STRATEGIC BUSINESS MANAGEMENT
Executive Summary
The purpose of the report is to analyze the state of business for Sunsilk to evaluate the current strategic position of the organisation within the cosmetic industry. The current organisational behaviour as well as the impact of the external environment are discussed in details within the scope of this chapter. Apart from that, the evaluation of competitive advantage as well as identifying the aspect of organisational sustainability is also considered to be an important aspect of the present context of the study. Henceforth, recommendations for improving the strategic business position of Sunsilk for achieving a high margin of competitive advantage and organisational sustainability is also discussed.
Appendix 1: Rate of inflation in the UK 13
Appendix 2: Disposable income for the population in the UK 14
Strategic business management plays an important role in the process of achieving organisation goals and transforms utilise successive opportunities for business expansion. In the present scenario, strategic business management for Sunsilk is discussed for analyzing the state of organisational behaviour and respective competitive advantage retained within the market place. The study aims to provide an evaluation of strategic issues as well as the identification of strategic movement will also be discussed within the boundaries of this report. Moreover, analysis of the competitive state of the industry with the use of analytical framework along with recommendations for improving the competitive nature of service will also be considered under the scope of this assignment.
Analysis of the strategic issues and opportunities
Strategic issues are considered as one of the major problems that challenge the functional capabilities of the organisation. As mentioned by Darvishmotevali et al. (2020), strategic issues are faced by an organisation due to uncertain change of market trend or significant political factors that delivers a direct impact on the company's operation. In the present context, it is analyzed that the use of sustainable marketing practices is one of the major issues faced by Sunsilk during their business operations in the UK. The present organisation is associated with the manufacture of daily used shampoos products and decreasing in the customers from the middle age due to low variation in their respective products. On the other hand, chances of business expansion in the international markets are considered to be one of the major opportunities for the respective organisation.
The impact of external factors on organisations associated with the consumer goods industry is discussed as follows:
Factors |
Influence |
Political |
|
Economical |
|
Social |
|
Technological |
|
Table 1: PEST analysis for consumer goods industry in the UK
(Source: developed by the learner)
It is evaluated that introduction of Brexit by the government of UK enhanced the power of business organisations to control their style of business for gaining a high degree of profitability. Moreover, the GDP margin, 1.21 % rate of inflation along with the steady rise of disposable income indicates a simultaneous increase in product prices along with their demand from the customers (Plecher, 2021). It is also observed that the population of UK is growing at an index of 0.56 % that significantly indicates the increase in the number of customers (Plecher, 2020). However, the growth of a business is also supported by the evaluation of different innovation within the products and automation factor. This measure imposed a positive impact on the process of ordering by the customers as well as simplified the aspect of mass production of goods.
Factors |
Impact |
Influence |
Bargaining power of the customers |
High |
The bargaining power of the customers is high due to the availability of multiple companies like Dove, Pantene and Tresemme that intends to deliver a similar category of products and services. Sunsilk needs to retain its quality of products to sustain its competitive advantage with the implementation of innovation within its products. |
Bargaining power of the suppliers |
Low |
Sunsilk intends to accept chemicals and goods from a wide category of suppliers in large quantities. Sunsilk also intends to avail the product in large quantities and thus, the individual power of each supplier is considered to be very limited. |
Rivalry among competitors |
High |
Sunsilk is associated with consumer goods such as the cosmetic industry and thus relatively faces high competition from Nestle, Colgate and P&G in the global markets. Hence, Sunsilk needs to focus on preserving their consistency of supply chain for retaining their customers for the long term. |
Threat of substitute |
Low |
Consumer goods industry is highly populated with products that satisfy the needs of the masses. Hence, the introduction of a new product does not highlight any threat regarding the discontinuation of any existing products. Hence, Sunsilk needs to emphasize on maintaining the quality of their existing consumable items and other products for retaining their brand image within the global markets. |
The threat of new entrants |
Low |
Sunsilk is considered to be one of the leading suppliers of cosmetic goods in the international markets. Thus it can be duly considered that any new organisation appearing as a new entrant will gradually fail to compete within the global market. |
Table 2: Competitive analysis of Sunsilk with the use of Porter’s five forces
(Source: developed by the learner)
Analyzing the strategic movement of the organisation
Sunsilk intends to maintain its brand image as well as its competitive advantage over the international market for maintaining its sustainability within the marketplace. As mentioned by Austin and Pisano (2017), competitive advantage helps an organisation to retain its existing customers and attract a wide section of potential customers as well. The primary strategy of product differentiation and delivery of value for money service is considered as the major strategic measures for the present organisation. Application of product differentiation by introducing a wide variety of products and services enables an organisation to compete with its competitors at a reduced price margin (Al Badi, 2018). Apart from that, delivering unique products by applying differential strategy also enables an organisation to enhance its value considering the perspective of its competitors. This measure helps to generate a high-profit margin for Sunsilk along with better sustainability over the global markets as well as develop a high sense of loyalty among their customers.
