MBA501 Dynamic Strategy and Disruptive Innovation, Kaplan Business School, Australia
Business Portfolio and Dynamic Capability analysis
Organisation Case Study – Millennium Health Sciences (MHS)
Prepare a Business Portfolio and Dynamic Capability Slide Presentation using the following headings:
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Question A. Business Portfolio Analysis
Plot each business unit on a BCG matrix, GE-McKinsey matrix, and Synergy matrix.
Business portfolio analysis is a systematic way of analysing advantages of all services and products within a business category. This process encourages an organizational management to examine each segment of the entire business and set up supportive objectives and allocate resource for them (Grant, 2016). This process helps in developing the availability of cash flow for application in business growth and expansion into various markets. Here, in this study, the business portfolio analysis will be done upon the MHS and its four respective business segments (Neutrino, LOOKS, Energino and Dermatech). It has been understood from the above case study that MHS has been formed with the vision of providing dermatologically tested products to the people. Currently, this organization has around $4.3 Billion revenue with approximately 4500 employees around the country. The business portfolio of this organization recently includes four various business groups. Neutrino is linked with producing Vitamins and other Nutritional supplements, whereas, LOOKS is the brand of cosmetics. Dermatech is connected with advanced skin care items and Energino is a new business segment, established in 2001 for energy drinks. From the business findings of each segments it has been understood that incoming benefits and competitive strengths of these business units are not fit for the competitive advantage as per the market review and demands. New competitive strategies are required for making each business segments up to the market expectation.
BCG matrix analysis
According to Kuimov (2017), BCG matrix analysis is solely based on the product life cycle, which can be applied identify what priorities should be attributed in the business portfolio of an organization. This model has two separate dimensions that are market growth and market share. Based upon bigger market share and what future investment needs to develop this product for more cash inflow. BCG matrix analysis is divided into four markings, which are Stars, cash cow, dogs and question marks. In this study, each business units and respective products will be judged based upon these markings. BCG growth matrix helps in understanding a frequently made strategic mistake: having an integral approach to strategy for an organization. On the other hand, Dobni and Sand (2018) have identified that highest market share is not always the solution for organization. Sometimes identified products in the Dog category can earn more profits than the cash cows.
GE-McKinsey Matrix analysis
As per the analysis of Widiatama, Hamid and Matrono (2018), the GE-McKinsey Matrix analysis includes two axes. The attractiveness of the market is presented on the “Y-axis” and the competitive advantage as well as organizational advantages are presented on the “X-axis”. These two axes are divided in to three measuring scales such as high, medium and low. A particular business unit situates in circles within the matrix. The size of the circle presents the entire volume of the organizational turnover. This matrix will be used to determine the strengths of MHS business units by placing them in three different strategies naming invest or grow, hold and sell or harvest. This matrix is useful in determining who are the consumers of the organization and what are potential products to attract them.
Synergy Matrix analysis
The Synergy is the concept of considering the esteem and competing of two different business segments in a joined strategy that will be more noteworthy rather than aggregate of the various parts. According to Bals, Laine and Mugurusi (2018), different business segments could be attributed as Altruists, parasites, fits and misfits. Combines business strategy is the essence of this strategy.
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Cash Cow (As per the case study analysis, this organization has a low growth tendency but well-established in the market with its market share)
Market attractiveness is medium and competitive advantage is low.
This business unit could be considered as a parasite as per this matrix analysis. According to the case study, it has been identified that it seeks support from Neurito and Dermatech.
Stars (According to the case study analysis, this oldest business segment has a high growth opportunity in the Asian market and the market share is also high in the Australian market)
Both scales are medium.
Stars (This oldest business segment has high market share and growth opportunity. As per the case study, this business has a great strength in their export business)
Market attractiveness is high of this business unit and competitive advantage is also high.
Dogs (As per the case study, this business has faced many difficulties in the energy drink market. Hence, their market share and growth both are low)
Both grading scales are low in case of this business unit.
