Strategic Management Plan for Bellamy Company - China Expansion

This report presents a strategic management plan for Bellamy Company, an Australian organic food producer, focusing on its expansion into the Chinese market. It begins with an executive summary highlighting the importance of strategic planning, resource allocation, and goal coordination. The report analyzes Bellamy's strategic dilemma, industry structure, and critical success factors, including customer needs and market dynamics. It evaluates Bellamy's resources, capabilities, and strategic choices, recommending strategic actions such as acquisition and vertical integration. Furthermore, the report details strategic initiatives, their suitability, and a comprehensive strategy implementation plan, including methods for measuring strategic success. The analysis covers the competitive landscape, the five forces model, and dynamic capabilities crucial for adapting to the Chinese market. The report suggests that Bellamy can leverage Free Trade Agreements (FTAs) and the increasing demand for organic products in China. The report concludes by recommending acquisition techniques and vertical integration as key strategies for Bellamy's successful entry into the Chinese market.

Running Head: Strategy Formation and Implementation 1
Strategic Management Plan for Bellamy Company
Name of the student
Name of the university
Author’s note

Strategy Formation and Implementation 2
Executive summary
A successful strategic plan is all about establishing priorities, allocating required resources to the
strategic initiatives and coordinating to achieve the desired goals and objectives in the business.
This report will provide the strategic management plan of the famous organic food company
Bellamy as the company is going to expand in China market. However, it has further analyzed
the strategic dilemma, industry structure, critical success factors where the customer’s needs
have been understood. Moreover, the evaluation of resources, competences and strategic
capabilities of Bellamy has also been done. Further, this report has discussed about the strategic
choices, recommended strategic actions, initiatives, and their sustainability. The strategy
implementation plan and measuring strategic initiatives are also discussed below. Lastly, to
conclude this report the recommended strategies that have been suggested are acquisition
technique and vertical integration.

Strategy Formation and Implementation 3
Table of Contents
Introduction......................................................................................................................................4
Strategic Dilemma...........................................................................................................................4
Industry structure.............................................................................................................................5
Critical success factors (CSFs)........................................................................................................7
Dynamic capabilities.......................................................................................................................8
Strategic choices of Bellamy...........................................................................................................9
Recommended strategic action......................................................................................................12
Strategic initiative..........................................................................................................................13
Suitability of strategic initiatives...................................................................................................14
Strategy Implementation Plan........................................................................................................16
Measuring strategic initiative........................................................................................................19
Conclusion.....................................................................................................................................21

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Introduction
To operate the business at the global level, it is important to understand to meaning and
concept of strategy in the business activities. Having a focused and clear strategy is really
important for the success of the business in the international market. Without a well-define
strategy, any organization will not be able compete with the established organization in the target
country. With the strategic operations, business can be more productive, more focused and more
profitable (Schaltegger, Lüdeke-Freund & Hansen, 2012). This report identifies the current
strategies of the organization in its operating market and provides new strategic initiatives to
enter in the new country. For the discussion, the famous organic food producer company
Bellamy has taken. This is the popular Australian organic food producer company. The company
is providing wide range of organic food products for the babies, young children and kids. Main
aim of the company is to improve the good eating habits among the children. In the food
products of the company, there are no harmful chemicals such as chemical fertilizers, artificial
addictive and so on (White, 2017). Bellamy is the popular company for its high-quality products
as it follows complete diet methodology that is helpful for the health development of children.
Currently, the company has more than 4400 outlets in all over Australia including Coles,
Woolworths, Terry White and Costco. Now, the company is seeking to expand the business in to
China market. This report provides strategic plan for Bellamy as for entering in the new market,
new strategic initiatives are required. Need to implement the strategy and ways of implementing
the strategy in the business operations of Bellamy is also discussed in this report.
Strategic Dilemma
The issues that Bellamy’s is facing are very much clear from its SWOT analysis. The
threats of Bellamy are that in the recent market competition is on high level and other rival
brands are also coming up with similar products in the local and global markets. Moreover, other
brands are also selling organic products to bring variations in their product line. Apart from these
threats the weakness of Bellamy is that they are lacking the strategic capabilities to wipe out the
threats of entering and compete with its rivalry brands in the market (Bellamy, Kornprobst &
Reh, 2012). Another major weakness of Bellamy is that the products that they have are very

