Introduction
Over ten years Healthy Potion (HP) has become a multi-store business in the food and beverage industry, driven by the reputation of its unique drink infused with Chinese herbal concentrate. However, a strategic analysis of HP through SWOT and Porter’s Five Forces (1979) exposes weaknesses in operating a seasonal and single-product business. This essay supports HP’s expansion into the Australian juice industry which has experienced steady 9.8% annually growth between 2011-2016 (Tonkin 2016, p. 3), benefiting most from pursuing a differentiation strategy.
Strategic analysis
Porter argues an effective strategy positions businesses to respond to competitive forces, being ‘customers, suppliers, potential entrants, and substitute …show more content…
The incorporation of the concentrate in their juice offerings, will form HP’s competitive advantage as other competitors such as Boost Juice offer other premium additions to their product (Tonkin 2016, p. 7). The perceived ‘reputation’ of HP from customers will be a valuable asset and more sustainable in the long term (Carter and Ruefli cited in Banker, Mashruwala and Tripathy 2014, p. 876). However, this method is Miller and Dess (1993) discusses the disadvantages of value-adding and highlights the need to invest in less dynamic business components such as perception and value which they argue as unstable. As businesses such as HP finance heavily on activities such as research and development of the product, this highlights the increasing risks as consumer preferences are dynamic. Crawford (cited in Banker, Mashruwala and Tripathy 2014, p. 877) further illustrates the prospective risks involved estimating how 80% of new goods fail to gain traction. Conversely, Ulaga and Chacour (2001, p. 526) argue the snowballing rewards from effective differentiation from high consumer satisfaction including increased consumer loyalty and favourable word-of-mouth, all culminating in increased market share. In relation to HP, this risk may be alleviated with the health trend in Australia and this opposition to avert risk is the result of deterioration and obsolescence (Clark et al. 2001 as cited in Pasanen 2007, p. 322). Conclusively, by implementing this differentiation strategy whilst may be riskier, the sustainability of this option will benefit HP as they are experiencing a declining and unsustainable single-product
Over ten years Healthy Potion (HP) has become a multi-store business in the food and beverage industry, driven by the reputation of its unique drink infused with Chinese herbal concentrate. However, a strategic analysis of HP through SWOT and Porter’s Five Forces (1979) exposes weaknesses in operating a seasonal and single-product business. This essay supports HP’s expansion into the Australian juice industry which has experienced steady 9.8% annually growth between 2011-2016 (Tonkin 2016, p. 3), benefiting most from pursuing a differentiation strategy.
Strategic analysis
Porter argues an effective strategy positions businesses to respond to competitive forces, being ‘customers, suppliers, potential entrants, and substitute …show more content…
The incorporation of the concentrate in their juice offerings, will form HP’s competitive advantage as other competitors such as Boost Juice offer other premium additions to their product (Tonkin 2016, p. 7). The perceived ‘reputation’ of HP from customers will be a valuable asset and more sustainable in the long term (Carter and Ruefli cited in Banker, Mashruwala and Tripathy 2014, p. 876). However, this method is Miller and Dess (1993) discusses the disadvantages of value-adding and highlights the need to invest in less dynamic business components such as perception and value which they argue as unstable. As businesses such as HP finance heavily on activities such as research and development of the product, this highlights the increasing risks as consumer preferences are dynamic. Crawford (cited in Banker, Mashruwala and Tripathy 2014, p. 877) further illustrates the prospective risks involved estimating how 80% of new goods fail to gain traction. Conversely, Ulaga and Chacour (2001, p. 526) argue the snowballing rewards from effective differentiation from high consumer satisfaction including increased consumer loyalty and favourable word-of-mouth, all culminating in increased market share. In relation to HP, this risk may be alleviated with the health trend in Australia and this opposition to avert risk is the result of deterioration and obsolescence (Clark et al. 2001 as cited in Pasanen 2007, p. 322). Conclusively, by implementing this differentiation strategy whilst may be riskier, the sustainability of this option will benefit HP as they are experiencing a declining and unsustainable single-product