Phoenix Organic Case Study Review
Introduction:
Phoenix Organic started from 1986, where their main objective is to serve in such a way that would help them to change the world pattern. They plan to do something that would be good for the planet along with benefits for the health of the people. That thought forced Chris Morrison, Roger Harris and Deborah Cairns introduce the Phoenix product (Our story, 2009). Phoenix Organics is under the food and beverage industry. The company is producing organic products. Organic products are foods that are transformed with utilizing strategies for natural cultivating – that don’t include modern manufactured inputs for example engineered pesticides and substance composts. Because of this, health promotion through intake was given a high regard. The Phoenix Organics team is concerned in promoting organic products which are away from genetic engineering that might bring harm to people. This company was originated in New Zealand in 1986.
Discussions:
There are different driving forces (or trends) affecting the non-alcoholic beverage industry. Diving force would be included internal and external forces that would influence the productivity equilibrium level. It was Harris who used to deliver the bottles; he decided to upgrade the business that required some strategic decision about what they want to achieve would refer to the internal forces. Further the internal driving forces would include the knowledge, competence management and the workforce that helps in achieving the future object of the organization. It is management capability and their skills that decided to bring their business into a professional field that require comprehensive strategies. It was Harris trust that their business would turn into international brand that is start from the part time partnership (Collins and Bowden, 2005).Driving Factors would include the following sections that need to discuss in a business specially. The indirect or external forces are technology, legislation, economic development, and demographics. On the hand are the direct environmental forces which are employees, business leaders and suppliers. The analysis of technology advancement along with the opportunities available in the market indicates that there is need to change the brand that would reflect our mission and goals especially stated by Harris (Collins and Bowden, 2005 pp: 2). The step was taken as it decided to hire more staff for expand the business that would ensure their required standards as well discuss by Morrison would refer to the direct environmental forces. The technology and opportunities would discuss as the external driving forces (Appendix I). The concern of the director of the Phoenix Organic that introduce the healthy product that would be benefited to the planet and concern the people heal that is non-alcoholic beverage started from “Ginger fizz” that is natural fermented product. The temperature, PH level and flavouring would be considered under the non-alcoholic beverage that would affect the quality of the product.
There are five key factors that would help a company ensure success on its business. These are managing and developing people, strategic focus, operation, physical resources and customer relation. For managing and developing their people they offer range of flavourjuices to their customer. Further, the company considering addingchocolateflavour in the juices in 2004 would be the represent the concern of people taste.That successfully able those to sale six million bottles of drink each year and Organic juices popularity increase 30% to 50% annually that shows the customer relation and concern (Collins and Bowden, 2005 pp: 2).In the operational aspect as the health concern issue were associated with alcohol and non-alcoholic beverage that would affect the industry. For the quality and taste purpose, phoenix plan to prepare two drinks in a same bottle format. That enables them to offer range of flavour to their customer.
The soft drink industry would be evaluated on the bases of economic indicator that would be calculated on the basis of market size, growth rate and overall profitability. The soft drinks industry enjoying 46.8% share of the market within the non- alcoholic industry in 2005 and reached at $307.2 billion in 2005 (Deichert, EllenbeckerKlehr, Pesarchick and Ziegler, 2006).The competitive threat in the industry would be the threat of substitute product, the threat of the entry of new competitor, the intensity of competitive rivalry, and the bargaining power of the customer. There is substitution non-alcoholic beverage that is Coca Cola who is earning substantial money from the sale of their product. To face the challenging environment, so the Phoenix intentionally targeted the already developed cafes argued by the Harris and adds that it create a big gap of café trade that needs product. Further, it is easy to target the café by coca cola y offering them a good deal that is fridge and distribution supply with their product and directly communicate with the owner of the café. Further the brand loyalty would cause another competitive pressure.
