In today`s competitive environment, it has become extremely important for any business organization to look out for factors existing in the external environment so that it is easily able to combat with the factors present in the external environment. The business is required to utilize its competitive advantages and then use them for the benefit of the firm. There are various strategic tools present which can be utilized effectively in order to ensure that the given business is being able to use them to their competitive edge. The company chosen for the given assessment is the Billabong International Limited (Choose Your Experience | Billabong, (2018). The company is a surf company which was primarily established as a clothing retailer which produces goods like watches, backpacks, snow board and other related items under different brand names.
The primary aim of the given report is to present an external and internal environment analysis of the company which can further be used to analyse the strategic problems being faced by it and present alternatives for the same (Hill, Jones & Schilling, 2014).
The external environmental tool like the Michael Porter`s Five forces can be described as an effective tool to analyse the relevant factors present in the industry in which any company operates. According to Wheelen et al., (2017), the five forces have a significant impact on the profitability of the firm in which it operates in. The five factors which tend to have a huge impact are given as follows:
In the given section, the Porter`s Five forces of Billabong International will be analysed in order to derive strategic problems and their solutions.
The threat of new entrants is a measure which is popularly used to analyse the different companies who may be willing to enter into a given industry in order to be able to plan accordingly. The new entrants in the Consumer durables and apparel industry bring about innovation, new processes and thus have put a pressure on the given company by following a low pricing strategy and offering a unique value proposition to the customers. The Billabong Company needs to look after the strategies in order to ensure successful business. The company can tackle these problems by bringing about new services and products and developing an economies of scale.
The bargaining power of suppliers in the given industry is quite strong and various companies in the apparel industry purchase their raw materials from the external suppliers who have a dominant position in the market. These suppliers using their negotiation techniques in order to extract high prices from companies like Billabong. Hence, the presence of these factors tends to lower the profitability of the firm. Billabong can combat against these issues by building an efficient supply chain system where they do not have to source from just one supplier but multiple suppliers so that the power gets distributed. It can take reference from Wal-Mart and Nike and aim to build a dedicated their party relationships with their suppliers.
Bargaining Power of Buyers
The buyers are the customers who tend to purchase the products and hence they would like to have the best offerings which are available at the minimum price. Hence, this demand which is made by them tends to put a pressure on the profitability of the firm in the long run. As the powerful customer base tends to put pressure on the company, Billabong can start building a large base of customers then. For this they will be able to reduce the bargaining power of the different buyers and also be able to provide an opportunity to the firm to be able to streamline its sales and the production process.
It can also bring about new products and seek discounts on the same in order to be able to attract the given customer base. If the company starts taking in new products then it will be able to reduce the competition which is presently prevalent.
The threat of substitute products or services can be defined as a threat whereby the new products or services will be able to meet similar customer needs in a different manner. In such a scenario, the profitability of the industry takes a toll. The threat of substitutes for Billabong comes from the different alternative products. The company can combat against these threats by becoming service oriented along with being product oriented (Barney, 2014).Billabong can also increase the switching cost for the customers and lastly understand the need of the customers.
The rivalry in the given industry is relatively very huge, however, if Billabong is able to build sustainable differentiation it will be able to combat against this factor.
Although the external environmental factors present in the business tend to play a great role in determining the success of the firm, it is also very important for the organization to ensure that it makes use of its internal components in a manner such that the firm will be able to survive in the long run and fight against the different factors which exist in its environment (Chernev, 2018). Hence, a strategic management tool which can be used in order to assess the internal environment of the business is the SWOT Analysis. The SWOT Analysis tool is an efficient tool in analysing the internal process of a business and for this purpose, a SWOT analysis of the Billabong international company. A value chain analysis will also be done on the same.
Strength
The strength can be defined as an internal advantage which a company may possess and utilise in order to combat against the external factors which may be present in the external environment of the given organization. The strengths of the company are its good brand name and product offering (Bettis et al., 2017).
