Strategic Analysis of Bellamy's Australia Limited (MGMT 23): A Report

This report provides a comprehensive strategic analysis of Bellamy's Australia Limited, a major player in the Australian organic food and beverage industry, particularly in infant formula. The analysis begins with an overview of the company, its background, and the industry in which it operates. A SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The report then applies Porter's Five Forces framework to assess the competitive dynamics of the industry. It examines the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and the intensity of rivalry among existing competitors. The report also explores the company's commitment to environmental ethics and the challenges it faces. It further discusses the distinctive features of Bellamy's business-level and corporate-level strategies. The report concludes with recommendations for improving strategy formulation, drawing on Porter's and Mintzberg's ideas, and for developing new capabilities to adapt to the evolving industry environment. This report is a valuable resource for understanding strategic management principles and their application in a real-world business context.

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Executive Summary:
The objective of the report is to provide an insight into Bellamy’s Australia Limited; an
Australia based manufacturer of infant formula. The report commences with a brief introduction
of the company information. A Porter’s competitive analysis shows that the company is highly
competitive within the industry in which it operates. The report also helps in identifying the
business level and the corporate level strategies of the firm. The report also leads to the findings
that strategies implemented based on the ideas put across by Porter’s and Mintzberg results in
improved strategy formulation. The report also puts across recommendations for developing new
capabilities that helps it in adapting to the changing environment of the industry.

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Table of Contents
Introduction:....................................................................................................................................5
Background Information..................................................................................................................5
Major Industry within which it competes:.......................................................................................6
SWOT Analysis of the Firm:...........................................................................................................7
Porter’s Five Forces for Determining the Competitiveness of Firm:............................................10
Commitment towards Environmental Ethics.................................................................................13
Challenges Faced by the Firm.......................................................................................................13
Economic Condition of the Firm...................................................................................................14
Distinctive Features of Business Level and the Corporate level Strategies of the Firm that
determines Success........................................................................................................................14
Ensuring Improved Strategy Making in Future Guided by Porter and Mintzberg........................16
Recommendations for Development of New Capabilities to Adapt to Changing Industry
Environment..................................................................................................................................19
Conclusion:....................................................................................................................................20
References:....................................................................................................................................22

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Introduction:
The report aims at providing an insight into Bellamy’s Australia Limited. Bellamy
Australia Limited, initially known as Tasmanian Pure Food Ltd represents a major food and
beverage company based in Australia (bellamysorganic.com.au, 2019). It is the parent company
of the Bellamy’s Organic which is one of the biggest producers of organic formula for the
infants. Bellamy’s has been a company based in Tasmania that produced 100 percent certified
Australia made organic food. Bellamy’s distributes its product range to the pharmacy,
supermarket chain and the medical stores across the Australian subcontinent. It also undertakes
direct online sales to the consumers online through sales portal. It also undertakes export of its
products in Hong Kong, China, Malaysia, Singapore, New Zealand and Singapore. Due to the
increased demand of its product, the company also opened office in Singapore as well as
Sanghai. The report focuses on the major industry of competition, porter’s five forces for
determining competitiveness; business and corporate level strategies, proposals for improved
strategy making and recommendations for developing newer capabilities for adapting to new
environment.
Background Information
Bellamy’s began as the Bellamy’s Organic in the city of Launceston, Tasmania in the
year 2003 as family operated firm. Bellamy’s Organic was however taken over by Tasmanian
Pure Foods in the year 2007 which represented a private business that had the aim of investing in
and building Tasmanian food and agribusiness (bellamysorganic.com.au , 2019). Later, in 2014,
Tasmanian Pure Foods had been renamed as Bellamy’s Australia. An immensely successful July
got the company listed in the Australian Stock Exchange (ASX). Huge trading and over 30

