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Biotech – New Infant Formula Division – Business Report
Biotech – New Infant Formula Division – Business Report

Thriving businesses today attribute their success to their ability to analyse external and internal environmental factors effectively. The internal environment influences the mission, leadership style, levels of communication, organisational structure, and training of employees. On the other hand, the external environment examines opportunities and threats that influence the success of a business (Section 5. Trends in Organization, 2016, p. 2). This report will analyse both types of environmental factors to Biotech and the Infant Formula manufacturing plants based on PESTEL, SWOT, and Porter’s Five Forces Model. Also, it will discuss the goals and objectives the business is likely to set based on the analysis of the external and internal environments. Lastly, it will provide a competitive analysis of the company in their industry; this will help in setting strategies aimed at penetrating the new market and remaining relevant in the existing market (Porter’s Five Forces of Competitive Position Analysis, 2013).

PESTEL Analysis
Numerous factors internal and external factors have the potential to impact Biotech and the infant formula industry. In this section, the focus is on the external factors to Biotech and the Infant Formula division. The factors will include political, environmental, social, technological, economic, and legal considerations in the industry. A business that fails to analyse these factors beforehand will lose the competitive advantage to similar companies.

Political Factors
Political factors such as taxes, tariffs, stability are essential considerations when expanding into new territories. The current political stability in most parts of the world is advantageous to the success of any business. Political instability is a source of conflicts and war which endangers people’s lives and the ability to grow a business. The Biotech Company is already established in regions that are politically stable. Expansion to Malaysia is ideal for businesses to continued exposure to positive growth and opportunities.

Malaysia’s political factors are beneficial to businesses due to their ROI and high profits in foreign investments (Doing business in Malaysia, n.d.). The country shows political stability, with favourable government policies. Moreover, the tax advantages give businesses the ability to take high-quality products and price them competitively (Doing business in Malaysia, n.d.).

Economic Factors
The economic factors, which include GDP, interest rates, and indicators of ongoing economic health, illuminate if a specific economy is a good match for an industry (Section 5. Current Challenges in Management, 2016, p. 4). The US which hosts the headquarters is one of the most developed economies in the world. This offers assurance that the company will not undergo losses due to changes in currency, interest rates, and recession crisis.

The ability to expand to other regions limits the risks of currency devaluations and low exchange rates associated with foreign markets. The business is well positioned to deal with local economic forces while operating under a branch while exporting their products to such regions. Infant Formula will benefit from the stable economy in Malaysia; the country has both positive local and foreign economic reputation.

Social Factors
The demand for natural and eco-friendly products has shown a steady increase for most regions thanks to the discovery of innumerable hazards associated with chemically manufactured products. The prevalence of diseases and other health problems due to unhealthy lifestyles has prompted many countries to set laws and regulations on standardisation of products in its market; similarly, the internal market is vigilant on the safety of products.

The success of a product depends on the attitudes of the consumers on the products (Section 5. Current Challenges in Management, 2016, p. 4). A product that is perceived to be safe will attract increased sales and revenue to the business while products considered unsafe is likely to damage the image of the product and company at large. Furthermore, the culture determines employment decisions and corporate social responsibility practices of an organisation in a given region.

Infant Formula has an advantage in operating the business in Malaysia because it seeks to employ people from the country. Malaysia has a well-educated, qualified, and affordable labour force that the companies seek to incorporate in its operations (Doing business in Malaysia, n.d.). Additionally, setting the division in Malaysia will foster its interactions with the local communities’ culture and traditions; this is essential in market segmentation in the industry.

Technological Factors
The rapid advancement in technology has made many organisations embrace the opportunities the use of technology presents (Section 5. Current Challenges in Management, 2016, p. 4). Efficiency and effectiveness are a result of the use of technology in a business’s operations. Biotech and infant formula are required to adopt progressive technology in its operations to compete favourably in the industry. The growing need for conservation of the environment should present a challenge when it comes to prioritising research and innovation. Although, any organisation that ignores the technological aspect is doomed to fail.

Technology ensures proper monitoring, regulation, and analysis of the progress of the business. Communication among all stakeholders is fostered through the use of technology to help in decision making. Malaysia has a well-developed infrastructure and logistics network (Doing business in Malaysia, n.d.). Malaysia and all the branches of Biotech have systems that support technology like improved infrastructure and proper laws to allow for research on the use of technology.

