Recovering SC Johnson's Profit: A Viable Strategy

This assignment analyses SC Johnson's external and internal environment to identify critical obstacles and recommends a viable strategy to recover its profit. The PESTEL analysis of the South African home-care industry is conducted to assess individual factors that have a significant impact on the industry's sales growth, costs, and profit potential. The stakeholder matrix is also used to evaluate the impact of stakeholders on business activities. The recommended strategy includes vertical and horizontal integration with a focus on cost leadership, differentiation, and focus strategies.

STRATEGY
STUDENT NUMBER:
WORD COUNT: 5979 excluding Table of Contents, Executive Summary and
Reference List
Abstract
WHAT IS A VIABLE STRATEGY TO RECOVER SC JOHNSON’S
PROFIT?

Contents
1. INTRODUCTION....................................................................................................................2
1.1.1 SCJ’s value proposition.............................................................................................3
1.1.2 The strategic challenge..............................................................................................4
1.1.3 Triggers......................................................................................................................5
1.2 Structure of the assignment...............................................................................................5
2. MACRO and MICRO ANALYSIS..........................................................................................8
2.1 PESTEL............................................................................................................................8
3. MICRO ANALYSIS..............................................................................................................12
3.1 Industry maturity curve...................................................................................................12
4. Market Analysis.....................................................................................................................14
4.1 Porter’s five forces..........................................................................................................14
4.2 Key success factors.........................................................................................................16
5. INTERNAL ANALYSIS.......................................................................................................18
5.1 Organisational resources and capabilities.......................................................................18
5.2 VRIO framework............................................................................................................19
5.2.1 Summary of Strengths of the resources and capabilities.........................................21
5.2.2 Weaknesses of the resources and capabilities.........................................................21
5.3 Organisational inertia and path dependency...................................................................23
6. RECOMMENDATIONS.......................................................................................................25
6.1 Strategic options..............................................................................................................25
6.2 Vertical integration.........................................................................................................25
6.3 Horizontal integration.....................................................................................................27
6.3.1 Option 1 - Cost leadership strategy.........................................................................28
6.3.2 Option 2 - Focus strategy.........................................................................................28
6.3.3 Option 3 - Differentiation strategy..........................................................................28
6.4 Evaluation of strategic options........................................................................................29
6.5 Implication section..........................................................................................................29
7. REFLECTION........................................................................................................................31
8. References..............................................................................................................................32
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1. INTRODUCTION
SC Johnson (SCJ) is a family business which is non-listed fast-moving consumer goods
company operatingin more than 76 countries with headquarters in the USA. In Africa, SCJ has
three main operations in South Africa, Nigeria and Kenya. The South Africa business, this
assignment’s focus, houses four business units namely, shoe care, home cleaning, air care and
pest control, manufacturing and marketing. The author is the South Africa customer manager.
Crafting a good strategy entails a diagnosis of the external environment to identify critical
obstacles, a guiding policy to overcome those obstacles and coherent actions to support the
policy (Sterling and et.al., 2020). The value proposition framework that entails, an analysis of
SCJ’s external environment, its aspirations and values, its value offering, and its resources and
capabilities is applied to analyse the company’s ability to sense and understand changes in the
external environment and the resilience and longevity of its resources and capabilities.
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1.1.1 SCJ’s value proposition
Figure 1. SCJ’s value proposition, adapted from
(Henley Business School, 2020)
The home-care industry offers mass market products that have become commoditised due to
external environmental factors of consumer affordability ina saturated market (Qin, Liu, and
Tian, 2020).SCJ offers environmentally-friendly products backed by research and specialised
resources which make its product prices high (Yang and et.al., 2020). SCJ has appliedpromotion
strategies to respond to the lack of consumer affordability and market saturation which has
resulted in its value declines, rather than a cost leadership strategy that drives profitability
(Bonaccorsi and et.al., 2020). Its deep strategic partnerships with retailers are questionable as
retailers’ main aim is to drive volume and value from competitor companies and its dealer-
owned products. SCJ’s research and development (R&D), technological and financial strength
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position the company to continue to create differentiated environmentallysafe products(Köseoglu
and et.al., 2020).
1.1.2 The strategic challenge
The respective company is not price competitive and it result into declining of profits as
well as market share. SCJ’s business in South Africa competes with threemajor players that are
Unilever, Rekitte Benkiser and local giant, Tiger Brands, its number one competitor.SCJ’s
brands have been market leaders with 71% share in shoe care and 30% share in air care and
second strong number in pest control and home cleaning, however for the past 3 years, has been
faced with declining share and sales year on year(Gong and et.al., 2021).
In 2020, SCJ lost 7%of its sales versus industry growth of 6% (Miroshnychenko and et.al.,
2021). This is a strategic challenge for SCJ South Africa because the home-care industry is
showing growth and is predicted to grow even more in the long term driven by external factors
such as population growth and urbanisation. Whilst its competitors are growing, SCJ is declining
in both share and value (Queiroz and et.al., 2020).
South Africa experienced a technical recession in the second quarter of 2018 (Kulshrestha and
Saini, 2020). This external economic factor has put pressure on consumer affordability, driving
consumers to trade down to cheaper alternatives (Harrington, 2020). Competitor industry
players have developed strategies focusing on consumer needs such as affordability and product
efficacy which have allowed them to thrive in this challenging environment(Barrail, 2020). This
has led to increase in consumer demand for quality at a low price profitability (Bonaccorsi and
et.al., 2020). Due to this industry being in a maturity phase, the market is characterised by
market saturation that drives low margins, resultingin the need for high volumes to drive
profitability as products are not differentiated (Qin, Liu, and Tian, 2020).