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percent rise in the initial prices of shares proved that the company’s launch resulted in
outstanding success by the commentators of the financial industry.
The product range of the company included infant formula that included toddler milk,
follow on formula, baby porridge, baby rice, cinnamon breakfast and apple, teething rusks, baby
macaroni, brown rice pasta and spelt pasta, fruit and grain snacks, readymade meals for babies
and the vegetable macaroni(bellamysorganic.com.au , 2019). The products are available for three
age groups that include the newborns between 0 to 6 months, the infants between 6 to 12 months
and toddlers between 1 to 3 months. In the year 2014, the company underwent an expansion of
its range and included the organic milk products for children in the age group of 3 + years. This
was a supplementary food for the children that was made to complement not only the dietary
needs of the toddlers but also the children who might require additional nutrients and energy.
Major Industry within which it competes:
The major industry with which Bellamy Australia Limited competes is the organic food
and beverage industry which shows a substantial amount of growth as per the reports of 2019
(austorganic.com, 2019). According to a conducted research by Mobium Group and Nielsel
Company, the organic food market grows at a rate of $1 billion on a yearly basis. Health and
beauty, dry grocery and dairy comprises of half the sales of the organic market. Further research
has put across that increase of product availability along with additional convenience of retail
channels has led to the increasing level of frequency of the organic purchasing that helped in
adding newer consumers. It is the food products that acted as one of the entry points of the
Australian consumers into the organic food industry. In other words, the organic food and
beverage industry is thus considered a booming industry in recent times.

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The top three competitors of Bellamy’s Australia Limited are a2 Milk, Bubs Australia
and Synlait. The a2 Milk is one of the biggest rivals of Bellamy’s. Bubs Australia competes with
Bellamy’s in the field of Food Processing. Synlait which is one of the prominent competitors
generates closer to 254 percent revenue of Bellamy’s.
Figure 1: Diagrammatic Representation of the Growth of the Organic Market
Source: (Lobo, Mascitelli & Chen, 2014).
SWOT Analysis of the Firm:
The SWOT analysis refers to internal as well as external analysis of the firm. The
internal analysis refers to the strengths and weakness whereas the external analysis refers to the
opportunities and threats.
Strengths:

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1. Bellamy’s Australia Limited built the expertise of entering the newer markets and
accomplishing success (annualreports.com, 2015). The expansion enabled the organization in
building newer streams of revenue and diversifying the risk of the economic cycle.
2. The company ensured higher customer satisfaction levels through its customer
relationship department.
3. Implementation of automation brought about consistency in the product quality of the
company and enabled the company in scaling up and scaling down demand conditions of market.
4. Bellamy’s Australia has a reliable and strong distribution network that is able to reach
maximum number of people.
5. The successful learning programs and training leads to an immensely skilled workforce
Weakness:
1. The unique selling proposition and positioning of Bellamy’s Australia is not defined
clearly which makes it vulnerable to the attacks of the competitors.
2. Bellamy’ Australia has not been successful in integrating with the firms having a
different work culture.
3. The net contribution and the profitability ratio of the company has remained below the
industry average.
4. The structure of the organization does not hold compatibility with the business model
that limits its expansion in various product segments

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5. Although Bellamy’s Australia spends substantial amount on the industry average so it
has not been able to compete with leading industry players.
Opportunities:
1. The low cost of transport has brought down the product prices of Bellamy'S Australia
Limited thereby putting across an opportunity for the company.
2. The green drive of the government opened procurement opportunities for the company
through state and the contractors of the federal government
3. The free trade agreement of the government along with an adoption of newer
technology has provided an aid to Bellamy’S Australia Limited in entering a newer and
emerging market.
4. Newer consumer behavior trends also plays a key role in opening up newer market for
Bellamy'S Australia thereby providing a greater opportunity for an organization for building
newer revenue streams and diversify into product categories.
5. The newly introduced technology also puts across an opportunity for Bellamy’s
Australia Limited for practicing a differentiated strategy for pricing.. It also helps the firm in
maintaining the loyal customers through value oriented propositions.
Threats:
1. The demand for the highly profitable products seems to be of seasonal nature and any
unfavorable event directly has an impact on the profitability.
2. There does exists a continuous supply of the innovative products

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3. The strengths of the local distributor also puts across threat to the marketers as the
competition pays higher margin to local distributors.
4. The online buying behavior of the consumers also posed a threat to existing physical
infrastructure driven by the supply chain model.
5. Newer technology put across by the market disruptor or the competitor act as threat to
industry in the medium to the long term.
Porter’s Five Forces for Determining the Competitiveness of Firm:
The Porter’s Five Forces portrays on how Bellamy’s Australia Limited is able to put
forward sustainable competitive advantage within the organic food and beverage industry.
Threat of New Entrants: Newer entrants in the organic food and beverage industry not
only bring in innovation but also implements newer means of getting the things done (Booth &
Whelan, 2014). This result in additional pressure on Bellamy’s Australia to lower its pricing
strategy, reduce its cost and produce newer level of value propositions to customers. The
company needs to manage the challenge and build the effective barriers in safeguarding the
competitive advantage. In other words, the company can handle the threat of newer entrants by
adopting the following means:
 Through innovating newer products and services
 By building the economies of scale such that it is able to lower the per unit fixed cost
 Spending money and building capacities on the research and development.

