Great Start Nutrition: A Century of Growth and Expansion - Essay Sample

Introduction

Great Start Nutrition Company is one of the leading international players in the infant formula industry. Warren Pfife around the year 1922 started this company as he was working as a young apprentice for Andrew Griffith in an apothecary shop which he took over (Montgomery, 2018). Pfife made a drink by use of a home remedy hence attracted a large number of customers; therefore, the business has seen steady growth and expansion over the years. Currently, the company is in seven countries worldwide (US, Asia, Belgium, Switzerland, Netherland, Canada, South, and Central America) and has plans of expansion to other countries such as Malaysia and China. The current significant competitors include Sanofi, Colgate-Palmolive, and Caribbean Lines, among others. The services provided include; Vitamin and Food Supplements, and has prospects of venturing in Infant Formula. Internal and external business environments, goals and objectives, and competitors are the major factors that determine the existence of a company in the industrial market and expansion to new regions (Montgomery, 2018). These broad entities have greatly influenced the Great Start Nutrition Company in the infant formula industry. The purpose of this paper is to discuss how these factors will affect the Great Start Nutrition Company in Malaysia. The environmental analysis involves a PESTELE analysis, SWOT analysis, and Porter's Five Force analysis of Great Start Nutrition Company in Malaysia. The goals and objectives of Great Start Nutrition Company are discussed with explanations as to the importance of each goal and why the goals are relevant to the company's strategy. The goals of this company are linked to either PESTELE, SWOT, or Porter's Five Force analysis. Every company faces a threat of competition; hence, Great Start Nutrition Company will have its fair share of stiff competition from other giants in the infant formula industry. The three major competitors of Great Start Nutrition Company in Malaysia will include; Nestle NAN HA, Karihome Infant Formula, and Isomil Plus (Infant Formula Manufacturers, 2019). The competition will influence the products and services that this company will offer as it dictates the value, quality, price, and the target population.

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Section I: Environmental Analysis

Great Start Nutrition's General Environment

A company's environment includes both internal and external factors that influence its performance, an undertaking of daily activities, existence, and expansion. These factors usually may fall within or beyond its influence. The factors that are beyond the organization are said to exist within the organization's general environment (Wheelen, Hunger, Hoffman & Bamford, 2017). The general environment is said to have a significant influence on the organization's success hence the executives are expected to keep track on the trends and events that are present and as they evolve to anticipate the implications of these events and trends (Wheelen et al. 2017). Therefore, for the Great Start Nutrition Company to succeed and expand to new regions such as Malaysia, its executives have to put into consideration the components of the PESTEL model. The general environment of an organization can be represented by a PESTEL anagram, as discussed below.

PESTLE Analysis

PESTEL is an anagram, which is a word that has been created by the use of parts of other words. PESTEL represents explicitly the names of the six components of the general environment, which include; Political, Economic, Social, Technological, Environmental, and Legal scopes (Eva et al. 2014). Great Start Nutrition Company executives need to analyze the six segments to identify the main opportunities and threats as well as the adjustment of the firm's strategies as it ventures in the field of infant formula in a new country (Malaysia).

Political

Great Start Nutrition Company has to take into consideration the political situation in Malaysia to determine the current events and predict the future occurrence of events and activities that would influence its operations. Political factors in Malaysia that this company needs to analyze include elements such as; tax policies, and stability of the government, changes in trade restrictions. Malaysia has a very stable economy which can be attributed to the fact that it has been a member of the Commonwealth since 1957 (Common Wealth Network, 2019). The Nation is classified as a parliamentary democracy with a federal constitutional monarchy who is elected on five-year terms (Common Wealth Network, 2019). Malaysia and the U.S remain strong trade allies even through the recent trade wars affecting not only China but other countries in the region. In its latest reported data, the U.S. remained the third largest export partner of Malaysia, with over $20,576 million worth of useful shipped to the U.S. (WITS, 2019). Malaysia also has a very trade friendly tariff system on food, and most Nations only face their 6% tariff rate on select products like Palm oil, rubber, and timber, to encourage domestic processing (Export, 2019). There are no other indicators that politics would be heavily involved in the importing and exporting of goods. Therefore, political factors would favor the operations of the Great Start Nutrition Company.

Economic

Malaysia's economic factors that the Great Start Nutrition Company should consider before expanding into the region include; inflation rates, interest rates, level of disposable income, unemployment rates, gross domestic product and the general direction of the economy in terms of growth or decline. The GDP of Malaysia has grown 4.5% from last year, attributing to an increase in employment and exports (Trading Economics, 2019). As their economy continues to shift from being just being an exporter of raw material to a manufacturing juggernaut, employment has increased 1.9%, steadying the unemployment rate at 3.4% (Trading Economics, 2019). The interest rate lowered to 3%, this year as consumer spending continues to increase (Trading Economics, 2019). The inflation rate was a meager .2%, and the exchange rate of USD/MYR trading remains steady at 4.05 (Trading Economics, 2019). This is the same as 1 Ringgit equaling .24 dollars. Due to the favorable economic factors in Malaysia, the Great Start Nutrition Company would perform well and be successful in the country due to the growth of GDP, availability of raw materials, cheap labor among other suitable factors.

