The study is centered on biotechnology
industry and it narrowed down to one player in the industry; thus, Blis Technologies
was chosen as a reflector of biotechnology industry in New Zealand. It was found
that biotechnology, as a sector is one of the leading sectors, which has experienced
steady growth in the past few years. It was found that this is a company that centers
of the utilization of its technology in using the BLIS producing bacteria as
its raw material to create various products. Accordingly, macro environmental
analysis, competitive analysis, and the
swot analysis were used as tools for examining the company; to help in
identifying the strengths and weakness of the company as an effort to formulate
strategies for operation. The key limitation revolved around information, it
was difficult to get substantial information about companies based in New
Zealand. Thus, this hinders the conducting of an extensive study.
Table of Contents
Strategic analysis of Blis Technologies
Studies affirm that, New Zealand`s biotechnology sector has experienced strong growth, especially over the past few recent years. Various analytical studies regarding the growth of the industry have held the revelation that the sector is on the verge of growth, thus, it continues to build vital mass (Acton, 2013). For example, the total number of corporates engaged in biotechnology activities increased by a massive fifteen percent in a couple of years that have past. Accordingly, over the same period FTEs increased rapidly by about twenty percent, and expenditure was seen to rise by about the same rate to about $639.5 million (Riley, 2006). Subsequently, it is believed that the majority of recent growth has come from private sector, which is unswerving with a vivacious business in robust development made creating and building new companies (Diamond,2011). Another factor revolves around the base of biotechnology activities in universities and research institutes, which has remained stable over time, offering a constant and reliable support needed (Manning, 2012; Smith, 2011). Another factor concerning the industry regards the income, which has increased based on export revenue rated at about thirty percent rise (Glowka, 2003). As such, biotechnology industry in New Zealand plays a vital role as it contributes to and influences various aspects of the country`s economy. In essence, the industry contributes about $399 million every year in economic contribution through the country`s primary industry (Statistics New Zealand, 2002). Substantially, there are currently ten biotechnology companies, which are registered on the NZX, and there are additional New Zealand organizations listed on the Australian stock exchange market. Consequently, the performance of the NZX listed biotechnology organizations has been quite outstanding ant this is attributed to the total shareholder returns.
Moreover, about forty percent of New Zealand biotechnology activity, which is measured by average expenditures, is majorly concentrated in agricultural biotechnology. This is consistent with the country`s global position in sectors like pastoral industry, horticulture, and forestry. Medical devices and diagnostics accounts for twenty-three percent of expenditures; however, industrial applications accounts for about nineteen percent of expenditure (Acton, 2013). On the other hand, human health applications attracted the smallest proportion of total private sector consumption, rated at seventeen percent of total biotechnology expenditures. Substantially, New Zealand`s biotechnology is apportioned between North Island and North Island combined and Auckland (Glowka, 2003; Smith, 2011). Essentially, many of these areas host vital universities, research institutes, and private sector organizations. Furthermore, regarding the level of research and development, in biotechnology industry, studies reveal that it is a measure of the level of continued investment in innovation (Manning, 2012). Accordingly, the overall expenditure of research and development by the industry ranged from $ 400 million in the middle of the last decade and about forty percent of it was spend by the private sector, while thirty-eight percent was spend by the public sector and the rest was spend by the higher education sector.
Based on the above information, this study will center on one of the companies in the biotechnology sector; this is Blis Technologies (Glowka, 2003). Blis Technologies, which is ranked among the top in regard to the NZX listing performance of the sector, and it is a company based in New Zealand (Statistics New Zealand, 2002). Studies indicate that this is a New Zealand biotechnology organization, which develops healthcare products based on strains of bacteria (Acton, 2013). These kinds of bacteria are known to produce bacteriocin-like inhibitory substances, essential for medical purposes through research. Accordingly, Blis Technologies uses these substances to produce its patented K12 and M18 probiotics, which area throat-care products (Acton, 2013). In essence, studies indicate that professor Tagg working at the University of Otago, had collected and greatly catalogued a collection of about two thousand BLIS producing bacteria in a bout thirty years (Acton, 2013). After which, Blis technologies acquired the rights to this unique collections of BLIS producing bacteria from the university (Diamond,2011). Soon afterwards, the company was listed on the New Zealand stock exchange; and following this, the company kept on developing consumer products for throat health, halitosis, immune simulation, and complete body support (Manning, 2012).