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Bargaining Power of Suppliers: Dominant suppliers help in reducing the margins of the
company (Devin & Richards, 2018). Powerful suppliers are believed to use negotiating
power fpr the extraction of higher prices from the organic food and beverage sector. Hence,
the impact created by higher bargaining power of suppliers lowers overall profitability of the
organic food and beverage sector. Bellamy’s Australia can however handle the higher
bargaining power of the suppliers by adopting the following measures:
 By building effective supply chain with the multiple suppliers
 By undertaking experimentation with the product designs through the usage of different
materials
 Development of dedicated suppliers such that their business solely depends on the firm.
Bargaining Power of Buyers:
Most often the buyers are found to demand a lot since they expect in buying the best
available offerings through paying the minimum possible price (Burch, Dixon & Lawrence,
2013). This aspect might put pressure on the profitability of Bellamy’s Australia Limited in long
run. Smaller customer base leads to higher bargaining power and an increasing capacity in
seeking for offers and discounts. Bellamy's Australia Limited can however handle the higher
bargaining power of the buyers by adopting the following measures:
 Through building larger customer base
 Through rapid innovation of newer products
 New products will help in reducing deflection of the existing customers of the company
towards the competitors.
Threat of the Substitute Products or Services:

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Industry profitability suffers when a new service or product meets the needs of the customer
in varied ways (Bigliardi & Galati, 2013). The threat of substitute products are higher when its
value proposition is unique compared to the other available products in the market. Bellamy’s
Australia Limited can handle this threat by adopting the following means:
 By being more service oriented besides being product oriented.
 By understanding needs of customer instead of what they buy
 By increasing switching cost for customers.
Rivalry among Existing Competitors
Intense rivalry amongst existing players will drive down the prices and reduce the
profitability of the food and beverage industry (Larder, Lyons & Woolcock, 2014). Bellamy'S
Australia Limited works within a competitive industry where the competition might take a toll on
the long term profitability of the firm. The company however tackles the intense rivalry of the
existing competitors by adopting the following means:
 Through building sustainable differentiation
 By building scale for undertaking better competition
 By collaborating with competitors for increasing the market size instead of simply
competing for the smaller markets
Commitment towards Environmental Ethics
Bellamy’s Australia focuses on the environmental improvement and protection. The
company produces only those products that are certified as organic( annualreports.com, 2015).
The organic produce enables setting a higher benchmark towards environmental sustainability
since their production ensures strict adhere to the processing standards and practices. In other

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words, practices related to organic farming is sustainable since it involves the blend of farming
with natural environment. The resources and the methods used have minimum impact on
environment due to emphasis on utilization of the natural resources. However, this could be
achieved through focus on the welfare of the livestock, energy conservation and reduction in
carbon emission and ensure water and soil conservation and encourage production without using
chemicals or artificial fertilizers.
Challenges Faced by the Firm
In Australia, Bellamy’s faces the challenge of maintaining its products according to the
demand of the consumers which is leading to hike in the share prices. The product category that
faces the maximum challenge is the infant formula that accounts for not only the vast majority of
the sales and is known to be 100 percent organic. It has been found that anxious and sleep
deprived mothers do not want to take any chance for baby and therefore acts reluctant in
switching to a different product other than this particular infant formula (Greenhalgh, 2015).
This created major challenges for Bellamy’s Australia as it gave rise to the unprecedented
demand for products. The company also faced challenges due to a shift in buying towards e –
commerce.
Economic Condition of the Firm
According to the fiscal revenue report of 2019, Bellamy’s Australia lowered the
expectations to $275 million from $300 million. The revenue forecast for the year 2018 has been
within the range of $302 million to $332.2 million. The firm also attributed to lower revenue of
about to $129.6 million in the second half of December due to the delay in the approval from