Alpha Natural Resources Case Study Solution and Analysis
Alpha Natural Resources Case Study Help is currently one of the greatest food cycle worldwide. It was founded by Henri Alpha Natural Resources in 1866, a German Pharmacist who initially launched "Farine Lactee"; a mix of flour and milk to feed babies and decrease death rate. At the same time, the Page brothers from Switzerland likewise discovered The Anglo-Swiss Condensed Milk Company. The two became competitors in the beginning however later on combined in 1905, leading to the birth of Alpha Natural Resources.
Alpha Natural Resources is now a global business. Unlike other international companies, it has senior executives from various countries and tries to make decisions thinking about the entire world. Alpha Natural Resources Case Study Solution presently has more than 500 factories worldwide and a network spread throughout 86 countries.
The purpose of Alpha Natural Resources Corporation is to enhance the quality of life of people by playing its part and supplying healthy food. While making sure that the company is succeeding in the long run, that's how it plays its part for a better and healthy future
Nestlé's vision is to supply its clients with food that is healthy, high in quality and safe to eat. It wishes to be ingenious and at the same time understand the requirements and requirements of its customers. Its vision is to grow fast and supply items that would please the needs of each age. Alpha Natural Resources visualizes to establish a trained labor force which would assist the business to grow.
Nestlé's objective is that as currently, it is the leading company in the food industry, it thinks in 'Great Food, Excellent Life". Its mission is to offer its customers with a variety of options that are healthy and best in taste also. It is focused on providing the best food to its customers throughout the day and night.
Alpha Natural Resources Case Study Help has a wide variety of products that it offers to its customers. Its products consist of food for babies, cereals, dairy items, snacks, chocolates, food for family pet and bottled water. It has around four hundred and fifty (450) factories all over the world and around 328,000 staff members. In 2011, Alpha Natural Resources was listed as the most rewarding company.
Objectives and objectives.
• Keeping in mind the vision and objective of the corporation, the company has actually laid down its objectives and objectives. These objectives and objectives are listed below.
• One goal of the business is to reach no landfill status. It is pursuing no waste, where no waste of the factory is landfilled. It motivates its workers to take the most out of the by-products. (Alpha Natural Resources, aboutus, 2017).
• Another goal of Alpha Natural Resources is to lose minimum food during production. Most often, the food produced is lost even prior to it reaches the consumers.
• Another thing that Alpha Natural Resources is working on is to improve its packaging in such a way that it would assist it to minimize the above-mentioned issues and would likewise guarantee the delivery of high quality of its products to its consumers.
• Meet global requirements of the environment.
• Build a relationship based on trust with its consumers, organisation partners, employees, and government.
Just Recently, Alpha Natural Resources Company is focusing more towards the method of NHW and investing more of its revenues on the R&D innovation. The nation is investing more on mergers and acquisitions to support its NHW technique. However, the target of the company is not attained as the sales were anticipated to grow greater at the rate of 10% annually and the operating margins to increase by 20%, given in Exhibit H. There is a requirement to focus more on the sales then the innovation technology. Otherwise, it may lead to the decreased profits rate. (Henderson, 2012).
Analysis of Present Strategy, Vision and Goals.
The current Alpha Natural Resources method is based on the concept of Nutritious, Health and Wellness (NHW). This technique deals with the idea to bringing change in the consumer choices about food and making the food stuff much healthier worrying about the health concerns.
The vision of this strategy is based upon the key approach i.e. 60/40+ which simply indicates that the items will have a rating of 60% on the basis of taste and 40% is based on its dietary value. The items will be made with extra dietary value in contrast to all other items in market getting it a plus on its dietary content.
This method was adopted to bring more yummy plus healthy foods and beverages in market than ever. In competitors with other companies, with an intent of maintaining its trust over consumers as Alpha Natural Resources Company has gotten more trusted by clients.
Microenvironment Analysis (PESTEL Analysis).
The analysis utilized to determine the position of company in the market is done by using PESTLE analysis, offered in Exhibit A. Alpha Natural Resources works under the guidelines and rules directed by federal government and food authority. The business is more focused on its products and services to make sure about the product quality and safety.
The political influence on the company is greatly influenced by the government laws and policies. The company has to meet its requirements offered by federal government otherwise it has to pay fine. Alpha Natural Resources is considerably supported by Government to satisfy all the requirements of standards like acts of health and wellness. In efforts to make excellent food, Alpha Natural Resources is altering the requirements of food and beverage manufacturing. This may trigger the offense of governmental guidelines and policies.
Initiation of the business where the capital earnings of each specific matters for the increased net sale as this varies country-to-country. The economy of the Alpha Natural Resources Company in U.S. is growing year by year with variable items launch especially focusing on the dietary food for babies.
The social environment continues changing with regard to time like the mindset of the consumer along with their way of lives. Any services or product of any company can not be successful till the company is not concerned about the living system of the customer. Alpha Natural Resources is taking measures to meet its goals as the world is in search of tasty and healthy food.
