Strategic Analysis Assignment: Case Analysis of Vraksh “A Plant Nursery Business”
Prepare a strategic analysis assignment illustrating the internal and external factors of Vraksh, which is a plant nursery business in India.
The main concern of this strategic analysis assignment is the strategic management in an organization which is a process of assessing business and its goals and objectives and accordingly formulates and implements strategies for achieving success and growth. To gain competitive advantage, business organization need to implement strategies so developed effectively and efficiently. It has been assessed that to grow and develop in the competitive market structure, every company needs to assess its market structure in order to develop effective strategies and for its efficient implementation. In this report, there is an analysis of Vraksh which is a plant nursery business in India. It has spread over 25 cities in the country and has a turnover more than 10 million annually. To assess business and its market structure, there is an examination of external and internal environmental factors. Macro or external environmental factors have been assessed with the help of PESTLE analysis. Internal factors are those factors which are internal to organization and organization has a control to modify and change these factors as per the dynamic market structure while organization has no control over external factors. Further, in this strategic analysis assignment, there is a competitive analysis with the help of Michal Porter’s five forces model. With the help of these analysis there is a determination or identification of key issues in the organization and the corrective actions that can be taken to survive and grow in the current market situation.
In incorporation of any business establishment or in running the operations of business smoothly and efficiently, it is necessary to evaluate the company’s structure, its market condition and internal/ external environment of the organization to assess strength and weakness of the business and to ascertain all the available opportunities (Chugh,2016). Assessment of strengths and weaknesses and ascertaining available opportunities establishes a platform to develop and implement relevant strategies in the business organization, the whole process is known as strategic management. It is a compilation of strategic analysis, its formulation and the effective implementation of strategies framed (Ansoff, et. al. 2018). In the given strategic analysis assignment, internal and external factors have been analysed in which all the functional areas in the business organization such as- marketing, finance, operations, human resource management and the external factors and competitive environment influence the operations of business organization are evaluated. Further, there is an examination of skills and competence required to run business organization smoothly and efficiently are recognized. To understand organization and its environment, I have analysed my own family business of plant nursery business named Vraksh.
Vraksh is plant nursery established in 1991 which provides various plants, kitchen seeds and gardening tools and equipment. Vraksh is a medium-size business which was established in Jaipur, India and now it has 25 branches all over the country. It is a limited liability partnership (LLP) with annual turnover of more than 10 million. They provide variety of plants both indoor plants and outdoor plants with a lot of significance such as- air purifier plants, plants for prosperity and good luck, pollution control plants, and others. With the stint of almost 30 years, Vraksh has gained many loyal customers and because of its brand value, it has gained many potential customers throughout its business life. Vraksh has employed many professionals who has knowledge in plants and further has botanists in the employment structure to guide and frame strategies to maintain nursery. These professionals guide and instruct customers on how to keep plants safe and the significance of plants.
Figure: Plant Nursery- Vraksh, 2020
Vraksh aims at providing products and services to all the customers which includes household purposes or big corporates. It conducts its business online and offline both and now Vraksh wants to expand its business to organic farming as well. Because of the increase in consciousness among people regarding maintaining environment and health, there is a prominent shift of market towards planting trees, gardening and eating organic fruits and vegetables. Because of the increase in market share, there is a significant rise in the competition in the nursery business. Functional areas of Vraksh discussed in this strategic analysis assignment can be determined as-
Marketing- Vraksh has a dynamic marketing mix which includes- changing the style of the plant, selling in bulk, online selling, various sales promotion techniques, pricing strategy and has various boutique stores in big cities.
Finance- Vraksh has an adequate finance team to manage all the financials in the organization. And has adequate CC limit to manage working capital requirement.
Operations- Vraksh has proper professional gardeners, planters and botanists that manage and maintain the operations of the nursery in an effective way.
Human resource management- To maintain the operations of the organization efficiently and effectively, Vraksh has maintained adequate number of human resources. There are around 100 employees in the organization (Trigeorgis, & Reuer, 2017).
Every business organization in order to grow and develop competitive advantage in the market is required to formulate business strategies and plans after considering both internal and external factors of the organization, it is known as strategic management theory. In other words, it is a process developing goals and objectives of the business organization post analysing competitive environment and internal and external factors of the organization is known strategic management (Rizal, et. al. 2017).