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much imitable by other brands in the market. However, Bellamy have certain opportunities as
well that they can avail but for that they have to make certain tough choices. The opportunities
that they have are that in Australia there is a high demand of utilizing organic and healthy
products by the customers. Then followed by this another opportunity is that Australia has FTAs
that is Free trade agreements which is an international treaty that decreases the obstacles to
trades and investments. Therefore it gives better access to necessary markets and better
positioning for the Australian exports. Lastly, Australian customers are very much into online
shopping these days therefore that is an opportunity that Bellamy can grab. Now to avail these
opportunities Bellamy must expand its business and from being a solely domestic market owner,
they must also export to more places like US, UK and India. As Australia is into FTAs thus, they
have high opportunity to gain an important and enhanced competitive position in the Australian
export (Thangavelu & Narjoko, 2014). Apart from exporting its products this organization can
build up new stores in other countries as well. However, to take advantage of these opportunities
they might face certain dilemmas like opening more stores or outlets can divert their mind from
the main established work that they have in Australia. Then, at a time exporting in so many
countries will raise the supply of their product. To supply more products they have to increase
their workforce for which more investments will be needed. Thus, taking the advantages of the
opportunities can highly make Bellamy fall into difficult situations.
Industry structure
a) Bellamy is currently planning to enter the markets of China. In china it has been found
that 75% of the mothers are using organic infant milk products to feed their babies.
However, research shows that this will increase in the upcoming years because of the
policies that the government in china is implementing. The consumption of organic food
products have largely increased in China in the recent few years (Willett, 2012). Organic
products are however, making a great way for Australian companies to enter the markets
in china because the mass of Chinese middle class are in the favor of imported products
than their own domestic food chain due to the environmental hazards and food
contamination risk scandals. The strategies that can influence the fives forces can be that
firstly to built barriers to new entries in the market Bellamy should become more
vertically integrated, then for the threat of the substitutes they must understand how their

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substitutes appeal to their customers and then they must tackle these alternatives by
following two strategies one for blocking the customers from evacuating for a customer
and the other one is to attract the customers from their substitutes. Now to deal with the
bargaining power of the buyers the organization can choose generic strategy so that the
profits can be protected. However, for the bargaining power of suppliers the organization
should focus more on the distribution channel, keeping the intermediaries small so the
product can reach the consumer through a smaller chain. Bellamy has fewer competitors
in the domestic as well as in international markets and so they must keep their focus on
and try to enhance their intensity so that they can maintain their position. Moreover, there
will be various implications on different organizations for the forces and thus it can be
seen that for those organizations with large markets the pressure will increase, without
the barriers there will be new entrants entering the market, the larger the organizations
work climate the lower the possibility of profit will be. Bargaining powers of both buyers
and suppliers must be controlled by the organization that is effectively done by larger
firms (Zhou et al., 2013).
b) The life cycle of the industry that has been denoted in the five forces model is that the
threat of substitute has been found to be low as organic products cannot be easily
substituted (Garnett, 2014). Then at the medium level is bargaining powers of buyers.
Rivalry between competitors and the threat of new entry into the market and lastly, there
is high bargaining power of the suppliers.

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Figure 1- the diagram above showing the life cycle of Bellamy’s organic product.
Critical success factors (CSFs)
a)
1. Australian people these days are very much health conscious and thus, there need are
mainly local, organic as well as natural food products. Thus, customers in Australia
mainly want those food products that are healthy as well as nutritious. For them they not
putting emphasis on the taste of the foods rather they want healthy food (O'Kane, 2012).
Due to the emerging scandals related to food Australian customers are very much
concern about the safety of foods that they are consuming. The company should target
those customers who are very much health conscious, into proper diets and thus, will be
more inclined towards organic food products. Along with them they must also target the
mothers of newly born (Ng & Kee, 2012).
2. Yes, the company has sufficient resources that can deal with their customers need.
Bellamy has developed hugely in 2016 and made a powerful balance sheet and cash flow.
However, they own 50% of the market share in the pharmacy for infant foods. Along
with that they are capable of offering a product line of almost 40 items for babies to
young children. Thus, they are very much capable of delivering their customers with
genuine, nutritious and simple products as well as investing overseas. Further, the

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company should take up the strategy of acquisition and vertical integration technique,
which can motivate their employees and helps in maintaining the effectiveness in the
organization. They must also make communication flow from top to down.
b) Critical success factors (CSFs) are an important factor in relation to any organization. As
far as the current company is concern the organic products that they sell which are
nutritious and safe do meet the customers need and thus, they value their products
because organic products are in high demand among the Australian customers. However,
when customers are getting products that are safe and meeting their health conditions
they will buy these products but on the other hand, economy’s prosperity can highly
affect the market of organic food products. Thus, due to the enhancing spending power of
the customers in Australia thus, they can afford to purchase the products (Parmenter,
2015).
Dynamic capabilities
Bellamy is changing its market and thus, they are making a move towards the Chinese
market. However, the most important factors are Human resource and their market analysis.
Therefore, with the changing environment from Australian market to Chinese market they must
be capable in integrating, forming and reconfiguring both internal and external capabilities so
that they can mark the changing environment. Market analysis is very important as it will help
the organization to communicate with the customers in china (Thøgersen & Zhou, 2012). A clear
communication can definitely bring out the choices of the customers which can benefit the
organization, opportunities and calculate the reputation of the organization. Apart from that
another important need is of Human resource which will help enhancing organizational culture,
engagement and development, relationship with the customers and also look after the
performance management. However, Bellamy must focus what the customers in china value
more. Due to diverse cultural difference there will be differences in choices among the customers
and thus, Bellamy must pay attention to take and strategies accordingly. However, as far as
ordinary capabilities are concerned for a short time basis Bellamy can keep its price slightly low
to attract customers for the first few months so that awareness are spread among their customers.
They can also give discounts, free samples, and food coupons as additional benefits to attract
more customers. Though they mainly get their profit from people who are highly health