Weakness
The weakness of a company can be described as an internal disadvantage which the company may have which weakness its position in the external environment of the business organization. The weaknesses of Billabong are given as follows:
Opportunity
An opportunity can be described as a factor which is present in the external environment of the business and goes a long way in supporting it to perform well. If these opportunities are able to be utilized well, the firm can reach to new heights (Foxall, 2014). The opportunity is the market present.
Threat
A threat can be described as an external component which may hamper the business activities of the firm. If this threat is not planned against then, the business may shut down. The threats of the Billabong have been given as follows:
The value chain analysis is generally used in order to analyse the primary activities of the firm and identify those activities which will be able to satisfy consumer needs. For the analysis a three step process is generally adopted
|
Primary Activity |
Value Analysis |
Current Practices |
|
Selling apparels |
Reliable quality Premium brands Attractive offers |
The quality is highly reliable The Store offers premium brands to the customers It does not provide any attractive offers to its customers |
|
After sale services |
Return Policy Damage repair (Morschett, Schramm-Klein & Zentes, 2015) |
There is a return policy in place. There is no damage repair guarantee |
|
Attempting sales activities |
Reliable performance at checkout Huge display |
The performance at checkout is not highly reliable The display of the firm is good |
|
Customer care |
Efficient and fast responses Well trained staff |
The customer care is not that efficient. |
Therefore, from the external and internal environmental analysis, the following could be figured out. The main strategic issues being faced by the company are as follows:
|
Sr. No |
Activity |
Resources |
Time frame |
KPI |
|
1 |
Revive marketing strategy |
External marketing company Participation of suppliers Participation of various units and alliances |
Six months |
Increase in sales Increase in profits Increased advertisement views |
|
2 |
Management team formation |
HR Company to be assigned for this purpose |
1 year |
Better operations Increase market share Increase sales |
|
Activity |
Months |
|||||||||||
|
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
Quarter 5 |
Quarter 6 |
|||||||
|
Hiring external marketing company |
||||||||||||
|
Planning |
||||||||||||
|
Implementation |
||||||||||||
|
Controlling |
||||||||||||
|
Feedback |
||||||||||||
|
Hiring external hr company |
||||||||||||
|
Recruitment |
||||||||||||
|
Selection |
||||||||||||
|
Induction |
||||||||||||
|
Review of results |
Conclusion
Therefore from the given analysis it can be said that although Billabong has been in business since a long period of time, it has not been able to perform well in the last few years. In 2008 the company was on the verge of shutting down, however due to the consistent efforts being made on the side of the management and its corporate turnaround strategy, it was able to achieve considerable success. However, due to the fraudulent activities of the given management, the company was not able to achieve considerable amount of success. The report has analysed the internal as well as the external environment of the business and certain strategic issues with a strategic corrective plan has been identified.
References
Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson higher Ed.
Bettis, R., Gambardella, A., Helfat, C., & Mitchell, W. (2014). Quantitative empirical analysis in strategic management. Strategic Management Journal, 35(7), 949-953.
Bryce, H. J. (2017). Financial and strategic management for nonprofit organizations. Walter de Gruyter GmbH & Co KG.
Chernev, A. (2018). Strategic marketing management. Cerebellum Press.
Choose Your Experience | Billabong. (2018). Retrieved from https://au.billabong.com/
Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.
Foxall, G. (2014). Strategic Marketing Management (RLE Marketing) (Vol. 3). Routledge.
Ginter, P. M. (2018). The strategic management of health care organizations. John Wiley & Sons.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.
Meyer, G. D., Neck, H. M., & Meeks, M. D. (2017). The entrepreneurship?strategic management interface. Strategic entrepreneurship: Creating a new mindset, 17-44.
Mooradian, T., Matzler, K., & Ring, L. (2013). Strategic marketing: Pearson new international edition. Pearson Higher Ed.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management (pp. 978-3658078836). Springer.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Stead, J. G., & Stead, W. E. (2014). Sustainable strategic management. Routledge.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy. Pearson.
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