As per the above business categorization and analysis of the BCG matrix, it could be said that, this business unit with their vitamins and supplementary products needs to launch their new product range “Poseidon” to the international market. The star mark on this business segments means, it could generate more revenue to the business and market growth in next two years. Probably, selecting the Asian markets could be helpful for them. According to Mohajan (2017), implementing BCG matrix in this business portfolio development could help them in become a market leader in the vitamin and supplementary industry but a continuous investment is needed. This could help them to generate more return on investment.
This business segment and the analysis of the above GE-McKinseyMatrix, it has average market attractiveness and the competitive advantage opportunity is also low. According to Buckley and Casson (2016), in this situation, a business needs to invest on modifying their marketing strategies to suit the changing market demands. On the other hand, as noticed in the case study, international business market could be helpful for developing this business segment’s competitive advantage. Additionally, it could be said that in this situation continuous strategic management of international business operations are required.
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It should be said that, this business segment is not doing good even in the home market. As per the current market analysis, in this situation, organizational management should invest in remodeling their product portfolio. For that, customer choice analysis is required and the market demands are also need to be examined. In this way, new product range could be developed and the energy drink product range could help effectively attracting customers.
As stated in the above-mentioned part of the study and the business categorization analysis, it would be helpful for this business in implementing the BCG matrix. The organizational business portfolio would be helpful in doing business with the international business partners.
Question B.Business Portfolio Recommendations
Provide recommendations to the organisation for the strategic management of each business unit with explanations for each recommendation.
All the important recommendations are listed below;
• The marketing manager needs to identify potential Asian markets and do analysis of the market demands there as well as the vitamins and supplementary industry operations.
• After that, the organizational management needs to select one suitable internationalization strategy. As per the business portfolio scenario, it could be said that partnership with potential market leaders could be helpful.
• This business segment needs to decide on launching their products in the Asian market, thus select to become a global brand.
• Launching cosmetics products to the developing markets could be helpful for this organization.
• Another important thing is that implementation of the BCG matrix should be supervised by providing motivational encouragement to the employees so that they could start participating in running business internationally. In this regard, the management should change the reward management program to providing motivation to their customers.
• Implementation of the GE-McKinseyMatrix should be done by changing the product range of this business. As it is evident that energy drink market in the home country is not doing well, the profit margins from this business unit is also influencing the entire business profit margins.
• For this reason, the marketing management and the research team should develop their product range to produce healthy drinks for their customers. Analyzing the Australian market demand and consumer preferences on healthy drinks could help in this regard.
• Product development into healthy drink segment could cost the company more. For this case, the financial manager and marketing manager should re-module their operations. Shifting online marketing could help in decreasing costs rather than the offline marketing and new financial plans should be created.
• This business segment of MHS should invest in developing knowledge of their employees regarding their export business.
• Online direct distribution to the consumers could decrease the hazards in exporting through different distributors.
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From the above analysis, it has been identified that the business portfolio of this organization is well-established in their home country. It also has been identified that some of the business unites have business growth opportunities into the Asian market. Hence, the marketing managers should invest into international business development prospects. This business portfolio analysis also finds out some of the loopholes in the business administration and lack of motivation among the employees of the organization. It has been acknowledged that employees in LOOKS should be encouraged with supportive leadership changes to work in an international scale. The overall business development management and marketing management should invest time on developing international strategies as soon as possible to compete in the global market of skin care products. In this way, brand recognition and profit level of the business will grow in the future.
Question C. Dynamic Capability Analysis
Prepare an assessment of the organisation’s dynamic capability including its capacity to:
1. Identify and assess opportunities
2. Mobilise resources
3. Transform and reconfigure strategic assets
C. Dynamic Capability Analysis
Lupo(2015) has unfolded the fact that dynamic capability analysis has emerged as a process to untangle the critical problems of sustainable competitive advantage in current dynamic business environment. The underlying information is that organizations that are capable to sense and then seize latest opportunities and, further, use their resources in line with the identified market opportunities and environmental changes can able to make and sustain a competitive advantage. With successful dynamic capability analysis, an organization has the chance to know their internal organizational strengths and resources availability to meet new changes in the process (Breznik and Lahovnik, 2016). On the other hand, these facts could be used objectively in avoiding resistance to change within the company.
