential to provide quality products and services
to their customers so that, they can easily maintain a huge brand image in that country.
8

9

REFERENCES
Books and Journals
Online
Financial position of Holland and Barrett 2017. [Online]. Available through:
<https://www.statista.com/statistics/872506/holland-and-barrett-annual-turnover/>.
Australia GDP Annual Growth Rate 2018. [Online]. Available through:
<https://tradingeconomics.com/australia/gdp-growth-annual?user=reuters|bloomberg/>.
10