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2018 2019 2020
0
200
400
600
800
1000
1200
1400
1600 1500 1455 1353
SCJ SHOE CARE VALUE SALES
Graph 1: SCJ’s South African unit gross sales in rands millions. Source: (Finance SC
Johnson, 2021)
1.1.3 Triggers
The challenge triggers originating in the external context are an increase inprice competition as
competitors lower their margins to drive volumes, through increased value offerings, and
increased promotional activities(Qin, Liu, and Tian, 2020). SCJ has failed to respond to thislow-
price strategy because of the component quality it uses that result in costs being passed down to
the consumer.
SCJ is dedicated to manufacturing innovative high-quality products and has a long-term
commitment to the environment. SC Johnson prides itself as “a family company at work for a
better world” (SCJohnson, 2021). Its focus is to create a more sustainable world through its
innovative product-ingredient selection programme, choosing product ingredients and packaging
components that better protect human health and the environment (Gonçalves, Weaver and
Konetzka., 2020).
A value chain issue is that some imported SCJ product sare priced higher than those
manufactured by competitors in South Africa. The high-cost quality raw materials used by the
South African business unit result in its products having a base cost much higher than the
competition. In line with the global company’s strategy of centralised procurement to achieve
scale, this becomes unfavourable to the South African business unit as these products and raw
materialsresult inmultiple shipping costs from the United States of America, Indonesia and
Brazilandunfavourableforex rate driven by the recession. The business’s raw materialscontribute
to 4% of global procurement of 76 countries, making it a relevantcontributor to the
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organisation’s cost reduction. This is significant factor in order to reduce the cost of organisation
as well as developing high quality products. This is effective in order to increase the profitability
of business and increasing its revenues.
1.2 Structure of the assignment
In this assignment, reasons for the sales and market share decline are identified through an
analysis of SCJ’s external environment,assessingindustry opportunities and threats, andits
internal environment, to establish the organisation’s resources and capability that can combat the
threats or capitalise on the opportunities. A selection of possible strategies is identified leading to
the recommendation and implications for implementation of a suitable strategy for SCJ to deliver
shareholder value through increased profitability and return on investment.
Stakeholder matrix
This is significant tool that is consider analysing and evaluating the impact of stakeholder as
well as their engagement in order to successfully and effectively conducting business practices.
The stakeholder matrix is developed by John Jeston and Johan Nelis with the motive of
determining the impact of stakeholder business activities along their interest and power to take
decision. This is classified into different parts which are mention below –
 Keep satisfied – This includes all those stakeholders who have high power to influence
functioning of respective organisation but low interest in business practices. it is
important for SCJ company to satisfy their needs in order to smoothly conduct business
practices. it consist of government and legal authority.
 Manage closely – It consist of different stakeholder that have high power as well as high
interest in business activities (Porcherot and et.al., 2021). These stakeholders are
responsibility for managing all activities and task closely in order to attain desired goals
and objective. This includes stakeholder such as owner of the company.
 Monitor – This includes stakeholders who monitor the functioning and performance of
business. All those stakeholders who are included in this quadrant have low power to take
decision but high interest in business practices. This includes employees or customers as
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they have high interest in the activities of respective business but have low power to take
decisions.
 Keep informed –This consist of stakeholders who have low power as well as low interest
in business practices. for example media groups and so on. They do not have power to
change business decisions and not interested in business practices.
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2. MACRO and MICRO ANALYSIS
2.1 PESTEL
A PESTEL analysis of the South African home-care industry is conducted to assess
individual factors that have significant impact on the industry’s sales growth, costs, and profit
potential. Onlyrelevant and impact-bearing factors are considered.
Figure 2: PESTEL analysis of the home-care industry in South Africa. Source: Adapted
PESTEL Framework (Porter, 1997)
Political factors
This is one of the major factor of macro environment which will lead to have significant
impact on business performance as well as capabilities of organisation to conduct task and
activities in effective and efficient manner. It has been determined that political factor consist of
various elements such as stability of government, rules and regulation, taxation policies, trading
policies and so on. All of these aspects of political factor will lead to have direct or indirect
impact over SC Johnson company (Noor, 2020). This organisation is performing its business
practices in home care industry of South Africa. The government of South Africa is very stable
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which will lead to have positive impact on business practices(Gul and et.al., 2021). There is very
low intervenes of government that is significant for respective company to smoothly perform
business practices. The favourable trading policies assist SC Johnson organisation to increase
sales and profitability of business.
Economic factors
This is refer as the economic factor which includes various aspects of macro environment
such as economic rates, GDP rates, inflation rates, employment rates and so on. Home-care
industry in South Africa is highly affected by economic factors as it will lead to have significant
impact over performance and productivity of business. Economic factors are highly
unpredictable and volatile driven by the country’s state of full blown recession and the COVID
pandemic. This has a high impact on organisation which has probability of change(Thakur,
2021). Exchange rate fluctuations of up to10%, have had a negative impact on home-care
industry in South Africa as the cost of imported raw material and finished goods further drive the
already high base costs. The low gross domestic product rate of 3%which is predicted to remain
low (Worldbank, 2020). Due to this home-care industry in South Africa operations will be
affected. SCJ organisation needs to take business decision correctly by determining economic
factors in order to enhance business activities.