The macro environment analysis usually encompasses various factors, which are; partisan, monetary, communal, industrial, ecological, and lawful features.
To begin with, looking at the political aspect of this analysis it is very essential to understand this aspect with respect to business operation. Politics in every country may promote or discourage business operation in the country. Bad politics leads to bad policies, which may cause poor market performance (Acton, 2013). Such poor policies may lead to lack of essential components like good infrastructure, good policies regarding taxes and various dependent variables (Dickson and Ginter, 2007). Such factors are very sensitive to both internal and external investors who may have the potential of investing various sectors of the economy (Mitchell, 2009). With such bad politics, various investors may opt to look for favorable environments elsewhere (Glowka, 2003). On the other hand, good politics is the desire of every investor including the inhabitants of a particular geographical location or country (Manning, 2012; tramper, 2011). Significantly, many countries are too new to have ever been listed as politically stable for many years; this is because of civil war and other undesirable factors (Diamond,2011). In essence, New Zealand`s political system is based on the British model, which offers more stability since the queen acts as the head of state. Politically, New Zealand is ranked fifth in the world for political stability and it has this stability state for many years. Thus, many businesses flourish based on this factor. As such, Blis Technologies carries out its business well based on politically stable environment.
Furthermore, the other aspect of the macro environment is about the economy; where an economic aspect determines the level of investment as return on investment rates are of significant value to investors at all levels (Acton, 2013). The state of the economy determine how business flourishes in any country, as such when an economy of a nation improves, business flourishes since there are many transactions and returns on investment are guaranteed for investors (Smith, 2011). As such, Blis Technologies is situated in an economy environment that is on a new scale. This is attributed to the fact that New Zealand has been able ton sustain its economy stable for a long period. Accordingly, New Zealand has a stable and internationally competitive economy with a very efficient tax code (Mitchell, 2009). Moreover, New Zealand is one of the most promising and emerging giant market or economies in the world. Thus, Blis Technologies enjoys promising economic environment, which has helped it to grow businesswise with a ready and supportive home market.
On another scale, New Zealand has a high degree of social stability evidence from a modern social welfare system; for universal entitlements to primary and secondary education. Moreover, the population is mainly European of British decent constituting about eighty percent of the residents (Dickson and Ginter, 2007). About fifteen percent is the constitution of New Zealand Maori, pacific Islanders consistute seven percent, while Asians consistute a small one percent of the total population (Acton, 2013). Because of the cultural diversity that is dominated by majority British descent inhabitants, the country is very peaceful and the community around businesses is supportive. The high population also offers a good ready home market for Blis Technologies to sell its products. In addition, the employees are drawn from the big populace composed of highly educated individuals evidenced from the many high-class institutions.
The forth aspect on the macro environment analysis regards technology, where studies show that technology is the foundation of producing good products (Dickson and Ginter, 2007). Further, through good technology, then economy may be supplied with quality products that meet market specifications (Forster, 2008). Technological advancement in any field helps a business top stay put by achieving what customers want or by meeting the various needs in market (Manning, 2012). As such, in New Zealand the government has spear headed the advent of technology through funding of research and devolvement in public corporations (Glowka, 2003). The best step that the government has achieved is funding research and development through higher learning institutions (Diamond,2011). This has helped in shaping the live of professionals with much needed skills (Acton, 2013). As such, it is found that the foundation of Blis Technologies was also build through technological advancement that enabled Professor Tagg to successful collect BLIS producing bacteria (Riley, 2006). This is a key breakthrough that the company is using to create high standard products that satisfies the demands and desires of shoppers in and outside the New Zealand market. Furthermore, the company has based on research and development, the company has differentiated its products among its competitors and through this, it is venturing into foreign markets like United States through export of world class products like K12, which is a food additive.
Furthermore, the environmental aspect is important for business because it determines whether a business flourishes or not. This is because based on government regulations regarding the environment determines how the business will, suitably fit in the economy also in term s of ethics, clients would wish to find out how the raw materials are sourced to create the products in the market (Dickson and Ginter, 2007). Hence, based on this, the government of New Zealand has given a lot of support for research and development in various fields, biotechnology being one of them as such, regulations have been set in favor of the industry and thus Blis Technologies is set to rise (Mitchell, 2009). Moreover, since the bacteria as the raw materials are sourced from an unending source, which does not affect the ecosystem significantly, clients are ready to associate with company in terms of business.
