Paleo Hero: An Internal Analysis of Quality Products - Essay Sample

Introduction

Paleo Hero is a family-owned Australian company that sells high-quality paleo-friendly products to its customers. Paleo Hero has vegetarians, primal, dairy-free, paleo, and clean eating products (Paleo Hero, 2019). The mission of the company is to sell the freshest and highest quality Paleo products. It also sells snacks and ensures that all their products are made with natural ingredients and have no chemical preservatives or additives. The current report will conduct an internal analysis of the company using the resource-based theory. An external micro-environmental analysis using the porter five forces theory and an external macro-environmental analysis using the PESTLE tool will be done as well. Lastly, a SWOT analysis will be done. Recommendations will be provided on how the marketing strategy of Paleo Hero Company can be improved based on the internal and external audit analysis.

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Internal Analysis

The internal analysis of a company consists in evaluating the resources, skills, and competencies of said company in order to adopt the relevant strategic tools and thus be able to acquire an optimal level of results through a resource-based theory (Grant, 1991). Conducting an internal analysis aims to know the resources and capabilities that the company has and identify its strengths and weaknesses, and thus establish objectives based on these resources and capabilities, and formulate strategies that allow it to enhance or take advantage of these strengths, and reduce or overcome these weaknesses (Helms & Nixon, 2010).

The main elements of Paleo Hero will be the weaknesses and strengths of the company regarding its resources, staff, values, and structure. The resource-based theory will be applied in carrying out the internal analysis. One of the fundamental tools of a company's internal analysis is the resources and their functional analysis. It is important to study whether the resources of a company constitute strong points, and, as a consequence, provide benefits, or if on the contrary, they constitute weak points and, therefore, the relevant solutions must be sought (Das & Teng, 2000). Among the human resources useful for the company are employees with high levels of motivation, competent and trained (Indris & Primiana, 2015). In relation to material resources, it is necessary that the company owns equipment with sufficient technological advances to be able to solve business challenges and tasks. The geographical situation of the company is very important, that is, whether or not it has easy access can have an important impact for both employees and customers (Khan, Alam, & Alam, 2015). Financial resources have a clear impact on the development of Paleo Hero. Finally, it is worth highlighting the advertising or marketing resources that Paleo Hero has in the face of competition. At present, due to the high number of companies that offer similar services, it is necessary to develop marketing techniques to stand out from other companies. Likewise, the position that Paleo Hero adopts in the market is very important, since this will depend, in large part, on the clients' decision to choose one company or another.

Regarding the marketing positioning, mix, and positioning of Paleo Hero, the following can be noted: the company only ships and distributes its products in Australia. All online orders are distributed through the country's courier's services and Australia Post. Most orders are sent within 2 days but for people who live in further areas, it takes 5-7 days (Paleo Hero, 2019). People who live in the Northern Territory, Western Australia, and South Australia receive their products after 7-10 days. The shipping costs are determined by the weight of the product, orders below 1.5kg are charged $5.95 while those ranging above 1.6kg are charged $9.95 (Paleo Hero, 2019). Customers who purchase orders worth $200 or more do not incur any shipping charges. Payment is through the PayPal and customers do not require a PayPal account to make payments. The product range includes primal cereals, primal snacks, primal pre mixes, paleo groceries, mixed boxes, primal pizza base, primal bread mixes, primal slices, primal pancake mix, almond porridge mix, and primal slice nut crunch among others (Paleo Hero, 2019). Paleo Hero has vegetarians, primal, dairy-free, paleo, and clean eating products. All the products are for customers' intent on consuming high-quality meals with high nutrition levels.

External Microenvironmental Analysis

The microenvironment of the company refers to all the micro factors that affect strategy, decision making and business performance. It is vital for the success of a company to carry out an analysis of the microenvironment before its decision-making process. It corresponds to the internal environment of the company (Rakesh, 2015). The main elements of a microenvironmental analysis are employees, competition, resources, company's culture, customers, and suppliers.

Porter's 5 forces analysis is from the Microenvironment since it analyzes the variables directly related to the company's business and/or the category of products it offers. The 5 forces or factors that Porter determines are the bargaining power of customers, the bargaining power of suppliers, the rivalry between competitors, the power of substitute products and the threat of new entrants (or entry barriers) (Porter, 2008). Bargaining power of customers is the negotiation capacity that customers have (quantity of substitute products and competitors in the industry) (Tavitiyaman, Qu, & Zhang, 2011). Paleo Hero has very few competitors. There are very few companies that sell 100% preservative-free, natural, paleo, and gluten-free products. Customers who want such products mostly buy from Paleo Hero and this gives them a competitive advantage. Bargaining power of suppliers is the possibility that the company has to choose between different alternatives of suppliers, depending on the existing quantity of the last ones and the state of the market (Dobbs, 2014).