Social factors
This is one of the essential factor of external environment and it will lead to have major
impact on successful and effective performance of business. It is important for respective
company to correctly analyse the social factor in order to take correct and appropriate decisions
for business. Social factor consist of belief and perception of customer, culture values as well as
demand of products. Home-care industry in South Africa is providing different types of unique
and high quality products which is significant for full filling customer needs(Pestel, 2020). This
industry has developed effective perception of customers regarding its products which lead to
increase its sales. SCJ company is dealing in home-care industry in South Africa and it is crucial
for respective company to develop and create products which is according to the needs and
requirements of customers. The changes in customers’ requirements and trend is one of the
crucial factors that could negatively affect business performance.
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Technological factors
Technological factor includes new and innovative technology which is significant in
order to carry out business successfully and effectively. It is essential for respective company to
consider advance technology as it will lead to positive impact on business performance(Olaniyi,
2020). The rise in urbanisation has led to the increase in demand ininfrastructure for housing,
schooling, and hospitals, driving the growth of technology infrastructure in South
Africa.Thisincrease in technological infrastructure,exacerbated by lock downs during the
COVID pandemic have led to a 66% growth in ecommerce (Businessinsider, 2020).The overall
improvement in technological infrastructure will lead to increase practices of home-care industry
in South Africa. This is great opportunity for respective company that is SCJ to enhance its
performance as well as attain desired goals.
Environmental factors
This can be describe as the surrounding in which business in conducting its practices. The
elements of environmental factor will lead to have significant impact over home-care industry in
South Africa. This infrastructure provides SCJ with a variety of opportunities of a route to
market to reach its preferred market. The covid 19 prevention measures has driven growth in the
industry as this is providing products related to home care (Zenani, 2020). These products could
be used when people stayed home more, cleaned more and disinfected more with home cleaning
products. The adverse impact was seen in SCJ as its home-cleaning products areunaffordable to
the cash strapped consumer. SCJ’s shoe care category that declineddue to the reduce in consumer
demand, as people and school going children stayed home. Due to this, individual are not
purchasing new shoes (Fayissa and et.al., 2020). This factor will lead to have major impact on
successful functioning of business.
Legal factor
This is refer as the factor which includes different laws and regulation that is significant in
order to effectively perform business practices. The laws and legislation of South Africa will
lead to have crucial impact over home-care industry as well as functioning of SCJ
organisation(Lok, Pestel and Reboul, 2021). The industry is highly regulated with regulations
that control the types of chemicals that can be used. South Africa has fair legal system which is
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effective for successfully conducting business practices. Productregistrationfor new products
cantake more than twoyears. Legal system is significant for providing accurate direction and
improving business performance.
Thus, it has been analysed that there are different factors of external environment which will
support in growth and development of SCJ organisation. Political factor is highly favourable for
this company as government policies will assist in increasing sales. By considering new and
innovative technology respective company can conduct business practices in effective and
efficient manner.
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3. MICRO ANALYSIS
An analysis of the home care industry is conducted to assessmarket factors to determine the
nature of competition between industry players.
3.1 Industry maturity curve
The home-care industry is characterised by different business that is providing high quality
products and services to customers, competing on price with undifferentiated products, putting a
strain on margins and profits. Purchase behaviours of increased frequency are seen in end-month
grocery shopping with mid-month purchases for top ups(Albuquerque and et.al., 2020). There
are fewer new users in comparison to current users, hence the plateau in growth of 6% versus
double-digit growths seen in new industries.
Figure 3: Home-care industry life cycle Source: Industry maturity curve (Porter, 1997)
SCJ is declining below the demand growth of the home care industry. It is crucial for business to
focus onbrand-building activities in order to attracting more and more customers. This company
needs to use effective promotional activities that are significant for providing information about
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high quality products as well as influence customer. They harnessefficiencies througheconomies
of scale and varied different sourcing opportunities that drive down costs(Baek, Mohanty and
Glambosky, 2020). Other industry players are agile and flexible enough to drive growth through
R&D and innovation. SCJ,due to its centralised sourcing structure andits specialised
environmentally-friendly ingredients and packaging, which is not readily available nor
affordable, is not able to respond to change in demand and requirement of customers faster than
its competitors. To increase profitability in this FMCG industry, SCJ needs to differentiate itself
from the market or improve its profitability. SCJ will unlock competitive advantage by exploring
new opportunities such as value addition strategies in the form of cost reductions, revenue
migration strategies such as seeking more profitable markets outside of South Africa, and
revenue generation strategies such as differentiation.
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4. Market Analysis
Market structure is significant in order to analyse the impact of different industries on
business performance as well as sale of goods and services in market area. SCJ is dealing in
home care products of South Africa. This market structure includes perfect competition in which
different companies are providing products and services to customers (Zia and et.al., 2020). The
major competitors of SCJ organisation is Unilever, Rekitte Benkiser as well as local giant, Tiger
Brands.
4.1 Porter’s five forces
Figure 3: Porter’s 5 forces analysis of the home-care industry in South Africa. Source:
(Porter, 2008)
Threat of new entrants
The threat of new entrants mainly from diversification by large organisations from other
industries such as personal care and pharmaceutical. These companies have resources that allow
them to achieve economies of scales. They haveregulatory compliance competencies and
establishedretail distribution channels. They bring increased know-how, driving anincrease in
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product quality and efficacy.Due to home-care products being undifferentiated with low
consumer-switching costs, price levels are driven down by their low-cost strategies, decreasing
the profitability of existing players(Grennan and Michaely, 2020). There are different barriers to
entry which make it more difficult for new entrant to perform practices in respective sector. The
major barriers to entry are high cost of capital as well as low brand awareness in market area.