Environmental Factors

The surrounding environment for a business affects its operations both externally or internally. Biotech deals in eco-friendly and natural products. The prevailing environmental conditions directly influence the manufacturing of these products. The company has its headquarters in New York, the US with several branches in other parts of the world. The US operations offer a limited supply of green products needed for the new division because of its focus on environmental protection.

On the other hand, Infant Formula’s location in Malaysia provides an advantage towards the access of raw materials. Malaysia has strong environmental protection policies and places a high priority on environmental conservation activities. The country primarily utilises organic food and product, stemming from natural formulas (Suhaimee, Zurailhah, & Wahab, 2016).

Another consideration is geographical differences in weather and climate. These have been addressed by opening branches in several regions across the world. Biotech has offices in the US, Europe, Asia, Canada, and South and Central America which benefits the organisation in challenges associated with global weather changes. The companies are likely to survive in the industry due to their location and the prevailing weather conditions.
Legal Factors
As mentioned previously, the prevailing political stability in most parts of the world is advantageous to the success of any business. The Biotech Company is established in regions that are politically stable; this has exposed the business to growth and expansion opportunities. Also, the political neutrality of the company makes it easy to survive political challenges that many businesses face across the world. Businesses are expected to avoid engaging in politics in a country; this limits political interference and influence.

Neutrality promotes the establishment of proper policies that encourage investments and operations of a business. Moreover, Malaysians have laws which protect investors, as well as their intellectual property. The country has developed policies that protect the environment; the National Biodiversity Strategy and Action plan among other laws will be beneficial to the success of the division. Biotech’s penetration in the infant formula market will be made more accessible as a result of the stability and favourable laws of Malaysia.

SWOT Analysis
The SWOT (strengths, weaknesses, opportunities, and threats) analysis is vital for distinguishing a company from other companies in the same industry. This tool enables a business to position itself in a trade while remaining competitive with other business. Biotech and the Infant Formula industry have unique features that are lacking in other companies. The other side of this is to look at certain factors which can compromise the growth within the industry. Establishing an honest reflection of a company is vital in setting the goals, mission, and vision of a company. Illustrated in Table 1 is the SWOT analysis for the BioTech, new Infant Formula division.

Table 1. SWOT Analysis

SWOT

Strengths

Weaknesses

Established Parent Company, Biotech

Timely Decision-Making

Organic and Eco-Friendly Product

Costs in technology and materials

New Director

New Product Development

Opportunities

Threats

Favourable Laws and Regulations

Technological Advancements

Expansion to New Market

New Business Environment

Availability of Qualified Workforce

Competition

Strengths
The Infant Formula’s mission toward organic and eco-friendly products will assist in allowing easy penetration in the Malaysian region. The country’s people value organic products and foods extracted through natural formulas. The ability to offer products that are readily accepted will enable the division to respond to the customer’s tastes and preferences from the start. The new division will face limited policies and regulations in Malaysia as it seeks to promote the use of organic and green products. Operating in a foreign country might be a challenge if the business contravenes the laws of the country on the manufacture, distribution, or use of certain products. The division intends to use green production methods; this will lend itself well with authorities in the country as they seek to realise conservation on the environment through various agencies like the National Biodiversity Strategy and Action plan.

The division will have a new director. Sloan will head the Infant Formula division in Malaysia. The new director will bring her expertise and experience into the division from serving in Europe as an Executive director; she has sufficient knowledge on the management of branches such as Infant Formula. Moreover, she is known for her inclusivity and employee recognition from her past roles. This is vital in promoting positive employee morale and passion while carrying out their tasks. Sloan’s interests are attractive to the vision, philosophy, and mission of Biotech. The division seeks to achieve environmental conservation and products that are healthy for human and animal consumption. Her ability is strength to the division as it aims to explore a new market niche in Malaysia.

