Strategic Analysis of Costa Group: A Management Report

This report offers a strategic analysis of the Costa Group, a major player in the horticulture sector. It begins with an executive summary and introduction, followed by an in-depth examination of the external environment using a PESTLE analysis, considering political, economic, social, technological, environmental, and legal factors impacting the company. The report then delves into the internal organization, assessing resources, capabilities, core competencies, and competitive advantages, with a focus on the VRIO model. It discusses tangible and intangible resources, internal capabilities like market orientation and coordination, and the company's core competencies, including its large distribution channels and global operations. Finally, the report concludes with strategic recommendations, such as market development and leadership approaches. This comprehensive analysis provides a clear understanding of Costa Group's strategic position and potential for future growth.

Strategic management

Strategic management
Executive summary
Strategic management emphasize on boosting the abilities through as it maintains the
competitive advantage. In this report, the discussion will be on Costa group which is the biggest
organizations in the horticulture sector. In this internal and external analysis will be elaborated in
which it will assist in boosting the competitive advantage. There are different factors that will be
elaborated such as VRIO model that will assist in maintaining the competitive advantage. The
last phase will be recommendation part in which different strategies are elaborated that is
important to be considered by the company such as market development strategy and leadership
approach.
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Strategic management
Table of Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
External environment.......................................................................................................................4
Internal organization........................................................................................................................6
Resources.....................................................................................................................................6
Capabilities...................................................................................................................................7
Core competencies.......................................................................................................................7
Competitive advantage.................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
Appendix........................................................................................................................................11
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Introduction
It is necessary for the company to focus on managing the functional activities by focusing on
external and internal factors so that strategies can be implemented effectively. The horticulture
focused agribusiness identified for this task is Costa Group. The company is known as one of the
biggest Australian horticultural company. It is examined that the CEO of the company is Neil
Chatield and Harry Debney. The ongoing goal of the company is to maintain the quality by
controlling the supply chain and also emphasis is given on upholding the commitment to
sustainability that ensures greener future (Costa, 2019).
The company grows the products in its own farms and greenhouses. There are various divisions
such as the division of the produce is there in which berries, mushroom, Tomatoes and citrus
fruits are grown. The next is international division in which the varieties of blueberries are grown
for the international markets. The last is costa farms and logistics that are liable for logistics and
also wholesaling such as banana farming and marketing. Costa has different business units of
Banana and Tomato. The products of the company are supplied to the Australian supermarket
chains and also export is done in different countries such as in Asia, North American and
Europe. Costa also acquired the company such as African blue and Nangiloc Colingnan. These
are the service line through which the company emphasizes on maintaining the overall
production process (Costa, 2019).
In 2017, the company was having the annual revenue of AUD 909.1 Million. The revenue is
created from the various units such as from the supply segment and also by the ingredient of the
supply division. Also, the overall revenue of the company can be maintained from growing,
packaging, marketing and distribution of fruits and vegetables (Costa, 2019).
Through this graph, it can be analyzed that the revenue has been generated from different
segments such as Mushroom, Berry, Tomato, Citrus and Avocado. In 2017, the overall share of
the revenue is 26% of citrus category and 13% of the Avocado category. So, it can be stated that
the market share has been enhanced in relation to organization revenue attained in the
competitive market (Costa, 2019). It is stated that by having the largest revenue the company can
easily boost brand factor and can offer the quality products and services. This can help the
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company in maintaining competitive advantage and also affect the sales in relation to the other
competitors present in the market.
External environment
The company should have proper understanding of the external environment so that it could be
easy to accomplish the set goals. In order to evaluate the external environment of Costa group
the emphasis will be given on the Pestle analysis tool. This tool will offer the overview of the
external factors of the organization.
 Political
In relation to Costa Group, it is analyzed that government of Australia has enhanced the pressure
to adhere the world trade organizations regulations in relation to food processing sector. The new
government policies of the government have also brought improvisation in the investment
sentiment in relation to customer sector. It is examined that Costa Group Holdings has attained
the benefits from lower taxation policies in the western hemisphere (Shry and Reiley, 2016). It
has boosted the profits and also enhanced inequality in Australia that leads to the overall change
in the policies related to taxation. The government is emphasizing on setting the food processing
taxation policies through which it could be easy to attain the carbon footprint of the customers.
Costa group also operate it activities in different countries so they have to follow the policies of
each country in relation to food processing sector. But due to rise in the populism in Australia the
company has to face the issue of instability in the Australian market. Therefore, it can be stated
that rules and regulations in the Australian market are important for the company to be followed
because of the instability in the market conditions (Underhill and Rimmer, 2017).