It shows the powerful men of competitors. That gap could be filled through as the café owner did not have real choices, in this scenario the Phoenix could take a positive step. It would be achieved through introducing the innovative and variety of options that would help in reduces that gap and makes the profitable business (Collins and Bowden, 2005 pp: 2). Chris Morrison considers building the Phoenix successful business through developing the relationship with direct customer that needs consistent efforts because developing trust and respect would not in overnight.The success based on the strong and positive relation with the people that would include not only the people but the supplier too. It is the base of success of the businessof Phoenix that although they are now malty million dollar company but still it is the family business flavour. The treat of entering situation is always there in the market but however it could be manage through their initial objective that is provide the healthy andquality product to the customer.Bottle water, sports drinks, coffee and tea were increasing trend in their popularity that especially among the health consciouscustomer that would be the source of advantage for phoenix (Deichert, EllenbeckerKlehr, Pesarchick and Ziegler, 2006).The beverage industry in the blend of alcoholic and non-alcoholic and the business shows the steady growth but still facing the stressful economic timer due to tough competition and lesser margin. The total industry cost and expense would be 88.85% while the net margin from the industry would be 11.15% (Appendix II). Non-alcoholic beverage achieved cash flow margin of 1.78% that is gross margin improved to 55.43% in 1 (Non-alcoholic beverage industry). With reference to the case study of Phoenix Organic they are successfully able to sale six million bottles of drink each year and Organic juices popularity increase 30% to 50% annually (Collins and Bowden, 2005 pp: 2).
Phoenix Organic can be compared to its key competitors in terms of competitive scope, position, distribution channels and competitive strategy in some manners. The big competitor of Phoenix would be Coca Cola and Pepsi that offer them tough competition.The competitive scope would hold the four dimensions that are: segment scope that is the variety of product offer to the customer and target customer, industry scope includes the range of industry in which organization is competing, vertical scope would discuss the firms activities these are suppliers and channels of distribution and geographic scope consider the area where firm is operating (Competitive scope). It was included in the plan of Phoenix that to introduce the organic food brand starting with jams and salsas that are the complementary to the beverage products. It would broaden the competitive scope of the Phoenix as there are really want to grow their business.The competitive strategy of Phoenix would refer to the statement of Harris words, “we are going to run the risk of basically stretching ourselves too thin, exhausting our resources trying to keep too many different balls up in the air.”However the effort was successful that able to manage the distribution channel of Phoenix Organic in all national supermarkets chains that is about 20% of its business. But it requires considering the new strategy that would help in developing the product of supermarket where they are the single serve beverage. Harris considers approaching two main supermarkets in the New Zealandtoachieve in their objective.
So, what’s Phoenix’s competitive strategy? It is important for a firm to develop a comprehensive competitive strategy that make able to grow and face the forces that could drive the competitive structure for firms and for profitability (Porter, 2008). The competitive strategy based on: to overview the threat of the new entrance, Bargaining power of Supplier, Threat of substitute products or services available in the market and the bargaining power of the buyer. For the Phoenix the competitive strategy was considered for growth¸ as described by the Harris, the strategy defines the present situation and director of the Phoenix planning for the next step for his form to take risks that would help in 20% growth in their business. The fundamental approach to target the supermarket and introduce their brand at national and international brand would help them in taking the competitive advantage. It’s not only to develop the competitive advantage in the market but to give consideration to the profitability as well. Identification of the market size and position and further plan where one of these strategic issues (A competitive Strategy Model).
Phoenix Organic stands for an integrated vision, strategy and goals. Phoenix business main concern to develop such business that would be facilitates the people in term of good health along with the benefited to the planet. For the purpose of providing healthy product that good for the planet, Phoenix strives each day and facing new challenges for suitability of their principle. That could be possible only through empowering the customer. Their vision for the organization is that to make feel different to their customer and show the different picture that give their customer a feeling of fun and enjoyment (The Phoenix vision). According to the phoenix member, Phoenix is passionate about the potential risk in our food and safety issue. They are focusing on Clean Green Image, and aim to protect the food market in New Zealand and enhance the green image among the people so that they introduce their business.
The strategy followed by Morrison would be to make the money in such a way that would help in saving the world as well. Making money would not be the sole goal of the organization. It is necessary to go along with the firm vision and goals. Morrison estimated total sales about $ NZ 6.5 million in 2004, from the $NZ 4 million and $ NZ 5 million in 2002 and 2003respectively. Through the consistent performance and Phoenix approaches the international protocol. The strategy focuses on the water, waste and energy reduction system, for that the founder introduces the Natural Step that is a Swedish framework for sustainability that was implemented at phoenix. The steps involve for growth, it could be explicit in the statement of Rachel brown that is the company given consideration in every aspect that would involve the environmental and social responsibility. It focuses on expanding the business network state by Morrison. The strategy based on resolve the staffing issues, reduction in fossil fuels use, avoiding the persistencechemical in the drinks and tries to protect the environment along with the efficient use of resources. It is important for Phoenix to ensure that they are squeaky clean (Collins and Bowden, 2005 pp: 5). It is stated by them that they are focusing on the quality of the product that fulfil the vision of the phoenix instead of earning profit and boosted their sale with the low quality and lost their image.