Lastly, the division has an established parent plant. Biotech has a long history in the provision of health and life products ranging from as early as the 1920s. The Infant Formula division will undoubtedly benefit from the experience of its parent plant based in New York, US and other branches in several parts of the world. Sloan can directly consult with Maximillian Barney, the Executive Director of the new Asia division. Other branch managers, from different branches, can share significant information and advice with both regarding the operations of the division. Secondly, it will be easier to run the organisation in an already established culture in the parent company than in new cultures. The director can adjust the division’s culture based on the needs of the market and the parent company’s culture. Also, the company will benefit from the technological elements of the parent plant. The division is likely to embrace tested and up to date technological aspect based on what exists in the market.

Weakness
Weakness, as it relates to internal causes and characteristics, can be ascribed to the increased cost towards innovative technology, timely decision making, and failed product testing. Technology plays a critical role in maintaining a competitive advantage. However, investing in technology, especially new technology can be time-consuming and costly. Another facet to technology is product research and development. Every product requires going through different stages of development. Each failed product is a hit to the business. The third weakness is timely decision making to the business operations.

Most parent companies make decisions for different divisions. The level of operational bureaucracies has the potential to compromise the ability of an individual division to enact changes and attain specific goals. Biotech’s culture tendency to rely on the parent company culture is dangerous to the realisation of the mission and vision of the division. Conflicts or indecisions at the parent level in Biotech the systems of the division, therefore limiting the success of the division.

Also, Malaysia offers a qualified and affordable labour force compared to other options the company had in setting up the branch. However, the ability of the employees to use their expertise in conducting their duties is uncertain. Most companies are faced with the challenge of the inability of the employees to translate their knowledge and experience into efficient and effective production; skills are useless unless they help in realising the goals of the division.

Opportunities
The Infant Formula division will give a chance to explore a new market. Entry into a new market increases the customer base of a company. This results in increased sales and profits to the overall organisation. Biotech presence in Malaysia through the Infant Formula division will promote its competitive advantage over other businesses already in the country. New markets allow for the growth of a company by offering an opportunity to develop in a market that has growth potential (Section 6. Managing Change for Organizations, 2016).

The division is confident in the availability of qualified personnel in Malaysia. The success of an organisation depends on its ability to attract and retain potential employees with the relevant skills required to perform specified tasks (Section 6. Managing Change for Organizations, 2016). Organisations thrive when they can minimise the cost of production through affordable rates of employment while maximising on their employees’ skills in service delivery. However, the division should be sensitive to the needs of the employees to foster passion and morale in performing the division’s tasks. Organisations that ignore the needs of the employees experience high turnover and reduced productivity. Finding a balance between employee roles and needs is vital. Sloan has proven the ability to identify that in the Malaysian labour market.

Lastly, Malaysia is changing its policies and laws to reflect environmental conservation. Infant Formula Division’s mission and goals align with the conservation efforts being proposed in the country. This opportunity will allow the division to benefit from government support and favourable business conditions. Countries tend to favour sectors that address the vision of the country as opposed to sectors that are indifferent. Laws and regulations are essential to the establishment and growth of any foreign company. Finding a country that supports your vision is a lifetime opportunity for a company seeking global positioning.

Threats
Rapid technological advancement is the primary challenge for an organisation. Established companies have access to resources that support new technologies while developing companies may find it hard to adjust to the new technological demands in the industry. Infant Division is a developing branch that lacks the resources to support the latest technological trends in the industry. As a result, this might delay growth potential and the ability to meet customer demands. Besides, some technological trends are good but unnecessary.

Secondly, unfamiliarity with the business environment is a challenge to many businesses who seek to explore new markets. Infant Formula lacks real-time experience in Malaysia. Although research provides insight, it still is not quite the same as first-hand experience and data. The division should be prepared for new cultures, climate, laws and regulations, market trends and customer behaviour. These factors are likely to slow the growth of any company in a new environment. However, allowing inclusivity in decision making will offer the division chance to mitigate this threat. Businesses that interact openly with new environments are likely to succeed as opposed to those that are preservative of their home cultures and traditions.

The Infant Formula division will be exposed to competition from established businesses in Malaysia offering similar products. Just like the parent plant, Biotech; it should employ innovative strategies to gain customers. The division should provide quality and a diverse range of products than its competitors. Alternatively, the reduction of prices and costs of production may offer a good market penetration strategy to the division. However, this attracts lower revenues and profits which have a negative impact on the growth of the company. The division should embrace systematic strategies that will offer a balance between customer satisfaction and the development needs of the division.