 Economic
The impact on Costa Group has been analyzed due to the volatile exchange rate of Australia and
it has affected the investment plans of the company for long and short time. It is analyzed that
the level of skills of the workforce in Australia is moderate to high. The company can leverage to
bring improvisation in the services in Australia but can also focus on leverage the employees to
generate the global opportunities. In the Australian market, there is increase in the liberalization
of the trade policy that can assist the company in investing into the different regions. The
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economic performance of the Australian market is stable in relation to the demand because there
is stable disposable income which has enhanced the investment into the new sector (Bondarenko
et al., 2017).
 Social
Costa Group has to consider the attitude towards health and safety. It is examined that with the
increase in the liberalization factor in relation to the health and safety are enhancing. The
company should emphasize on ignoring these attitudes as it can lead to the cost of failure in the
Australian market. In the market of Australia, the customers are focusing on giving preferences
to the experiential products so in this context it is necessary for the organization to emphasize on
boosting the customer experience so that the large market share can be grabbed. The role of
gender has been evolving in the market of Australia, so the company can test different concepts
to cater and support the gender role in the society of Australia (Reilly et al., 2018).
 Technological
The latest technology introduced in the market is boosting the production and also the service
cost. Costa Group should emphasize on restructuring the supply chain so that flexibility can be
maintained to meet the needs of the customer and also to maintain the cost structure. The
technology in the Horticulture sector is still not attained maturity and there are many competitors
who are emphasizing on the new innovations that enable them to attain the large market share in
the competitive market. There are latest technologies that are based on innovations and it is
implemented by the competitors of the company. This can offer a good insight in what are the
strategies of the competitors and how they will focus towards attaining success. Costa group
also emphasizes on keeping an eye on the overall development and enhancement of the customer
experience that boost speed and access. This has brought transformation in the customer
experience in the food processing sector (Underhill and Rimmer, 2016). Therefore, it can be said
that it is necessary for organization to consider the latest technologies so that growth can be
attained.
 Environmental factor
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Costa emphasizes on sustainable agriculture and the company ensures that the natural resources
are utilized in a proper manner. By focusing on the approach, the company grows the products
that are healthy and safe with high quality and also at the same time emphasis is given securing
the natural environment. The sustainable practices of the company focus on boosting the water
use efficiency by conservation and recycling and also through continuous improvement in soil
health and fertility. The sustainable practices of the company emphasizes on reducing the
chemical usage through integrated pest management that also optimize the nutrients (Costa,
2019).
To keep the environment safe, the company emphasizes on considering National Greenhouse and
Energy Reporting Scheme through which the company provide the information about the
greenhouse gas emissions and also the overall energy consumption that comes under the
specified NGER legislation. The company offers the data and information in context to
greenhouse gas emissions and energy consumption under the scheme of NGER (Costa, 2019). It
has been analyzed that extreme weather is also one of factor that add the cost of operations for
the company as it has to focus on the investment in managing the supply chain and making it
more flexible.
 Legal environment
Data protection law is also one of the factor in relates with the intellectual property rights. It is
necessary for the organization to consider the process that helps in securing against the data
breach. Health and safety norms that are followed in Australia have also boosted the overall cost
of operations for the company. So, it can be stated that it is necessary for organization to follow
the legal laws given by the government so that it could be easy to control the overall operations
of the business (Xia, 2019).
Internal organization
Resources
It is essential to examine the internal factor as it assist in managing the activities that take place
in effective way. By focusing on the resource based view concept, it is examined that tangible
resources of company are concerned with the assets such as machinery, manufacturing and
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workers. The location in which the activities are managed has an important role in maintaining
the competition level present in the market. If intangible resources are considered then market
share, quality and brand image are the essential factors of the organization (Bentley, Omer and
Sharp, 2013).
Capabilities
It can be said that organization should maintain the capability as it can help in enhancing the
growth of the company. Flexibility in the workplace is one of the essential factors that relates
with the internal capability. The human resource approach is taken into consideration that assists
in managing the functional operations. Market orientation can also be one of the internal
capabilities that assist to manage the wok according to the market scenario. This can also help in
offering the products that boost the demand of the products in the market. Therefore, it can be
said that there should be proper link between internal and external capabilities. The company
also emphasizes on maintaining the coordination that boost the capabilities and also help in
enhancing the competitive advantage (Clibborn and Wright, 2018).
Core competencies
The core competencies of the company are concerned with the large distribution channel. The
operational activities of costa group are conducted on the global platform. Cost group also export
the products to Asia, North America and Europe which states that the company has the large
market share. Costa Group has also focused on sourcing the products on the international
platform that has also maintained its competency in the market. The products are also provided
in the supermarkets that assisting in enhancing the share. Therefore, the overall competencies
positively affect the economic and social status in relation to farmers (McLean and Holmes,
2019).