Figure: Strategy Management Theory
Macro Environment Analysis
Macro environment analysis is determination of potential threats and opportunities for the industry as a whole. It includes those factors of the competitive environment which has an influence over the operations of the business and are external to the organization and possess no control over it, for example- political factors, economic trends, social and cultural trends, technological trends, legal complications, and environmental factors. It can be understood with the help of PESTLE analysis as presented in the following section of strategic analysis assignment -
Political- Government rules and regulations play a critical role in operating business functions. There are various government grants available in many countries for establishing gardening and planting services. There is no negative impact or influence of political factors in this industry, hence it can be said that it government support to the industry is an opportunity for the business.
Economic trends- Economy has a significance on the buying decision of the customers. Because of the global pandemic Covid-19, there is an economic downturn all over the world which has adversely affected the spending capacity of the customers. Therefore, current market situation is a threat to the organization.
Social/ Cultural trends- There is a rise in standard of living of the people. People love to live and work in the beautiful surroundings. This is the main reason of the growth in the industry. People are using plants in decoration for social status.
Technology- Technology is the marketing tool now a days. Most of the business especially in the time of global pandemic is dependent over online platform. Social media and online for shopping are the major platforms for selling the products and services.
Legal- Legal implications and penalties can adversely affect business operations or may result in the closure of business. However, any business organization must follow all the legal bindings to run the business smoothly.
Environment- There is significant rise in demand of plants and gardening utilities because of the increase in consciousness regarding environment. This factor plays a great role in the growth and development of this industry (Perera, 2017).
Michael Porter’s Five Force Model
Herein strategic analysis assignment, to determine various competitive forces in the industry and the organization or for competitive analysis of Vraksh, Michal Porter’s five force model has been conducted, which includes-
Threat of new entrants- With the growing demand in the industry, there is always a threat of new entrants in the business environment. Vraksh has a good brand value and a great market share but with the increase in competition, there is a requirement to develop effective strategies and implement it efficiently.
Threat of Substitutes- Plants has no substitutes but the presentation and variety of plants can affect the business. Buyers will only choose those plants which possess good containers, basket, and stems. As they play a great role in attracting potential consumers.
Bargaining power of suppliers- To grow plants and to sell them will require fertilizers, soil, tools and equipment, without which a plant cannot grow. Hence, the business is dependent upon suppliers which gives them a great bargaining power.
Bargaining power of buyers- Buyers are price sensitive and because of the increase in competition in the market. They have high bargaining power in the industry.
Rivalry among existing competitors- There are other big nurseries such as Nursery live, Ferns and Petals, Bageecha and various others. It gives rise to the industry growth in terms of quality, price, services, and others. Hence, there is low customer loyalty in the industry.
Hence, with the help of Michael Porter’s model, it is identified in this strategic analysis assignment that industry is among the fastest growing industry. There are limited number of competitors in the market. And Buyers and suppliers both have a high bargaining power in the industry, it is the reason that organisation in the industry is required to maintain price for the products and services to sustain and grow in the market.
Internal environment is very crucial for any organization, based on which there is an incorporation of effective business strategies in the organization. There are various internal factors such as- revenue, resources, goals/ vision, employee’s skills and capabilities, corporate culture. Companies generally frame marketing and other strategies based on these factors, failure of which may result in business failure or can affect the growth and development of the organization (Siegel, & Leih,2018). Vraksh has developed diversified strategies considering these internal factors which has led to gain the competitive advantage for the company. The key resources and capabilities of Vraksh that is providing the sustainable competitive advantage are-
Human resource- Without effective and skilled employees, a business can never grow. Vraksh has limited employment structure in which they have professional gardeners, botanists and marketing and distributing personals. Vraksh has loyal customers base because of the service they provide to them. These professionals assist customers in providing knowledge about various indoor and outdoor plants as per the occasion and significance of buying need. Therefore, human resource are the key resource and capability of Vraksh in gaining competitive advantage.
Goals/ Vision- Vision is the main bridge between the efforts and the success of the organization. After establishing good market share in the industry, Vraksh’s vision is to provide organic vegetables to its customers. Without any vision, no strategy in the organization can be formulated.
