Abstract
The world is globalising at a significant pace, and the global cosmetics industry is growing rapidly. Considering the rapid revolution of the cosmetics industry and increased technological revolution, buying preferences of customers have influenced. Due to the change, Tracy Newman formed Nutri-Nut which is a skin-friendly product. Unlike other companies, Nutri-Nut does not offer chemical-based products to customers. However, there are certain issues such as increased competition, change buying preferences, technological revolution and innovation necessity. The current study seeks to identify the Nutri-Nut from a member of the staff and CEO perspective. After critically analysing different factors, a brief presentation regarding strategic planning will also be presented to the board of directors. The current study will be of significant values for the Nutri-Nut as it covers various aspects of the organisation.
Introduction
The world is globalising at a significant pace, and technological revolution has allowed the customers to be informed about various issues. The technological revolution has also assisted different businesses to gain a competitive edge over other competing companies of the domestic and global market (Colen & Swinnen, 2016). Due to increased technological advancement, the use of chemicals in cosmetics has become increasingly common. Considering the growing issues in the market, Tracy Newman that has worked as a biochemical scientist for eighteen years formed a skin-friendly company named as Nutri-Nut. Macadamia farm background assisted Tracey to make a skin-friendly product. After critical research of the month, the product launch was a big hit for Nutri-Nut as approximately 4% of revenue was generated.
Increased globalisation and technological revolution have shifted the buying preferences of customers (World, 2016). Use of chemical has become increasingly common, and the side effects of skin are one of the essential things to consider in the production of the skin-care products. Apart from technological advancement, the competition in the market has also become substantially tough, and doing effective strategic planning is one of the significant challenges Nutri-Nut has faced in the market. Producing the maximum quantity of quality products with the least amount of resources has become a significant challenge for cosmetics products around the globe including Nutri-Nut (Boelkins & Varnes, 2015). Considering the immense growth of the global cosmetic sector and the market problems for Nutri-Nut, the current study focuses on analysing various factors of Nutri-Nut. Strategies from various aspects such as a member of the staff and CEO of Nutri-Nut will be analysed. After critically analysing various aspects of Nutri-Nut brief presentation will also be given to the members of the board to present the strategic planning of the organisation.
C orporate governance sets direction by handling and exercising power within an organisation involving strategic matters. While strategically exercising control, a balance between the company’s interest and stakeholder’s interest is warranted. Setting direction is essential to visualize the goal and in meeting the organizational objectives. Scholz (2013), claims that the absence of a set direction will drift members within the organisation towards differing goals. It is vital for an organisation and its employee to know where they are heading towards clearly and the individualised contributions in achieving the required aim. The vision statement clearly indicates the goals and the reason for an organisations’ existence. Therefore, having a clear vision statement and encouraging internal stakeholders falls within the role of governance. Furthermore, Scholz (2013) highlights the need for directors who can draft an inspiring picture of the future of an organisation. This objective is evidenced through the organisational philosophy and the value statement. The future direction must be a clear picture and expressed in a simple language and should communicate meaningful information about the organisational goals. Moreover, the mission statement of the organisation has to be transparent and consistent to believe; to help the staff prioritize the necessary attributes that relate to their personal and professional growth as well. Therefore, the role of governance in setting direction is in ensuring clearly guided vision, mission and value statements that responsibly conveys the reason for organisational existence and provides guidance on employees preferred actions. If the board also clarifies the aforementioned ideas from time to time, there is a possibility of setting up an effective organisational direction.
Risk mitigation is an act of using past experience and lessons to avoid major mistakes that can affect an organization’s productivity in the long run. According to the Chapelle (2019), it is referred to as four Ts: Tolerate, Treat, Transfer and Terminate. Tolerate risk mitigation means to agree to the risk without any further action to be taken by the organisation and accepting as it is. Treat is the most common form of risk mitigation; it is based on the in-company controls; its main objectives are to reduce the possibility of the risk or its impact on the company. Transfer risk mitigation as the word itself explains, moving the effect and the source of the risk to some third party or outsourcing company. Terminate means to remove the detected risk if any of the other is not handling. Moreover, Chapelle (2019) emphasize on the different controls used by corporate governance to mitigate the risk like preventive control which help to take necessary precaution before any such event takes place. Example of such control is wearing a helmet while working in any construction site in New Zealand. Secondly, detective control which comes in action once the event had taken place. An example is a smoke detector. Thirdly Corrective control which helps to lower the effect of the risk afterwards like data backup will reduce the pain in case server gets crash. Lastly, directive control involves the rule and restrictions, policies and procedure and hierarchy structure of the organisation. Leadership training for supervisors is one of its examples. Therefore, governance plays an essential role in defining the huddle for the future, also analyse and prepare the organisation against any harm that may occur.