Social

Several social factors will influence the operations of the Great Start Nutrition Company in Malaysia which include; the trends in demographics such as age, ethnic mix, population size and cultural trends such as consumer activism and attitudes towards obesity. The multi-ethnic nation of 32 million people in Malaysia, identify as; Malay 50.4%, Chinese 23.7%, indigenous 11%, Indian 7.1%, and others 7.8% (Malaysia Culture and Customs, 2019). This variety of backgrounds and cultures have made Malaysia in an increasingly popular tourist destination. Despite the mixture of environments, the ethnicities still retain their holidays, individual popular festivals, and way of life, even most couples marrying within their ethnicities (Malaysia Culture and Customs, 2019). The growth rate remains around 1.25% annually, expecting to reach 40 million by 2030 (Malaysia Population, 2019). Over 77% of the population resides in urban areas (Malaysia Population, 2019).

Technological Factors

Technological advances in Malaysia will influence the operations of the Great Start Nutrition Company which include the increase in automation, change in the rate of the new product development, and the advancement in the service delivery industry. Malaysian are becoming more tech savvy every year, with almost 26 million internet users, and 18 million users of cell phones (Statista, 2019). eCommerce revenue for all products is Total Malaysian eCommerce revenue across all product categories is USD 1.31 billion and is expected to grow to 2.53 billion dollars by 2023 (eCommerce, 2019). Malaysia is well aware that if it wants its economy to continue to compete and partner with other nation in the region, they will have to commit more funding to research and development in the automation industry. This being part of the new governments focuses on increasing plastic production, since they are one of the largest plastic producers in that region (Industry 4.0, 2018). The plan is to have more factories adopting integrated manufacturing processing systems. The favorable technological factors in Malaysia will be beneficial for the Great Start Nutrition Company as it will ensure decent profits and reduced cost of production.

Legal

The legal factors in Malaysia that the Great Start Nutrition Company will have to take into consideration will include; discrimination, employment, antitrust, health, and safety. As Great Nutrition begins the daunting tasks of hiring and screening employees in Malaysia, it must keep in mind that most employers are governed by the Employment Act 1955 (2019). This law sets the minimum wage of 1,000 ringgits a month, minimum working age (mostly 16, depending on the industry), allotted paid leave days, and even maternity leave (Malaysian Law, 2016). A lot of developing countries don't have the same level of established laws as Malaysia. The Occupational Safety and Health Act 1994 is very comparable to the OSHA laws used in the United States. There created a legal system is a good sign when opening up the new factories, and bringing in workers from the host nation.

SWOT Analysis

Strengths Weaknesses

Wealth of Resources: Has over $32 billion in Sales at its disposal ("Great Start", 2019). New Product: The company has to assume a lot of unknown risk with the infant formula.

Research and development department: is a team of experienced and professionals that have developed several product lines. Not tech-savvy: The company has not put enough efforts on establishing a reputation on the internet which will be a great challenge.

Resources availability: allows Biotech to obtain the resources that are needed to launch a new product line. Lack of raw materials due to the competition of the available materials by the rival companies.

Market Presence: The company had a 20% market share in 2012, and should be on track at well over 50% ("Great Start", 2019). Internal Strife: Facing internal quarrels while stateside management is not agreeing on new ideas.

Favorable corporate culture Quick expansion: The company is expanding rapidly which is a challenge as there are new hires that need to be trained and organizational structure to learn.

Marketing strategies: The company has adopted modern means of marketing that involves focused and aggressive campaigns with clear goals and strategies.

R&D: Beatrice leads a team of proven professionals.

Has many scientists with over 60 years' experience. Many successful lines ("Great Start", 2019).

Opportunities Threats

Growing Industry: Organic Infant formula is Tracking 14% growth from 2019-2025 (Organic Formula, 2019). Established Competitors: Abbot, Nestle, and Mead Johnson, dominate over 80% of the Infant formula market (Formula Manufacturers, 2019).

Innovations Political instability in Malaysia (Statista- Malaysia, 2019).

Government programs: Promotion and initiatives by the government to support Malaysia's exports. Price fluctuations: Huge fluctuations in prices of the supplies may occur.

Growing Population: Malaysia's population is growing 1.25% a year (Malaysia Population, 2019). .

Porter's Five Forces Analysis

Porter's Five Forces of Competitive Position Analysis is a simple framework that will be used to assess as well as evaluate the competitive strength and position of Great Start Nutrition Company thr...