Marketing/ Selling techniques- Vraksh sell products as a raw material, sell to architects and big corporations, other sellers and to individuals. Based on the clients and customers need, they have framed unique marketing techniques.
Resources- It refers to the products and service that organization possess. It includes- range in products, customer loyalty, technology, harvesting skills and production techniques. Vraksh has a good capacity in resources to survive in the competitive environment. The most important benefit is there in not much requirement of raw material and expensive machinery to carry out the business (Wheelen, et. al. 2017).
What are the key issues within the organization selected in this strategic analysis assignment?
With the growing demand of plants and its tools and equipment, there is a significant rise in the competition in the market. To survive and grow in this competitive market environment, Vraksh needs to develop strategies and effectively implement it subsequently. There are various issues identified in the present context strategic analysis assignment which are analysed in the organization, such as-
- There is no analysis of strategy for the change in trends and fashion. New entrants in the market have come with latest ideas and techniques which is to be dealt with in the organization (Grant & Jordan, 2012).
- It is observed that managing stores at different locations requires proper communication platform absence of which can result in mismanagement or failure of the business.
- There is no proper strategy for the stability and survival of business in this period of recession. There must be proper strategic formulation to deal this economy fluctuations.
- There is a specific guideline from the government to maintain social distancing and proper hygiene. Therefore, Vraksh because of inability to form strategy to deal with the government new norms has affected the business adversely.
- There is not much land to cultivate and harvest more plants. Therefore, to expand the business it is important to own or lease a land for the business operations.
- Further, it has been noticed that in few cities there is an identification of damage and loss of plants because of inappropriate handling and weather issues.
- Lastly, there are few online negative reviews regarding the late delivery of the plants and other products.
After assessing business and its market structure in the above segments of strategic analysis assignment, it has been identified that there are few issues in the business of Vraksh. Therefore, to sustain and grow in the competitive market, there are few recommendations which are required to be followed to gain competitive advantage. These are-
- There must be adequate number of employees in the organization to manage the business operations effectively.
- To build proper communication within the organization, Vraksh needs to organize weekly meeting with all the 25 store managers in the organization. With the help of which corrective steps can be taken in a timely manner.
- There is a loss of plants in many cities. Professional must guide the planters in those cities to harvest plant according to weather as few plants can only be grown in specific weather conditions.
- Vraksh must develop strategies to maintain social distancing. As there are many people who have gained interest in plantation and farming in the lockdown. But they are afraid to come in physical contact with the vendors. Therefore, Vraksh must establish a platform to maintain social distancing and hygiene and must spread awareness among people so that they can build good relationship with the customers.
- There must be proper online platform for obtaining feedback so that necessary resolutions can be taken in timely manner. Further there are few feedbacks obtained earlier but no follow up has been taken till yet. Therefore, to maintain customer relationship, it is essential to take appropriate follow ups in the future (Tian, et.. al. 2018).
- With the growing demand in the industry, Vraksh is required to incorporate certain techniques and methods to harvest and maintain the nursery in a cost- effective manner. In order to gain market share and competitive advantage, Vraksh need to maintain best price for the plants and other products.
- There is a need to provide other services as well to gain customer loyalty such as hiring a professional gardener who can provide services at customers home as well, home gardening, online guidance, kitchen seed plantation techniques and others.
- Marketing techniques needs develop to target mass customers such as free delivery services, bulk discounts, pack of 4 plants or pack of 5 plants in low price, segmentation of plants according to occasions and others (MakeInBusiness, 2017).
From the above discussion on strategic analysis assignment, it can be concluded that strategic analysis is essential for every company in the industry. Strategic analysis includes examination of internal and external factors of the organization. There is an analysis of external factors with the help of PESTLE analysis. And there is further study of competitive analysis of the organization ‘Vraksh’. Competitive analysis is done with the help of Michael Porters five forces model. According to which there is an assessment of competition, new entrant, bargaining power of suppliers and buyers and the substitutes available to the customers. As per the analysis done in this strategic analysis assignment, it has been determined that to grow and develop in the competitive market where there is a growth in global companies or globalization, it has become essential for every company to assess its market condition for its sustainability and growth. After assessing the micro and macro environmental factors, various issues have been identified with and proper strategies have been built to gain competitive advantage.
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