Legal compliance is equally important as an organisation has to follow few industry regulations and country regulations in which one is operating, so compliance help to avoid any unnecessary lawsuits, claims, penalties and makes the company run within the boundaries of the law. Legal compliance is not imposed by the involved stakeholders such as creditors, employees or customers but is imposed by an authoritative body such as the government. By imposing a legal framework for businesses, the government sees to it that corporate do not misuse their power. Through legal laws and legislations, the government tries to govern how firms conduct their business (Griffith, 2016). The compliance aspects of organizations are strengthened by the efficient practice of corporate governance and can be stated as a bargain between the needs of shareholders and managers.
According to Bonna (2012), An excellent corporate governance not only builds the pillars of the company by strengthening the future direction of an organisation, mitigating the risk and making it legally strong but also make the organisation more attractive for the investors. Moreover, the capital cost of the company will be reduced, and its worth in the industry increases. The ultimate aim for businesses is to increase profitability and concentrate on long-term wealth creation for the owners. Intelligent financial decisions related to income, investments, and financial performance should be taken by taking the corporate governance rules into account. Poor quality of corporate governance can create financial difficulties for the company which leads to long term repercussions for the company (Agarwal, 2013). Good corporate governance will bring up an excellent financial performance that helps to keep a check on the daily spending on staffing, manufacturing and other expense, most important it helps the company to fight against any external liabilities to business.
One of the crucial roles of corporate governance is to make sure that the strategic visions of the organization take into considerations the best interest of the involved shareholders of the company. The board members of a company must establish policies that are required for the smooth functioning of business operations. The vision statement of the company should reflect the organization’s emphasis on the code of ethics for customers, employees as well as shareholders. Strategic visions which are formed by focusing on corporate governance help in creating an organizational structure of compliance. It also encourages transparency of decision making in critical business situations. It is clear from the case study, Nutri-Nut has a flat organisational structure. Also, Tracey works closely with the team and include them in decision making, which shows the transparent working of the organisation. In Addition, Nurti-Nut is 100 % certified an organic organisation with NZCO logo, the ingredients used are authentic, and all the raw material is purchased from the organic grower. Moreover, business is IP protected which indicates the importance of its customers’ ethics. The board develop vision and mission and allocate appropriate financial, operation and human resources towards achieving these strategic visions to drive the firm towards success (Al-Azzam, Al-Qura‘an, & Al-Mohameed, 2015). The strategic vision is set by the governance to distribute the work to different departments within the organisation and ensure proper follow up and compliance check on each department’s execution in achieving the required goal. The case study reflects the working of Nutri-Nut’s governance is in the right direction, as an organisation have multiple departments taken care by different managers that hold vast experience in their respective industry, and all are working together to maintain the 100 % organic certification of the organisation.
Businesses are subject to several market risks. Appropriate risk management and mitigation plan are required to deal with market fluctuations. According to the case study, one such risk that the board members of Nutri-Nut have analysed is the entry of new companies in the natural/organic skincare market, most of which are Multi-National Companies. These big giants have a strong existence in the market through line extension or acquisitions like Jurlique, Kora, Gaia, Red Earth, Aesop, Natio and Neek Skin Organics but not all these brands are fully organic certified and contain mixed or natural alternatives. To which Julian, the research and development expert, suggested the introduction to a new line of sunscreen and anti-ageing products added to their existing product range. Also, the governance of Nutri-Nut has minimised the impact of the risk by going great length to ensure that only certified organic products are used in production. Moreover, Wendy, the marketing manager, has acquired the local orders for the products by the continuous promotion of Nuti-Nut. At the same time, there is no evidence in the case study to tackle the disruptive supply of rooibos extract, which is a significant component of the products manufactured by the organisation. Currently, this extract is grown and supplied from Cederberg region in South Africa, and production gets hampered due the no- availability of this product, which can be due to production issue in South Africa or shipping complications. According to Royaee & Dehkordi (2013), the company must develop its supply chain resilience in order to sustain its business in the long run and to thrive in the market. Study indicates working of governance of Nutri-Nut in mitigating the risk of supply of rooibos is not suitable for upcoming years, As Nutri-Nut never determine other possible suppliers of rooibos extract and to develop a successful buyer-supplier relationship with them.