From the case study analysis, it has been understood that MHS has the biggest opportunity to expand their business internationally. Some of the important business segments of this organization alone have the dynamic capability to do successful partnerships with the Asian companies in both emerging and developed counties, which could bring this organization effective change in the revenue structure. Information regarding acquiring this type of dynamic capability opportunity will be stated below under the framing of recognition and assessing opportunities, mobilizing resources and transforming and reconfiguring functions.
Identify and assess opportunities analysis
In the process of finding out the dynamic capability at present, organizations at first needs to recognize and evaluate business opportunities in front of them. In this case, it has been noticed that doing partnerships with the Asian market would be pointed out as a dynamic opportunity for future business growth. Along with that as per the profit margins in some of the business segments, strengthening the local market could be considered as one of the dynamic opportunities. As per the observations of Monferrer, Blesa and Ripollés(2015), it could be said that before going to internationalization, strengthening local market operations proved to be more effective as the base of organizational foundation should be strong to face the future change in the organizational operations.
Mobilize resources analysis
The next step in effective dynamic capability analysis is mobilizing all the important resources to channelize formatted plans according to the objectives. As opined by Burr, Valentowitsch and Carpentieri(2016), in case of business expansion, organizations should assemble their financial resources, workforce or human resources, marketing resources and R&D resources in one line so that all the effective outputs could be used in achieving the set goals. It is important than if one of the resource capabilities of the organization is not capable to support the other, then the entire process could face difficulty in coping up with the changing demands of the market as well as organization could face resistance to change within the working place.
Transform and reconfigure analysis
The last stage in the dynamic capability analysis is transforming and reconfiguring strategies as per the current requirements. Transforming suggests that organization needs to change their policies and strategies as per the needs and reconfiguration means rearranging both the tangible and intangible assets of the organization when necessary. According to Wheelenet al.(2017), it could be pointed out that this is the most important step in the entire dynamic capability analysis and achievements of competitive advantages. Organizations needs to carefully identified what strategies are providing value to them and which tangible or intangible assets could be remoulded if necessity comes. From several market and industry analysis, it has been analysed that marketing strategies and human resources capabilities are the two most flexible organizational assets that could be remoulded any time.
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Question D. Dynamic Capability Recommendations
Provide recommendations to the organisation for enhancing overall dynamic capability with explanations for each recommendation. Identify and assess opportunities recommendations
Important recommendations are listed below;
• From the case study analysis and several market studies, it has been found out that the foreign investment manager and the marketing manager should communicate properly and work together to invent strategies for internationalization.
• Strengthening local and regional markets suggest the fact that higher management needs to review the entire operational process and find out the opportunities to connect with more new customer segments in the future.
• Both the internal and external communication process practiced by the organization with their suppliers, shareholders and stakeholders need to reviewed.
Mobilize resources recommendations
• At the initial stage of mobilizing resources, MHS management needs to invest time in determining what type of change they are supposed to do for gaining more competitive advantage and in which way, these changes are going to influence each and every single individual involve in the businesses.
• After that, strengths of the workforce need to be analyzed and if possible, training for the new business agendas should be provided to them.
• On the other hand, the organizational management should invest time in identifying the financial capabilities of the organization and how financial strengths will be going to help in the business expansion procedure without interrupting into the current profit ration of the company.
Transform and reconfigure recommendations
• This organization needs to identify important organizational assets and their profitability so far. After that, necessary changes in the human resource policies should be made. As per the business expansion objective, workforce management and training are the two main strategic changes MHS needs to accomplish dynamic capability.
• On the other hand, turning marketing strategies online could be cost effective and digitalization could enhance better communication prospect to the organization.
From the above analysis of dynamic capability, it could be said that, MHS has several competitive advantage prospects in front of them through which dynamic capability could be achieved. Along with this positive aspect of the business, it has been noticed that internal business management needs to be more integral and communicative. Involvement of the management in the strategic growth process could be helpful in enhancing motivation and productivity level of their employees. On the other hand, the marketing strategies of this company needs to be more practical and up to the current market demands to achieve more consumer preferences. In this way, achieved competitive advantage could be sustained effectively in the future.
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