Regarding legal aspects, it is believed that the country has good frameworks that assure good health and safety for all its citizens (Acton, 2013). Moreover, there are equal opportunities for advertising, encouraging consumer rights and laws that protect consumers. There good product labeling and product safety that has guaranteed Blis Technologies to operate well in the country.
Studies indicate that, porter`s five forces were identified by Michael Porter and they are competitive forces that help shape every single industry and market (Forster, 2008). Through these forces, it is possible to examine entirety from the strength of rivalry to the success and appeal of a sector. Hence, competitive analysis of Blis Technologies will need the application of the five competitive forces on the company`s market.
To start with, the first force regards threat of new entrants, where the easier it becomes for new organizations to enter the industry, the higher the competition (Dickson and Ginter, 2007). However, looking at Blis Technologies, its products are of high quality in that many customers have become loyal to the company`s products. Thus, has become a big barrier for new entrant to consider this line of the industry (Acton, 2013). Another thing, based on high cost associated with an extensive research that takes many years; there is high fixed cost, which discourages many new entrants, making this sub industry of human health less attractive to the new entrants.
Power of supplier’s is another force, and this force tends to high because the products of Blis Technologies, especially the K12 seem to lack exact substitutes with the same value or equivalent value and quality. The force is high also because the cost involved in switching to another product is high and the M18 and K12 are very important to buyers (Mitchell, 2009). Thus, the power of suppliers is very high.
Increasingly, the other force involves the power of buyers and here the impact a client creates on a company determines the power they hold towards that particular company (Dickson and Ginter, 2007). Thus, based on this consumers to Blis Technologies do have a great impact it since the products that the company produces are very essential and it times of need they must use them. Regarding availability of substitutes, this is where there exists the likelihood of one switching to a competitive product (Acton, 2013). Since there are no similar products in the marketplace, it is very problematic for consumers to find substitute products. Thus, this threat is not significant and it has not influent on the company’s business operation in New Zealand (Forster, 2008).
Substantially, the other threat concerns rivalry from other key players in the market. In the biotechnology industry and its sub industry of the human health where Blis Technologies is situated, there are about five competitors; Comvita, genesis R and D, Pacific Edge Biotechnology, Living Cell Technology, and Neuron Pharmaceuticals (Riley, 2006). All this are rival companies, but with the uniqueness of the technology and production power, Blis has emerged at the top with highly differentiated products.
In this section Swot, analysis regards the examination of the fortes, faintness, chances, and intimidations of an organization in an industry.
As such, examining Blis Technologies as biotechnological company, many strength attributes are associated with it (Statistics New Zealand, 2002). To start with, the company has had a good financial back up where it gets the necessary funding for its technological advancement. This has helped it to come up with quality products (Acton, 2013). At the equivalent spell, the establishment has made its merchandises exclusive through differentiation. This is also because; the funding has allowed acquiring of highly skilled personnel to run its researches and product development (Forster, 2008).
The weakness of the company is that its marketing strategies have not been good enough to secure foreign market share, especially in the United States where it has lost severally (Mitchell, 2009). This has been a smudge, which worked against the company and its performance is wanting in foreign markets (Diamond,2011).
Regarding opportunities, it is believed that, based on the exclusivity of its merchandises, the business has the potential to growth in the expansive home market where it can increase its products (Dickson and Ginter, 2007). The method of sourcing the raw materials and the production techniques has made the product so rare in that opportunities are all over in big markets like the United States and many others (Riley, 2006).
The main threat comes from the competitors in the human health product line where there are several home country companies, which are coming up greatly with novel technologies.
After the extensive
analysis, it was found that the New Zealand Biotechnology industry is very
competitive with a promising market. This was attributed to the many players in
the market who already dominate the market share significantly. This is so
based on the great funding of advanced scholarship institutes in the country,
and this is key turning point for many biotechnological organizations. Good economic
as well as long-term political stability has helped the country sustain the biotechnology industry. Moreover, this has
been the reason behind which Blis Technologies emerged and maintained its
position as one of the top leading in biotechnology sector in New Zealand among
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