Industry life cycle
Industry life cycle signifies the position of an organisation within its respective industry that helps to represent their sustainability within the target market (Ren et al., 2019). In the case of Sunsilk, it is observed that the organisation is under the growth stage within the consumer goods industry. It is observed that the mentioned organisation is intending to expand its markets in the different region of Asia while taking their edge off from the markets. Apart from that, Sunsilk also intends to launch a wide category of new products including the beauty and skin products that are prepared from herbal ingredients. This measure suggests that the present organisation is trying to invest in the sector of personal care and target the home care segment as well.
The SAF framework is considered as one of the major frameworks that are applied for analysing the suitability of a product delivered by an organisation. The analysis of Sunsilk is presented as follows:
Suitability: The products of Sunsilk mainly highlighted shampoos and washing gel that were delivered to the customers. It is observed that Sunsilk failed to deliver the value-added variants to their customers that depreciated the sale of the products (Exchange4media.com, 2019). This measure prevented Sunsilk to achieve the suitability mark of the customers that prevented the exponential growth of the organisation.
Accessibility: In the context of Sunsilk it is observed that the present organisation failed to achieve the expectation mark of accessibility. Sunsilk failed to manufacture the required volume of the product that was demanded by the customer that restrained them from delivering a high degree of loyalty towards the organisation (Exchange4media.com, 2019). Hence, the accessibility of Sunsilk shampoo as demanded by the customers was prevented to a great extent that reduced the brand image of the organisation.
Feasibility: the current brand value of Sunsilk is more than € 1 billion that highlights a high margin of brand feasibility and availability of resources for promoting their brand. It is also evaluated that Sunsilk also sustains enough resources for maintaining its brand image with product invention or innovation as well as to conduct extensive promotional strategy. Hence, Sunsilk can also alter their process of business management and implement new production unit for meeting the demands of the market.
The result of VRIO analysis is presented as follows:
Value: The value of Sunsilk products is observed to be on a depreciating stage that intends to reduce the competitive advantage of the organisation.
Rarity: The main product of Sunsilk is considered as shampoo and other variety of cosmetics that can be easily imitated and manufactured by other organisations associated with the cosmetic or consumer goods industry. This measure intends to highlight the situation of a competitive parity that negatively affects the profitability of the organisation.
Imitable: The product of Sunsilk is not fully imitable as the composition of a chemical compound used by the organisation cannot be copied by other organisation that helps to maintain a temporary competitive advantage for Sunsilk.
Organised: Sunsilk can be considered as an organised company that intends to develop their markets at a slow pace. Apart from that, the present organisation also fails to adapt the strategies for promoting the organisation over the international markets. Moreover, Sunsilk also fails to focus on the strategy of maintaining effective compliance with the demands of the customers and thus gains an unusable competitive advantage within the global marketplace.
The strategies that can enable the process of business expansion as well as ensure a high margin of profitability for Sunsilk can be considered as follows:
Accessibility of products according to customer demographics: demands and requirements differ from customers to customers as well as according to the trends of the marketplace. As inspired by Zhang and Watson (2020), improving the accessibility of the customers regarding their expected products and services gradually helps to improve the brand image and sustainability within the marketplace. This measure also enables the organisation to enhance the aspect of inclusivity of their customers that can help Sunsilk to improve the experience of its users.
Increased range of products: increasing product range enables an organisation to deliver a wide range of choices to their customers that enables them to deliver better loyalty towards the organisation. As influenced by Sadek et al. (2018), delivering a high range of products enables the organisations to improve their brand awareness and popularity among the target market that impacts positively on their revenue. Hence, it can be recommended for Sunsilk that increasing their range of products can enable them to gain a high competitive advantage as compared to their competitors like Pantene or Dove.
Enable the use of customer’s feedback: customer’s feedback plays an essential role in the context of improving the quality of products as par with the loyalty of the customers. By the views of Gao et al. (2018), evaluation of customers feedback enables an organisation to identify the drawbacks and flaws of their existing products. It is observed that customers of Sunsilk are disuniting from the company due to lack of choices. Thus the analysis of customer’s feedback and implementing a required solution for the problem is considered to be a major strategy that can help to regain the market share for Sunsilk.
It can be concluded that Sunsilk is one of the organisations that retains a high brand image among the market place but is gradually failing to retain its brand image in the global markets. The present organisation also intends to face a high degree of competition from the other cosmetic industries like Pantene or L’Oreal Paris. Hence to maintain their sustainability within the market, Sunsilk intends to enable the use of differential marketing strategy for developing a new variety of products as demanded by the customers. Moreover, the present organisation is also facing a high degree of competitive disadvantage due to the availability of similar category of products by international brands. Thus the increased range of products and implementation of customers’ feedback can help to improve the quality of the products that can be considered for improving the state of the organisation.
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(Source: https://www.statista.com/statistics/270384/inflation-rate-in-the-united-kingdom/)
(Source: https://www.statista.com/statistics/591342/united-kingdom-uk-average-yearly-household-income/)