A financially stable organisation will sustain daily operations and be prepared for any external liabilities. For Nutri-Nut, Financial stability is equally important from a daily operational viewpoint because Nutri-Nut grew, the number of orders increased, and demand for the product of consumers started coming across New Zealand. Therefore Nutri-Nut invested in a private transportation agency. However, Tracey was concerned around the shelf- life of the organic products. This indicates that the governance within Nutri-Nit targeted financial sustainability. With the growing increase in sales and the projected demand for 2020, Nutri-Nut has systems in place that can help the organisation survive. According to Bonna (2012), a great business plan not only smoothens the working of the organisation but also attract investment. Setting stringent financial regulation and governance policies can help the company in balancing the short-term profitability with the long-term investment desire of the shareholders. Based on the sales forecast data, the board of directors of Nutri-Nut believe that the company has the potential to grow in the coming years and are ready to undertake financial investments with some reliable planning. The case study does not provide market capitalisation for Nutri Nut but indicates that consumers seek quality and highly innovative products. Further, this was the reason for L’oreal and Estee’ Lauder to be among the top cosmetic organisations while Tracey’s product is highly innovative as it utilises rooibos extract, but lack of finances made her decide to obtain strategy development.
| Strengths | Weaknesses |
| 1) 100 % Organic Certificated with NZCO logo. 2) Trademark registered and IP protected.3) Raw material obtained from local farmers and easily available. | 1) Disruptive supply of rooibos extract2) Distribution of product |
| Opportunities | Threats |
| 1) Sales through an online web business2) Introduction of new product or expansion | 1) New Entrants to skincare market.2) Support to local & foreign competition by MNC’s |
Strategic planning is necessary to keep the individuals working for Nutri-Nut motivated and engaged in their workplace and also to acquire a greater market position. An effective strategic plan can help Nutri Nut in achieving its business goals and targeted growth. As currently, the company is facing intense competition from the international skincare brands and demand of new product by the New Zealand skincare industry, strategic planning is necessary to hold the current market position and strive for business expansion. Every organization has to strategically design its long term and short term objectives by continuously investing in strategic planning to develop the competent vision, mission and organizational goals. It helps the firms to analyse their strengths and to overcome their weaknesses effectively (Ugboro et al., 2010). Based on the SWOT analysis following strategic approaches can be adopted by Tracy, the CEO of Nutri Nut, to help the company grow in the future and establish the products in new markets:
Blue Ocean Strategy helps the businesses to solve the problems when they are struggling to survive or looking forward to growing in their respective industry. Any sort of disturbance in the event, organisation or process that rises a change or innovation which empowers the functionality of organisation crates Blue Ocean. According to The Standard (2017), this strategy follows the process where a company launch a new technology or a product, which makes the market competition irreverent and opens the new and authorised market for the organisation. Therefore, this is the best strategy that Nutri-Nut can implement in their business due to the high demand of innovation by Skin Care Industry; also a buzz will be created in New Zealand by the new product which will be made of 100 % organic / natural ingredients. Moreover, a new market space will be created, and the high demand for the product is expected by the consumers. New Demand is always important because it will make the organisation stable for a long period of time. Also sticking to the old ways, generally create a sense of boredom and frustration in employees. The newly launched product that will be better than any existing product in the market. Due to no or least competition, this product will show remarkable performance, and a significant difference can be observed in the production and profitability of the organisation as compared to the current situation of Nutri-Nut. Moreover, this new change will motivate the staff of members, productivity level will get an increase, and a high rate of growth is expected for Nutri-Nut. Execution of blue ocean strategy is a dynamic process. Soon or later, followers will start appearing in the new market and will try to naturalize the competition created by Nutri-Nut by offering something similar or cost-effective. At this time, it will be necessary for Nutri-Nut to take a step ahead and look for innovation or some changes in the product by the use of technology.
Acquisitions is a state when one buys the 100% controlling stake of the other organisation in order to make a subsidiary. The acquisition can be made with the strategy of gathering a new product line or to gain access to innovative facilities or even to enter into a potentially beneficial market. Customers in the skin-care industry are heavily inclined towards plant-based natural ingredients that have no added chemicals or additives. Therefore, if Nutri-Nut acquires a firm that has a sustainable business strategy and is considered as an organic brand, then the acquisition will be seen by the existing customers as a “planet-friendly” business. During acquisition, the sustainability mission of the two firms must get closely aligned to achieve long term sustainability (Cooper, 2017). Acquisition can help boost the firm’s profile as well as credibility if the acquired firm is well aligned with the vision of Nutri-Nut. It can help the business to capitalise on the growth sector by targeting a new market segment at a time. Nutri-Nut can try to acquire an emerging skincare brand which is struggling to establish in the market but has a very innovative and effective product line. Through this acquisition, cost-cutting can be established by utilising the overlapped operations and resources and binding the production processes into a single entity to reduce excess expenditure. In case of an acquisition, cost-cutting can be achieved through the elimination of redundant facilities, processes, workforces and even business and operational units. Due to reduced cost, Nutri-Nut can get increased buying and negotiation power as it can establish a larger combined budget (Saat & Himmelsbach, 2014).