Bargaining power of buyers
The increase in demand of product has resulted in buyers being well educated about the
home care products. The buyers in this industry are retailers from whom consumer purchase the
products.Consumers exert power on industry players to provide high-quality home-care products
at lower prices(Western, 2021). The covid pandemiclockdown and increased urbanisation have
increased demand for home-careproducts which has increased the size of the market. This is
evidenced by the 6% growth in the industry and can be expected to grow due to the heightened
sense of hygiene and the increase in urbanisation, 8% in upcoming years.
Threats of substitutes
Substitute home remedies are cheaper and offer similar benefits to home-care packaged
products. Professional cleaning services offer higherquality products which lead to lower the
extent of this threat.
Bargainingpower of suppliers
There are many suppliers that are providing raw material, labours as well as technical
R&D expertise in the home-care industry with low switching costs. This results in a high
bargaining power of the buyers who purchase large volumes of these standardised products. SCJ
is purchasing products from different suppliers which lead to reduce the bargaining power of
suppliers.
Rivalry among existing competitors
SCJ organisation is dealing in highly competitive market area which lead to have direct
impact on its performance. Competitiverivalry is high due to low brand loyalty, undifferentiated
products and low consumer switching costs. The main competitors of respective organisation
areUnilever, Rekitte Benkiser and local giant, Tiger Brands.
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4.2 Key success factors
Key industry success factors (KSFs) are categorised as home-care customers’ minimum
purchase criteria (order qualifiers) and competitive criteria (order winners). A discussion and
analysis of the key success factor of the SCJ company are provided and discussed below:
Minimum purchases criteria- The SCJ firm is tending to provide the option and facility of the
minimum purchase criteria for its home care customers based on the order qualifiers. The facility
of the minimum purchase obligation that is also referred to as a minimum quantities requirement
basically presents the minimum requires a buyer to purchase a minimum quantity of the product
within a year or other specified time period to enjoy and have some improved benefits and
advantages. This, facility and services offered by SCJ offered it a larger number of popularity
among customers and purchases and thus act as a vital key success factors to enhance and
improve its overall productivity and performance level (Bradley and et. al., 2021).
Competitive criteria- an effective competitive strategy and criteria is being adopted and implicate
by the SCJ that offers higher success factors and improve productivity for this firm by the way of
better nature of position in the marketplace or the adopted strategy which helps in gaining the
higher market share that gives rise to critical success factors of SCJ. The current business
position of the SCJ within the industry (where it is relative to other competitors in the industry
and also the market leader), its strategy, and its resources and capabilities are playing a vital role
in improving and enhancing its key success (Rose, 2021).
Further, the main areas and key aspects of the SCJ that are presenting and reflecting its key
success factors are discussed and elaborated as below:
Strategic Focus - The SCJ organisation tend to have an effective strategic focus that
comprises of relevant and valuable leadership, management along with an effective planning for
various aspects and business operations. The SCJ leaders tend to make use of participative form
of leadership and management which supports improved confidence and higher performance
level in employees. Along with involvement of all employees and team members in decision
making supports improved strategy formulation and effective planning that supports higher
success and better business performance(Horner, 2021).
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People - the people are key assets and main resources of any organisation on which its
success and performance depends to a great extent. The SCJ organisation is effectively and
regularly provides training as well as development opportunity to its employees which ensures
improved performance and better development of staff as well as of whole organisation thus, act
as a vital key success factor for SCJ within its business environment(Wang, Chen and Song,
2021).
Operations- implication and adoption of most simplest and effective form of process and
positive environment has been made by SCJ to have better business operation and improved
image within the industry which supports higher competitive edge and improved business
success(Van Assche, Verschraegen and Gruezmacher, 2021).
Marketing (Customer Relations, Sales, Responsiveness)- effective promotion and
advertising of the products and services is a most vital key success criteria within any industry as
create improved customer relationship better sales responsiveness through ensuring awareness
abut the key features of product and service. The SCJ company tends to make use of online and
digital channels of marketing to ensure effective promotion and advertising of its product and
services that helps in attracting larger number of customers. Further, use of excusive digital
marketing is also made by SCJ company to have improved business position and brand image
within the current industry and business environment as compared with other
competitors(Trachtenberg, 2021).
Finances (Assets, Facilities, Equipment)- one of the key competency and success factor
of firm comprises of amount of finance it tend to have as it facilitates better use of equipment
and machinery to provide better quality product and service to client. The SCJ for is making
efficient use of finance and other monetary funds to have most efficient and effective tools and
machinery for better manufacturing of products that are having improved quality thus, helps in
attracting larger number of customers and act as a key success factor. Finance have been
gathered and procured by SCJ from reliable sources that ensures smooth flow of cash and
monetary funds to effectively meet the day to day business operations and expenses and maintain
improved liquidity that acts a key success factor for SCJ within its industry and business
environment(Rakoff and Goldstein, 2021).