Regarding Paleo Hero, they get their fruits, vegetables, and nuts from local farmers and their farms. The bargaining power of Paleo Hero is quite high. Competition rivalry is the level of saturation of the market, the number of competitors in the same market, and the differentiating factors of supply perceived by consumers. Paleo Hero has very few competitors in Australia. The threat of new entrants refers to the barriers to entry in the market in which the company operates. Threats of substitute products are products that do not constitute direct competition, but a product that satisfies a very similar need. The threat of substitute products is not that low since people can decide to consume local fruits, vegetables, and products. The threat of new entrants is high since most people want to consume healthy foods and it is a market that many entrepreneurs are intent on investing.

Through the innovation of new products, Paleo Hero will attract more customers while retaining their existing customers. It is also important for Paleo Hero to create economies of scale to lower their fixed costs. Paleo Hero should spend more resources on research and development and building capacities and ensure they have an efficient and effective supply chain with their suppliers. Paleo Hero should also experiment with different product designs and create dedicated suppliers as well as innovating new products rapidly. Paleo Hero has managed to create a sustainable differentiation through selling 100% organic products which are the most influential factor.

External Macro Environmental Analysis

The macro-environment of the company consists of forces that affect the entire microenvironment, that is, they are all those general factors (national and international) that define the framework in which the company operates and affect its specific environment (Yuksel, 2012). A very useful instrument to meet this objective is the PESTEL matrix, which allows a detailed investigation of the issues that will most influence the development of a company (Rastogi & Trivedi, 2016). The tool allows foreseeing future trends in the short and medium-term, offering the organization a wider margin of action and improving its capacity to adapt to the anticipated changes (Ho, 2014). This is achieved through the description of a series of variables that will give clues about the behavior of the environment in the future. The PESTEL factors that serve to know the great trends and redesign the business strategy (Forbes, Smith, & Horner, 2008) include: Political variables (These are the governmental aspects that directly affect the company), Economic variables (the evolution of GDP, interest rates, inflation, unemployment rate, income level, exchange rates, and access to resources), Social variables (demographic evolution, social mobility and lifestyle changes, tastes, fashions and consumption habits of society), Technological, ecological and legal variables.

In Australia, the legal framework is robust enough to protect the intellectual property rights of the company. Some of the legal factors that Paleohero, Inc. leadership should consider while entering a new market are anti-trust laws, copyright, patents/Intellectual property law, consumer protection and e-commerce, health and safety law, and data protection. To properly appraise the extent of the overall systematic political risk that Paleohero may be exposed to, the following factors should be considered before taking part in any investments: The level of political stability that the country has in recent years, the laws that the country enforces, especially with regards to business, such as contract law, as they dictate what Paleohero is and is not allowed to do, whether or not a company's intellectual property (IP) is protected, and the levels of taxation.

SWOT Analysis

Companies conduct an analysis of strengths, weaknesses, opportunities, and threats (SWOT). Commonly, the company will seek to take advantage of those opportunities that can be combined with its internal strengths; that is, the company has great capacity in any area in which strengths are combined with external opportunities (Phadermrod, Crowder, & Wills, 2019). Strengths are distinctive capabilities, competencies, skills or assets that provide a business or project with an advantage over potential competitors. They are favorable internal factors to achieve the company's objectives. Weaknesses are internal deficiencies that place the business or project at a disadvantage with respect to its competition, or deficiencies that prevent an entity from moving in a new direction or acting on opportunities (Bull, Jobstvogt, Bohnke-Henrichs, Mascarenhas, Sitas, Baulcomb, & Carter-Silk, 2016). They are unfavorable internal factors to achieve the objectives of the company. Opportunities are all the elements in the business environment that the business or project could exploit for their benefit. Threats are elements in the environment that could erode the company's market position (Gurel & Tat, 2017). These are external factors that prevent or impede an entity from moving in the desired direction or achieving its objectives.

Strengths

Paleohero's Strengths include its good image makes the company even stronger. It offers products of good taste and quality with qualified personnel, good working environment, and a hygienic environment. They are certified by the ISO (International Standards Organization). They have enough resources to operate different activities. They offer free home delivery service, creating a monopoly in this sector. Other strengths include capacities in key activities, greater operational capacity, advantages in costs, access to the economy of scale, inno...