If Nutri Nut fails to achieve product innovation or diversification, then it is more than likely to be removed from the highly competitive skincare industry where national, international as well as local brands are fiercely working towards achieving competitive strength. As the CEO of Nutri-Nut, Tracy must design an appropriate risk-mitigation portfolio by taking into consideration the opinion and viewpoints of all the involved board of directors. This should be done to ensure that the company is well prepared to face any type of financial, legal or market risks and come out with flying colours.
Recommendation
Nutri-Nut should use product differentiation strategy as it allows the organisation to take a competitive edge over others. With the ability of a diversified customer base, social media marketing has become one of the most reliable sources of communicating with a large audience. Therefore, print media and social media marketing strategies should be used by Nutri-Nut to communicate with cross boarder customer segments as well. The skin-friendly product should be the significant component of marketing strategies as it will appeal to the customer buying behaviour process and with the help of these strategies, a wide area of market could be captured.
To assess the success or failure of Nutri-Nut marketing campaigns, the organisation should use the Blue Ocean Idea Index framework (Eight key points of blue ocean strategy, 2019). The blue ocean idea index framework is an essential strategy for the organisation as it determines the flows in the organisation’s marketing campaign. The Nutri-Nut is an SME, and the sales could be boosted by proper marketing and advertising strategy. The blue ocean idea index framework increases the market visibility of the brand and helps the organisation to position itself positively in the market (Papazov & Mihaylova, 2016). Therefore, blue ocean idea index framework should be used by Nutri-Nut to grow at a relatively higher pace.
Nutri-Nut should use strategy canvas marketing tactic to take a competitive edge and the lion’s share in the market. Blue Ocean strategies assist the organisation with a strategy canvas which allows the organisation to understand the current position of the organisation in the market. By using the strategy canvas, Nutri-Nut can understand its market position and investment portfolios of the organisation could be analysed and assessed. Therefore, taking the competitive edge over the competitors would become easier (Lee, Wang & Chung, 2017).
Six paths framework should be used by Nutri-Nut as it allows the organisation to meet its objectives at a comparatively higher pace. The six paths framework includes diversified tactics such as strategic groups, customer group, and proposal for additional products, functional, emotional orientation and temporal development. The six paths framework would increase the visibility of Nutri-Nut in the market and revenue generation process of the organisation would be sped up. Therefore, the six path framework should be used by Nutri-Nut.
Firstly, as suggested by Julian, the research and development specialist, Nutri-Nut should develop a new product line for sunscreen and anti-ageing that will be 100% organic ingredients. The company have to create competitive advantage by creating a positive brand image; it has to extensively market about the authenticity of the ingredients being used for making of their upcoming skincare products. Consumers will be attracted towards such product line with 100 % natural ingredients that will make the competition less or zero (The Standard, 2017). Growth and survival changes of Nutri-Nut are because people of New Zealand will prefer to buy the product made with NZ. Moreover, they will feel that they are supporting local farmers and communities.
Secondly, the introduction of the new product will demand more raw material and rooibos extract while the company is already facing the disruptive supply from South Africa. According to Royaee & Dehkordi (2013), being sure about the durability of the supply chain in business is one step towards sustainability in the long run. If the rooibos extract could be imported from other Asian countries, then the Nutri Nut Company do not have to worry much about the demand of rooibos for production of new product and supply issues from South Africa. The company have to just go through the corporate governance rules and regulations related to import from that specific country and need to change its business policies accordingly.
Thirdly, Nutri-Nut should be looking for some small emerging skincare company to merge if the company is doubtful about the future of its products it can choose to collaborate with other skincare firms to invest in research and development of products which can be mutually beneficial (Goel, 2018). Currently, Tracey does not have automatic machinery, which is increasing the production and overhead cost this merge will help to help. Merge will help Nutri-Nut to achieve growth by co-marketing of products and adopting the technological license of their partner company to create innovations further. That can lead to high productivity and cost-cutting for Nutri-Nut.
Fourthly, as suggested by Wendy, Marketing Manager, Nutri-Nut should launch their online store. According to Digital Coupons Market (2019), it is essential for a company to make online sales that help the organisation to increase the customer base. Nutri-Nut should also expand their business online, with the increase number of internet usage people prefer to do shopping online because it is very convenient for them and available 24*7. Moreover, e-commerce is one of the easiest and fasted way to reach to your customer, also to keep the customers updated about the new product through push notification, and retail website plays a very crucial role. Furthermore, Nutri-Nut will be able to get real-time payments through all their online sales, so dependency on intermediate and transportation will be removed at a certain per cent.
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