Phoenix Organic operates in New Zealand and target the international market with their same goal and image to protect the planet and provide the safe and healthy non-alcoholic drinks to the people. While focusing on local café, they diverted their intention into the supermarket where the chance to increase their sales and give the tough competition to their competitors. They intend to introduce their product in international market as well so that could deliver their concept of health food and clean planet to rest of the world as well.With reference to the Phoenix Director and management team, Sustainability could be described like: “meeting the needs of the present without compromising the ability of future generation to meet their own needs”(The Phoenix vision). The both concepts would work parallel with it that is saving the world along with making the money.
There are different sources of competitive advantage and disadvantage of Phoenix Organic. Competitive advantage would refer to the term where the firm is enjoying the by offering the competitive product by offering the great value and quality of the product to the customer or offering lower price that could be able to increase the sale of the product. It is also referred to the facilities and services provided to the customer (Riley, 2012). It is the discussion of sustained competitive advantage and strategic management that would be implemented and a firm could achieve the sustain growth. It is the superiority gain of the product by providing consumers the competitive price at a lower price or in other hand providing greater value with the high price.It would refer to the result that comes from matching the core competency to the opportunities. It would be based on Cost Leadership Strategy, Differentiation Strategy, Innovation Strategy, Operational Effectiveness Strategy, and Technology based competitive Strategy. There is the fastest growth rate of tea, juices drinks and Bottled water that is 16% to 18% in 2001 as compared to the other non-alcoholic drinks (Hartogh) (Appendix III).Phoenix planning to maintain their growth and introduce their business in the overseas area says Malaysia and Japan and for more business they need to export to Australia too. By welcoming the opportunities they have. That way they are interested in offering the Chai, Chai is a creamy, milky, spicy tea. Harris observes the potential opportunity by offering Chai and shows his interest in introducing it. There are different range of drinking product along with price ranging from $ NZ 1.50 to $ NZ 4.00shows that Phoenix taking competitive advantage of the market, specially offer to the customer at Auckland CBD café.
Competitive disadvantage would refer to the risk of losing the customer in a competition for a firearm while facing competitive environment, where the free entrance of the competitor was open and threat of substitution product.For the Phoenix there are many top class café that would offer better quality to the customer as well, so there is less space for the Phoenix brand. They need to struggle hard to compete with their rivalry. It would be difficult for Phoenix that to maintain the historical growth level in New Zealand that would in their expertise. Phoenix Organic faces niche that needs to resolve, according to Harris, there should be some rules that would help them to survive and understand the problem they are facing.It comes when the customer have extra services or benefits from the other place where the Phoenix did not offer, that would be the source of take advantage from the other firms. That disadvantage goes in the pocket of Phoenix Organic. Morrison shows concern in this scenario as how well the Phoenix able to maintain and irradiated risk that are coming up front of the firm.
Key strategic issue related to the Phoenix would the policies that would be affected from the competitive environment and company is facing the challenges to maintain their position. These challenges would be as follows. First, Phoenix instruction for their management and mission that what they want to achieve, that depict by their mission statement that is:provide the healthy and clean drinking product that would offer the package with the motive is to clean the planet. Second, the product and service level that offer to the customer. It is necessary to offer such product or quality that is healthy and save for the user. Third, the cost consider as well in the view of the customer. There should be paid at that level that satisfied the customer and provide the same level of satisfaction that they are expected. Lastly, it not only for the customer concern that they are paid at that level that would satisfy them but the price of the product should be at level that have a margin of profit. There should be a financial analysis that management covers their cost and eara satisfactory levelel of profit.
Conclusion:
Phoenix is Organic is indeed a very competitive company with good strategies. They carefully deal with their businesses as they have high regards to meeting their company goals, vision and objectives as well as maintaining a good competition by showing unique competitive edge. Moreover I can conclude that as years would pass by, I can perceive this company as one of the most successful ones in the beverage industry. If I would propose the strategy in relation to the growth ambitions of Phoenix Organic’s founder-owners, this will be as follows. For growth and expand in the business it is necessary to adopt such strategy that would help in ensuring to face the competitive threat and risk and have such plans and tools that would bepower to face all these complication.It has following such qualities these are having the power to clinch the large market share, planning should be based on both short term and long term implementation, it should have diversifies nature so that could apply at national and international level, marketpresentational quality and planning for develop new market that able to divert the new customer attention, and phoenix is planning to introduce their product in the overseas country it is necessary to identify the taste and culture of these countries so that could able handle the new market segment.
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