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5. INTERNAL ANALYSIS
It has been stated by the Day, 2019 that competitive advantage is gained through the deliberate
and purposeful management of the organisation’s capabilities and resources in relation to
customers’ expectations, to create value. SCJ faces a decline in consumer affordability,
aggressive competitors competing on price and high base costs.
5.1 Organisational resources and capabilities
SCJ’s resources and capabilities are derived from interviews with SCJ’s leadership team.
R1- Financial capital: It has been analysed and seen that the SCJ is financially stable firm which
supports effective management and mitigation of all expenses and also ensures higher liquidity
to have proper cash flow(Adams, 2021).
R2- Physical capital: Established ISO-compliant manufacturing plant and equipment. Capacity
utilisation at 60%(Yeh, 2021). The SCJ firm is having a suitable amount of the physical capital
that comprises of a ISO complaint manufacturing plant and equipment’s with 60% capacity
unitisation that supports and reflects regular and timely production and manufacturing of quality
product. Physical capital of SCJ matters as it ensures efficient manufacturing and delivery of
products to end customers on time through use of appropriate manufacturing plant and
equipment(Cook and Bradley Dexter, 2021).
R3- Human capital: Access to global and local expertise in different disciplines located in varied
regions giving the business integral path dependencies which reflects about and explains about
the continued use of a product or practice based on historical preference or use to ensures better
meeting of consumers demand and needs. Human capital which comprises of staff and
employees plays a vital role in producing and delivering quality products and services thus, form
a vital resource of a firm which channelize and made efficient use of all other resources to have
higher productivity and improved success(Salmond and Mahato, 2021).
R4- Social capital: SCJ’s 50-year-old brand has a reputation as a home-care manufacturer with
the most environmentally-friendly products(Qin, Liu and Tian, 2020). Along with this, SCJ is
also effectively meeting and fulfilling its key social responsibility which provides a framework
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to effectively operate and function in most eco-friendly and socially responsible manner(Coll and
Arend, 2021).
R5- Relational capital: SCJ had developed supplier networks offering exclusivity to specialised
and trademarked ingredients and components. Customer networks allow for good listing of
goods in key retail and traditional trade. Ranked top three in customer centricity in South
Africa(Lyon, 2021).
C1- RD&E: A global R&D centre of excellence that is leveraged for innovation based on global
trends. The SCJ firm is having an efficient R&D department which ensures coming up with more
exclusive and improved product and services that are unique and better than other competitors
thus, plays a vital role in improving the overall productivity and success of this firm(Qin, Liu and
Tian, 2020).
C2- Sales, marketing: Experienced team with qualifications of at least a post-graduate degree.
This reflects that the SCJ company is having a highly skilled and well qualified sales team that
make use of excellent promotion and adverting strategy in order to attract and cater a larger
number of customers to have higher sales and productivity(Bonaccorsi and et.al., 2020).
C3- Operations: Operations team with excellent logistic and distribution network. The SCJ
company is having a highly effective logistic and distribution network that ensures regular and
free flow of its product and services to end customers on time and in convenient
manner(Köseoglu and et.al., 2020).
C4- Management: An experienced team that includes expatriates with critical skills and
managerial capabilities. Implication and use of participative management has been made within
the SCJ company that tend to boost the morale and confidence level of the employees which
supports higher productivity and improved business performance(Gong and et.al., 2021).
5.2 VRIO framework
The VRIO framework (table 3) is applied to assess which resources or capabilities can give SCJ
sustained competitive advantage. These resources and capabilities are analysed in terms of their
value, rareness, imitability and the organisation’s ability to exploit the source of competitive
advantage.
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Table 3. VRIO analysis of SCJ resources and capabilities.
Resource/Capability
Strategic
Revelance
Relative
Strength Sore V R I O
Potential
position on
competitive
advantage
R1 – Financial capital 9 9 81 Yes Yes Yes Yes
Sustainable
Competitive
Advantage
R2- Physical capital 9 8 72 Yes No No Yes Parity
R3- Human capital 10 5 50 Yes Yes Yes No
Unused
Competitive
Advantage
R4- Social capital 8 9 72 Yes Yes Yes Yes
Sustainable
Competitive
Advantage
R5- Relational asserts 10 6 60 Yes Yes No Yes
Temporary
Competitive
Advantage
C1- RD&E & Innovation 9 9 81 Yes Yes Yes Yes
Sustainable
Competitive
Advantage
C2- Sales & Marketing 8 6 48 Yes No No Yes Parity
C3- Operations 10 9 90 Yes No No Yes Parity
C4- Management 9 6 54 Yes Yes No No Parity
For SCJ to be successful, its resources and capabilities need to relate to the industry KSF. It has
been analysed and seen on the basis of above table that SCJ’s resources and capabilities as to
how well its assets, resources and capabilities are positioned with respect to these
KSFs(Miroshnychenko and et.al., 2021).
Table 4 Mapping assets, resources and capabilities.
10
9 R4 R1, C1 C3
8 R2
7
6 C2 C4 R5
5 R3
4
3
2
1
1 2 3 4 5 6 7 8 9 10
Relative Strength
Superfluous Strengths
Zone of Irrelevance
Strategic Relevance
Key Strengths
Key Weaknesses
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5.2.1 Summary of Strengths of the resources and capabilities
SCJ has three resources and capabilities that give it sustained competitive advantage.
The SCJ firm is having sufficient amount of financial and monetary funds to effectively meet its
business operations and day to day expenses. SCJ is financially sable which that supports
improved level of potential to have increased investment from its global company.
