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Environmental Analysis of Sanitarium Food Company

Task: Environmental analysis

1) Internal environment

    - Use McKinsey 7s Model

2) External Environment

    - Use PESTLE Analysis

3) Competitor Analysis

    - Use Porter's five analysis

Answer

Introduction

Sanitarium Food company promises to be different from other food companies of New Zealand. In this evaluation, the focus will be on the environmental analysis of the company, which includes both the macro, and the micro environmental analysis along with the competitor analysis. For the internal environment analysis McKinsey 7S model has been used. For external environment analysis, PESTLE analysis is used. Porter’s five-force analysis has been used in the Competitor analysis.


Internal Environment

Internal environment of any organization is consisted of the role players who are close to the company and they directly affect the function of the organization. Most important factors of micro environment of any organization are divided into ‘soft’ and ‘hard’ areas (Hourani, 2017). 

The 7s factors of the organization are


Hard S
Soft S
                            Structure
                       Style
                            Strategy
                       Skills
                             Systems
                       Staff

                   Shared   Values

Sanitarium Food Company has developed their strategy in order to achieve sustained competitive advantage. Their advertising strategies are sound and strong for long-term success of the organization. Structure, strategy and systems are considered hard elements which are easier to locate. The soft areas are harder to manage in spite of being the foundation of the organization. Sustained competitive advantage of the company depends on these factors (Song& Tsai, 2017).


Hard S factors:

  • Structure is primarily the organizational chart of any company. Sanitarium manages their different business divisions and units in a systematic manner. Several elements of the framework is easily changed through the structure.
  • The strategy or the plan of Sanitarium clearly articulates the vision, mission and values of the organization ( www.sanitarium.com , 2017). Their advertising policies include advertising to children. According to their slogan, they believe in the potential of the New Zealanders to be healthy both physically and mentally. Their slogan that ensures good nutrition for all attracts the consumers successfully.
  • The systems or the processes and the procedures of the company reveal daily business activities and decision making of the organization. The systems determine the business procedure of any company (Arvand & Baroto, 2016). The primary focus of the managers of Sanitarium remains on the systems of the organization during any possible organizational change


Soft S factors:

  • How the top level managers of any company managers the organizational activities is known as the style of the organization. The managers of this particular company have improved their management style in order to increase the organizational outcome. 
  • Skill indicates the ability of the firm employees to perform well. Competences and capabilities are also included in the skills. This organization has a number of skillful employees in different segments of the organization (Hourani, 2017). During any minute organizational change, the company relies on different skills that help in the reinforcement of a new strategy or structure.
  • The primary concern of the staff element is associated with the recruitment process of the company. The decision related to what type of employees and how many employees the organization needs depends on the staff element. Sanitarium food company follows a structured recruitment process and the recruited employees are trained, rewarded and motivated according to their needs
  • Shared values is the central point of the McKinsey 7s model which indicate the norms and decide the guidelines for the employees regarding their behavior and company actions (Hourani, 2017). Sanitarium maintains their customized code of values for the employees of the organization. 

The application of this model on the Sanitarium helps in understanding the alignment of each factors of the company. The review of which is presented below


Strategy
Providing quality   service in New Zealand
Aligned
Structure
Simple structure
Aligned
Systems
Systems focus is on   the customer support.
Aligned
Skills
Many specialized   skills are found and few jobs are undertaken by the management
Aligned
Staff
Employee need is   present in the company
Aligned
Style
Democratic management   style
Aligned
Shared Values
Teamwork and trust   among the employees
Aligned


External Environment

The macro environmental analysis on the Sanitarium food company focuses on the political, economic, socio cultural, technological, environmental and legal factors affecting the company.


  • Political factors

Regulation on organic and GMO food, low labor standards and free trade agreements are the political factors that affect the food companies. Sanitarium is proceeding with its policy of not sourcing GM ingredients in their products (Chain & Bookable, 2017). This organization monitors the consumer’s response to this particular issue as the state governments have approved the expansion of Genetically Modified (GM) crops in Australia. They also maintain the Identity Preservation or IP process.


  • Economic factors

For the assurance of the consumers, the company goes beyond the food labeling content requirement and also utilizes the ‘non GM’ supply chain which is supported by comprehensive handling, auditing protocols and testing to satisfy the customer needs.


  • Socio cultural factors

The success of this company lies on the fact that Sanitarium has changed the eating habit of the New Zealanders. They are the one who initially introduced innovative breakfast and soy foods which are healthy according to the demand of the people (Pulker, Scott & Pollard, 2017 ). Plant based food has been made trendy by this organization


  • Technological factors

Sanitarium uses advanced biotechnology to improve the potential quality, quantity and acceptability of their food supply. Several new biotechnological techniques are used in the supply of foods and consumer concern related to the product safety is taken under consideration (Chain & Bookable, 2017).


  • Environmental factors

Sanitarium also acknowledges environment while making their decision around technology, energy resources and operational methods.


Competitor analysis

Competitor analysis helps in understanding the viability of any business. The market condition plays an important role behind the success of any company or product. For the competitive porter’s 5 Forces can be followed as the model (Song & Tsai, 2017). These forces include


  • Competition in the industry

There are many other food companies in New Zealand but Sanitarium maintains its position because of their organic and healthy food products.


  • Power of suppliers

Sanitarium is focusing on incorporating Biotechnological advancements in order to improve the strength of the suppliers.


  • Potential of new entrants in the industry

In spite of potential new entrants in the food industry, this company is maintaining their position because of their authenticity.


  • Power of customers

This company has many loyal customers. High consumer rate functions as the major force behind their organizational success.


  • Threat of substitute products

In spite of substitute breakfast products, their new and innovative breakfast meal ideas have helped in maintaining their success.


Conclusion

The micro and macro environmental analysis of Sanitarium Company shows that the company needs to work on the skill and style and their strategy requires to be more structured. The PESTLE analysis evaluates the present condition of the company and for further development of the company the 5 factors of Porter’s model need to be evaluated by the management of the organization to ensure future success.



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