Competitive advantage
To highlight the competitive advantage factor emphasis will be given on the VRIO model in
which the few factors are considered such as
 Valuable
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Brand value is the essential aspect of the company that has boosted the market share. Positive
brand value has boosted the demand and sales of the company in the market. To produce
products the latest technologies is considered that boosted the production process (Fallahi, 2017).
 Rarity
Costa Group has a link with the farmers which have helped in keeping the overall supply without
having the intermediaries.
 Inimitability
It can be said that inimitable factor related to the employees in that the focus is given on
maintaining the competitive advantage. It has assisted to boost the employee’s skills and
enhanced productivity (Curtain et al., 2018).
 Organizational capability
Costa Group has a strong position in the market through which high level of competition is
attained and also it has targeted the customers (Nelan, Jansson and Szabo, 2017).
Recommendations
It is recommended that Costa group should emphasize on effective leadership as it can assist in
boosting the dedication. If effective style of leadership is considered than performance can be
maintained. Cooperative model can also assist in boosting the competitive advantage that will
also emphasize on maintaining the market development strategy with the motive of entering into
the foreign countries. So, it is recommended that focus should be given on these factors so that
market opportunities can be grabbed.
Conclusion
It can be concluded that organization is the biggest in this sector. In reference to the internal
capabilities the business can easily compete with the competitors that exist in the market. Costa
group can also focus towards enhancing the market that will help in enhancing revenue. So, it is
recommended that company should consider leadership approach and market development
strategy so that positive image can be maintained.
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References
Bentley, K.A., Omer, T.C. and Sharp, N.Y., 2013. Business strategy, financial reporting
irregularities, and audit effort. Contemporary Accounting Research, 30(2), pp.780-817.
Bondarenko, T.G., Isaeva, E.A., Orekhov, S.A. and Soltakhanov, A.U., 2017. Optimization of
the company strategic management system in the context of economic instability. European
Research Studies, 20(2), p.3.
Clibborn, S. and Wright, C.F., 2018. Employer theft of temporary migrant workers’ wages in
Australia: Why has the state failed to act?. The Economic and Labour Relations Review, 29(2),
pp.207-227.
Costa., 2019. Community and Sustainability. [Online]. Available at:
https://costagroup.com.au/community-and-sustainability [Accessed on 24 May 2019].
Costa., 2019. FY2017 Results Presentation August 2017. [Online]. Available at:
http://investors.costagroup.com.au/FormBuilder/_Resource/_module/YfnrttzbYEyUJyNrb86SEg
/file/report/01887252.pdf [Accessed on 24 May 2019].
Costa., 2019.About us. [Online]. Available at: https://costagroup.com.au/about [Accessed on 24
May 2019].
Curtain, R., Dornan, M., Howes, S. and Sherrell, H., 2018. Pacific seasonal workers: Learning
from the contrasting temporary migration outcomes in Australian and New Zealand
horticulture. Asia & the Pacific Policy Studies, 5(3), pp.462-480.
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Fallahi, E., 2017. Horticulture in Iran Can Be an Alternative to Petroleum and a Major Source of
International Business with Unique Potential and Challenges. HortScience, 52(9), pp.1145-1147.
McLean, I. and Holmes, P., 2019. The contribution of the pastoral industry to a diversified land
sector economy in northern Australia. The Rangeland Journal, 41(2), pp.157-160.
Nelan, B., Jansson, E. and Szabo, L., 2017. An Overview of Farmers Markets in Australia.
In Food Safety for Farmers Markets: A Guide to Enhancing Safety of Local Foods (pp. 103-
117). Springer, Cham.
Reilly, A., Howe, J., van den Broek, D. and Wright, C.F., 2018. Working holiday makers in
Australian horticulture: Labour market effect, exploitation and avenues for reform. Griffith Law
Review, 27(1), pp.99-130.
Shry, C. and Reiley, E., 2016. Introductory horticulture. Cengage Learning.
Underhill, E. and Rimmer, M., 2016. Layered vulnerability: Temporary migrants in Australian
horticulture. Journal of Industrial Relations, 58(5), pp.608-626.
Underhill, E. and Rimmer, M., 2017. Private governance, state regulation and employment
standards: how political factors shape their nexus in Australian horticulture. Relations
Industrielles/Industrial Relations, 72(1), pp.33-55.
Xia, C., 2019. Horticulture. Agricultural Commodities, 9(1), p.55.
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Appendix
(Source: Costa, 2019).
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