It has been analysed and seen that the SCJ firms is having a positive brand and reputation in
environmentally-friendly products, and its R&D capabilities to create specialised products that
are environmentally friendly, utilising patented materials(Barrail, 2020). Effective marketing
strategy and use of proper promotion and advertising strategy has been a key success factor for
SCJ firms as it supports creation of improved brand image and also create positive image in
minds of customers that attracts and influence them to busy products and services(Queiroz and
et.al., 2020). Along with this, todays customers are tend to be more eco-friendly and
conservative towards environment thus, providing and making use of eco-friendly practises and
business operations also cater and attract a larger number of customers for SCJ that supports
higher success and improved productivity for this firm.
These keys strengths are critical to the consumers’ KSF of ease of use and innovation
when it comes to external factors such as the need for home care products that kill covid.
Further, it has been also seen and analysed that the SCJ firm is having an efficient R&D
department that supports improved creating and development of product and service with
exclusive and improved feature thus, offer key success factor for the firm through supporting
higher competitive strength and improved customer base(Gul and et.al., 2021).
5.2.2 Weaknesses of the resources and capabilities
The key weakness SCJ has is that does not have resources or capability to deliver on order losing
sensitive qualifier of price due to its global centralised procurement system. It has been analysed
that the global centralised procurement system supports purchasing system more efficient in
which all the departments of a company with a wide geographical distribution can make
purchases through a common purchasing organization, but implication of centralised
procurement system creates delays in efficient decision making and also enhance the complexity
at global level that is creating weakness and many issues for the SCJ firm(Thakur, 2021). The
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management/leadership of the business has endorsed deep price discounts resulting in profit
decline. The marketing and sales team have failed to focus SCJ’s order winners on markets or
segments that consider them as order qualifiers. Although supplier relationships with exclusivity
are rare, customer relationships can be imitated as competitors consistently deliver more value as
SCJ continues to prove unprofitable.
Table 2: Home-care industry key success factors
Value Differential
KSFs R/C IMPORTANCE Performance Score Performance Score
(red - winners, grey - qualifiers) (a) (n) (a x n) (z) (a x z)
OW – Brand Premium R 40 9 360 8 320 40
OW – Product portfolio/ variety C 40 9 360 7 280 80
OW – Environmentally Friendly Products C 20 10 200 6 120 80
OQ – Price / Affordability R QQ (25) 5 125 10 250 -125
OQ – Ease of use C Q (10) 10 100 9 90 10
OQ – Innovation C QQ (15) 9 135 8 120 15
OLSQ – Retail Distribution Network R QQ (25) 10 250 10 250 0
OLSQ – Quality/ Efficacy C QQ (25) 10 250 10 250 0
Winners 920 Winners 720 200
Qualifiers 860 Qualifiers 960 -100
Summed Comparative Scores:
SIMPLIFIED COMPARATIVE PERFORMANCE
ASSESSMENT
SC Johnson Tiger Brands
Performance (n- z)
Key:
Q denotes an order qualifier, QQ denotes an order losing sensitive qualifier.
Performance is a 10-point score per KSF (higher points equals better performance to customers expectation).
R/C denotes whether a resource (R) or capability (C) is required to achieve the KSF.
An analysis about the internal strength and competency of SCJ firm can be made out which
comprises of sound financial position and physical resources which supports efficient
manufacturing and delivery of quality product and services. Along with this, SCJ also tend to
have effective marketing and management that supports exclusive and improved business
operations as marketing plays a vital role in enhancing the brand position and also creating
positive image which attracts and cater larger number of customers(Pestel, 2020). Although SCJ
has a great value offering for consumers, it does not have one of the critical bases that it must
compete in, being price. SCJ has been able to give frequent deep discounts to meet this low-price
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criterion, however this is not sustainable as it is the source of the company’s value declines. Most
recently, due external factors that resulted in the decline of consumer affordability, price has
increased in importance in consumers lives. One of the factors that have also increased due to the
external environment is the need for innovation as consumers wanted products that would kill the
Corona Virus. SCJ innovates in all aspects of global sociological trends, packing and raw
materials. Its competitors also innovate, however, based on key local market relevance of
affordable efficacious products. SCJ therefor has more order winners that drive preference over
order qualifiers. This driven primarily by price as SCJ products are priced at a premium(Olaniyi,
2020).
From the above, SCJ differentiates itself relative to its competitors as a premium brand, with a
variety of differentiated product portfolios that targets specific consumer groups. SCJ also has
the most environmentally friendly products. Based on this, it would be of value for SCJ to utilise
its existing resources and capabilities to focus on a niche consumer group or explore another
market that has higher consumer affordability.
STRATEGY DYNAMIC
5.3 Organisational inertia and path dependency
It has been analysed and observed that the SCJ tend to enjoy an improved market
leadership and profitability within the South most of its categories for a long time which
comprises of efficient use of participative management that supports proper involvement and
participation of all employees that supports improved productivity and higher business
performance(Zenani, 2020).
SCJ has been first to market to supply innovative products with patented components that
improved efficacy and ensured superior product quality (Bradley and et. al., 2021). SCJ’s
packaging is innovative driving ease of use and convenience in an industry that is not inspiring to
its users. This is enabled by the centralised global-procurement strategy that allows for
exclusivity with specialised niche suppliers. The company drives a cost-plus pricing strategy that
has allowed it to absorb the high base costs of this innovation and make sufficient profit. During
this market leadership time, the industry was not yet commoditised, and consumer affordability
was very high. This growth trajectory was further driven by the rise in middle class economy.