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conscious and mothers of newly born children, but for the initial few months they can target as
much customers possible to promote their products going beyond their target market of
customers. They need to keep their track with the changing marking and demands of their
customers so that they can sustain in the developing market and become as popular in China as
well as they are in Australia (Beske, Land & Seuring, 2014).
Strategic choices of Bellamy
a) Current Strategy
The current strategy of Bellamy is analyzed
i. Where is the Company Positioned-The past and current strategy of Bellamy focuses on
positioning itself as a premium brand and targeting a niche market of children by manufacturing
organic milk and food products for children in Australia. Bellamy has also started gaining
revenue from exporting its organic food products in the South East Asian countries like Hong
Kong, Malaysia, Singapore and countries like the United Kingdom and New Zealand.
ii. Strategic choices of the Company-The Company has options like manufacturing
organic food products for mothers of babies because after delivery women lose calcium from
their body. Bellamy can offer the food products of babies and mother as a bundle product
offering (Hill, Jones & Schilling, 2014).
iii. Is the Option Right for the Company- This strategic choice of diversifying its product
range, extending the product line for mother and adding more products in existing product line
for babies will be beneficial for Bellamy as future strategies.
1. Business Level Strategy- The organization concentrates on a buyer segment which is narrow
and meets specific needs, demands and requirements of the niche members of the target market.
a) The business level strategy of Porter’s Generic Strategy followed by Bellamy is focused
differentiation (Eden & Ackermann, 2013).
2. Innovation Strategy - Bellamy focuses on strong Research and Development to manufacture
specialized formula for children of each age group like including Organic Infant Formula Step
1for who are less than 6 months old, Organic Follow-on Formula Step 2 for babies in between 6

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months to 1 year age and Organic Toddler Milk Drink Step 3 for children in the age group of 1 to
3 years. The Bellamy focuses on differentiating its food products and charging premium price.
Bellamy focuses on product innovation (Rothaermel, 2015).
3. Corporate Level Strategy- Existing markets and existing products of Bellamy are organic food
products like milk products, cereals, pasta and other snacks for children in Australia.
Existing markets, New Products- The existing markets and new products of Bellamy could be
organic food products for mothers.
New markets, Existing products- Bellamy should export existing organic food products to China
and other South East Asian Countries.
New Markets, New Products- Bellamy can manufacture organic food products for mothers in
new markets like China.
Fig- The Ansoff Matrix

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Source: (Morschett, Schramm-Klein & Zentes, 2015).
Therefore, Bellamy should focus on market development and product development
4. Internalization Strategy – Bellamy focuses on CAGE framework and follows export strategy
for mode of entry in the Chinese market. The economic and administrative forces in China are
the ease of doing business there and the boom of the e-commerce industry which will enable
Bellamy to sell its products in China. The culture and geography of China will favor Bellamy’s
entry as for socioeconomic reason, Chinese mothers prefer baby formula and they rely on
extended families to take care of babies. So, formula milk is preferred than breast milk in China.
Fig- CAGE FRAMEWORK
Source: (Harrison & John, 2013).

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Recommended strategic action
The strategic action recommended for Bellamy is to diversify its products range and
develop products for mother and offer bundle products for mother and babies. Bellamy can apply
this strategy for existing markets in Australia and this strategy of product diversification and new
product development can also be applied to Chinese market.
a) From the TOWS matrix Bellamy can adopt the two strategies of SO and ST
(SO) STRATEGY FOR BELLAMY- Bellamy can focus on the opportunities of the
Australian and Chinese market and use the Company’s strength like core competency of product
knowledge and technical know-how of the products and apply the product innovation and
research in new product development which are strengths of the organization to tap the
opportunities of Chinese market where mothers prefer to buy ready-made milk formula for their
infants. Bellamy can use the Strengths of product know-how, strong Research and Development
and Supply Chain and distribution facilities in Australia to diversify its products for mothers
(Stead & Stead, 2013).
(ST) The strengths of Bellamy can be used to mitigate threats from competitors, threats
from substitutes, threats from bargaining power of buyers and suppliers and threats from new
entrants. Bellamy has to face competition from retail giants like NESTLE and from local organic
food manufacturer Only Organic. In Australia, competitors of Bellamy are Devondale, Aussie
baby and Blackmores. Bellamy can take leverage of its strength of first mover advantage in
Australian market and already established Brand Value to combat threats from the 5 key Porter’s
forces.
b) SAFe Framework- The suitability of the strategy is high and risks are low. The
opportunities and threats are addressed. There are resources and competencies to implement the
strategy effectively. Also Bellamy has required manpower and skills of product know-how for
product diversification and developing organic products high in calcium content for mothers of
new born babies. The Company can leverage its already established brand name to sell its new
range of products to mothers. The resources like wide range of suppliers and distribution