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As competitors saw the profitability on this industry, new players entered the market causing
product surplus. Product quality was maintained; however, prices became increasingly
aggressive. South Africa went into a technical recession and more recently was hit by a
pandemic that further drove down consumer affordability(Rose, 2021). The industry is now
commoditised; SCJ has not reacted to this change. SCJ is increasing its efforts in costly
environmentally-friendly innovations and centralised buying strategy, but still targeting mass-
market consumers in mass-market retail channels. Short-term pricing strategies have proven
detrimental to the company’s profitability and market share (Nader, 2021).
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6. RECOMMENDATIONS
6.1 Strategic options
The strategic option mainly comprises and consists of the creative alternative action-
oriented responses that are based to the external situation that an organisation (or group of
organisations) faces(Horner, 2021). Thus, the Strategic options are the one which take advantage
of facts and actors, trends, opportunities and threat of the outside world and provides most vital
and effective way of expansion and growth for a firm. The strategic operation tend to provide a
strategy and a plan for the successful achievement of the organization’s goals over a period of
time. It is always designed towards the achievement of a specific target or a goal (Wang, Chen
and Song, 2021). It should be done in context with the organization, its needs, its resources, its
vision, and other similar considerations. With respect to the SCJ firm the two main form of
integration that are available for SCJ to have improved sales and productivity comprises of
vertical (buy manufacturer and discontinue centralised procurement), or horizontal integration a
discussion about whose benefits and drawback for SCJ firm are provided as below:
6.2 Vertical integration
This form of integration tend to comprises of the strategy whereby a company owns or
controls its suppliers, distributors, or retail locations to control its value or supply chain. It has
been analysed and find out that the adoption and implication of the Vertical integration are
critical and beneficial for a firm as it benefits a company by allowing them to control processes,
reduce costs and improve efficiencies. In context of SCJ, adoption and making use of vertical
integration is seemed efficient as it supports better management of its supply chain and overcome
the complexity and challenges involved within the centralised procurement(Van Assche,
Verschraegen and Gruezmacher, 2021). Further, the other key advantages and drawbacks of
vertical integration for SCJ firm are provided below with the help of following table:
Benefits Drawback
 Helps in achieving the economies of
scale for SCJ firm through supporting
lower per unit fixed cost through
 adoption of vertical integration by the
SCJ firm night lead to adversely affect
the established distribution the might
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suppling in bulk along with spreading
the cost over a larger quantity of
products. Further, adoption of the
vertical integration option by the SCJ
company supports cost cutting through
eliminating expensive mark-ups from
middlemen, consolidating
management and staff, and optimizing
operations(Trachtenberg, 2021).
 Along with this, adoption of the
vertical integration also comprises of
creation of new profit centres for this
firm by the way of enabling the
manufacturers to sell directly to
customers along with creating an
entirely new centre of earnings.
 Expansion at global level along with
maintaining high quality control are
also the key benefits and advantages
of vertical integration for SCJ firm
through a well manage supply chain
and procurement process at global
level (Nambudiri, 2021).
 Further, the adoption of the vertical
integration option by the SCJ firm also
supports differentiation of product and
services from the competitors through
improved business operations(Rakoff
and Goldstein, 2021).
lead to enhanced complexity in
business operation.
 Further, adoption of the vertical
integration might also leads to bring
unprofitable outcome as Vertical
integration can be expensive, and
growing the supply chain does not
always lead to greater profits and
require larger investment to set up and
maintain an improved manufacturing
and distribution centres.
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6.3 Horizontal integration
The adoption and implication of the Horizontal integration is made by a firm to have an
improved competitive strategy that helps in creating better economies of scale along with
increasing the market power over distributors and suppliers and increase product differentiation
that help businesses to effectively expand their market or enter new markets. Adoption and
making use of the Horizontal integration is beneficial and effective for SCJ firm as it supports
and leads to increasing market share, reducing competition, and creating economies of scale
while effectively competing in the same industry(Adams, 2021). A description about the key
benefits and drawback of the adoption and use of the Horizontal integration by the SCJ firm are
provided and discussed as below:
Benefits Drawback
 The key benefit of implication and
adoption of the horizontal integration
for SCJ firm comprises of having
larger market share as when two
companies within the same industry
get merged it would supports combine
the product base, technology, and
services that are available on the
market. Thus, leads to higher
productivity and improved customer
base for SCJ along with enhanced
access to resources within the industry
(John and Walford, 2021).
 Increased revenue and customer base
along with reduction in the
competition level has been also
supported by the adoption and
implication of the Horizontal
integration by the SCJ firm.
 Facing troublesome in having efficient
regulatory scrutiny is the biggest
challenge and their created by the
horizontal integration for SCJ as it
might leads to antitrust laws and
creation of monopoly.
 Along with this reduction in flexibility
level has been also faced due to
adoption and implication of horizontal
integration that limits and hampers the
decision making and strategy
formulation by the SCJ firm(Cook and
Bradley Dexter, 2021).
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Porter (2008) offers three strategic options of differentiation, cost leadership and a focus
strategy to position an organisation within its competitive context.
6.3.1 Option 1 - Cost leadership strategy
Due to SCJ being in a mature industry that is not differentiated, the main element to compete on
is with price. It is recommended that SCJ retract from the global strategy of centralised
procurement. This will allow SCJ to source raw materials from the abundant local suppliers at a
cheaper price and eliminate forex fluctuation costs from importing materials as well. With SCJ’s
base costs being reduced, it will be able to price competitively in the market and retain more
profits(Yeh, 2021).
6.3.2 Option 2 - Focus strategy
SCJ’s brand equity has been routed in being the best supplier of environmentally friendly
products. SCJ should shift its focus from the unprofitable mass market and target a consumer
profile that is rooted in caring for the environment. This consumer segment is sizable, growing
and shows projected future growth based on local and international trends (Mittal, Jain and
Dhingra, 2021). The shift from the mass market also employs the shift from the mass retail
channel to a direct to consumer route to market. The buying patterns of this environmentally
consumers are responsible for the exponential growth of e-commerce. Price is not a KSF for this
target market but an order winner. The increased affordability of this target market, and
reduction in costs, taking out the retail channel that demands excessive margins, allows for
increased profitability for SCJ. KSF of this target market are product efficacy, environmentally
friendly products, and convenience in the use and acquisition of products. This strategy is in line
with SCJ’s values, brand proposition, and innovative sustainable competitive
advantage(Salmond and Mahato, 2021).
6.3.3 Option 3 - Differentiation strategy
SCJ can differentiate itself by re positioning itself as a premium brand that offers safer efficacy.
This is in alignment with its values as a company at work for a better world. Increased efforts
would be built around brand building marketing efforts that entrench this positioning. The
29

implication of this would mean, deterring from price discounting strategies and increased
marketing spend to entrench this positioning. This would allow SCJ to capture a larger market of
mothers that care for safer products around their children and the growing environmentally savvy
consumer. This segment of consumers would not consider switching or using substitute products.
This highlight in the company’s position would increase the brand’s equity and substantiate the
higher price of products. No competitor plays in this position(Coll and Arend, 2021).
6.4 Evaluation of strategic options
Table 5summary evaluation comparing three strategic options.
Summarised assessment criteria for key
strategy domains
Strategic
option 1:
Cost
Leadership
Strategic
option 2:
Focus
Strategic
option 3:
Differentiation
Weighting Score Score Score
(1–5) (1–5) (1–5) (1–5)
1. Organisation’s external environment 4 5 4 3
2. Stakeholders & the value offering 3 4 4 2
3. Resources and capabilities 5 2 4 3
4. Aspirations and values 4 2 3 4
5. Overall impact on the value proposition 3 3 4 2
Summated score
(individual summed score by
category x weighting)
59 72 55
Key
Weighting: Importance of the of the strategic domain, where 1 = lower weighting, and 5 = highly weighting.
Score: 1 to 5, to signify the impact or likelihood of occurrence, where 1 = highly unlikely, and 5 = highly likely.
Option 2, of a focus strategy, gives us the highest score, meaning it is the most suitable to adopt.
This strategy is most in alignment with SCJ’s resources and capabilities. With this strategy, SCJ
can differentiate and drive cost down simultaneously. In addition, the focus on this niche
segment, promises increased profitability, moving away from price competitive rivalry. SCJ has
the financial equity to implement an e-commerce channel. This will be very quick to implement
as SCJ can engage its unutilised global team that is much more advanced and know ledged in
planning and execution of e-commerce strategies (Kucherov and Zhiltsova, 2021).
30

6.5 Implication section
From the above discussion, an analysis can be made that from the vertical and horizontal
integration, adoption and making use of vertical integration is more suitable and appropriate for
the SCJ firm as it tend to reduce the complexity and issues faced within the centralised
procurement process of SCJ. Along with this, adoption of vertical integration also supports lower
per unit fixed cost through suppling in bulk along with spreading the cost over a larger quantity
of products and reduction in expenses which makes business operation more efficient(Lyon,
2021). The implication and adoption of the vertical integration strategic option has been provide
below in terms of TIPPIMM – time (how long), information (market research), people,
processes, infrastructure, management and money.
Basis Implication
Time A time period of at least 6 months has been required by SCJ firm
to effectively adopt and implement the vertical integration within
the current industry (Jain and et. al., 2021).
Information Effective market research has been undertaken by the SCJ firm
through making use of various tool comprises of PESTEL and
other internal and external analysis for effective implication of
vertical integration.
People Highly skilled employees has been appointed and recruited by SCJ
firm to effectively adopt and implicate vertical integration along
with leading and providing proper training for existing staff.
Process Adoption of latest and most efficient technology and machinery
has been made by SCJ for effective execution and implication of
vertical integration.
Infrastructure Proper plant and equipment has been used by SCJ for improved
implication of vertical integration
Management Adoption of participative management has been made by the SCJ
firm as it supports more effective planning and better strategy
formulation based on involvement of all employees.
Money Adequate amount of finance has been gathered and collected by
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SCJ to meet the expenses of vertical integration with existing
suppliers and other parties within same industry (Ahmad and
Dixit, 2021).
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7. REFLECTION
The current project based on strategy is very informative and knowledge for me that has
enhanced by knowledge and understanding level about the key aspects and core competency of a
firm. Further, use of PESTEL analysis has been made by me that supports better understanding
about the external analysis of a firm. Beside this, effective internal analysis through making use
of VIRO tool has been also made by me. Further, a better understanding and practical knowledge
about the various strategic option along with horizontal and vertical integration and porter’s
generic strategy has been also made by me.
33

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