In the development of service, tactical measures are somewhat obligatory. Alpha Natural Resources is one of the top popular international company and by time it invests in various departments to take its items to new level. Alpha Natural Resources is investing more on its R&D to make its items much healthier and nutritious offering customers with health benefits.
There is no such impact of legal aspects of Alpha Natural Resources as it is more worried over its laws and policies.
Alpha Natural Resources, in regards to environmental impact is committed to work in eco-friendly environment with conservation of the natural deposits and energy. If the resources used are recyclable or not, as due to the production of larger number of products there may be a risk.
Competitive Forces Analysis (Porter's Five Forces Model).
Alpha Natural Resources Case Study Help has actually acquired a number of companies that assisted it in diversity and growth of its item's profile. This is the detailed description of the Porter's model of 5 forces of Alpha Natural Resources Company, given in Exhibit B.
Alpha Natural Resources is one of the top business in this competitive market with a number of strong competitors like Unilever, Kraft foods and Group DANONE. Alpha Natural Resources is running well in this race for last 150 years. The competitors of other companies with Alpha Natural Resources is rather high.
Danger of New Entrants.
A variety of barriers are there for the brand-new entrants to take place in the consumer food industry. Just a couple of entrants prosper in this market as there is a need to comprehend the customer requirement which requires time while recent competitors are aware and has progressed with the customer commitment over their items with time. There is low danger of new entrants to Alpha Natural Resources as it has rather big network of circulation internationally controling with well-reputed image.
Bargaining Power of Suppliers.
In the food and beverage market, Alpha Natural Resources Case Study Help owes the largest share of market needing greater number of supply chains. In action, Alpha Natural Resources has also been worried for its providers as it thinks in long-term relations.
Bargaining Power of Buyers.
Thus, Alpha Natural Resources makes sure to keep its consumers satisfied. This has actually led Alpha Natural Resources to be one of the faithful company in eyes of its buyers.
Hazard of Replacements.
There has been a fantastic hazard of substitutes as there are alternatives of some of the Nestlé's products such as boiled water and pasteurized milk. There has actually also been a claim that some of its items are not safe to utilize resulting in the reduced sale. Hence, Alpha Natural Resources began highlighting the health benefits of its items to cope up with the substitutes.
Alpha Natural Resources Case Study Help covers a number of the popular consumer brands like Package Kat and Nescafe and so on. About 29 brand names amongst all of its brand names, each brand made an earnings of about $1billion in 2010. Its major part of sale is in North America constituting about 42% of its all sales. In Europe and U.S. the leading significant brand names sold by Alpha Natural Resources in these states have a terrific credible share of market. Alpha Natural Resources, Unilever and DANONE are two big markets of food and drinks as well as its main rivals. In the year 2010, Alpha Natural Resources had actually made its annual revenue by 26% boost due to the fact that of its increased food and beverages sale particularly in cooking stuff, ice-cream, drinks based upon tea, and frozen food. On the other hand, DANONE, due to the increasing costs of shares resulting an increase of 38% in its profits. Alpha Natural Resources Case Study Help reduced its sales expense by the adaptation of a new accounting procedure. Unilever has number of staff members about 230,000 and functions in more than 160 countries and its London headquarter as well. It has ended up being the second largest food and drink market in the West Europe with a market share of about 8.6% with only a difference of 0.3 points with Alpha Natural Resources. Unilever shares a market share of about 7.7 with Alpha Natural Resources ending up being ranking and first DANONE as 3rd. Alpha Natural Resources draws in regional costumers by its low cost of the item with the local taste of the items keeping its top place in the global market. Alpha Natural Resources company has about 280,000 staff members and functions in more than 197 nations edging its rivals in many regions. Alpha Natural Resources has likewise minimized its expense of supply by presenting E-marketing in contrast to its competitors.
Note: A quick contrast of Alpha Natural Resources with its close rivals is given up Exhibit C.
The internal analysis and external of the company likewise can be done through SWOT Analysis, summarized in the Exhibition F.
• Alpha Natural Resources has an experience of about 140 years, allowing company to better carry out, in various situations.
• Nestlé's has presence in about 86 countries, making it a global leader in Food and Drink Market.
• Alpha Natural Resources has more than 2000 brand names, which increase the circle of its target consumers. Famous brand names of Alpha Natural Resources consist of; Maggi, Kit-Kat, Nescafe, and so on
• Alpha Natural Resources Case Study Help has large big of spending on R&D as compare to its competitors, making the company business launch release nutritious and innovative healthyItems
• After adopting its NHW Method, the company has done big quantity of mergers and acquisitions which increase the sales growth and improve market position of Alpha Natural Resources.
• Alpha Natural Resources is a well-known brand with high customer's commitment and brand recall. This brand loyalty of consumers increases the possibilities of easy market adoption of numerous new brand names of Alpha Natural Resources.
• Acquisitions of those company, like; Kraft frozen Pizza company can provide an unfavorable signal to Alpha Natural Resources clients about their compromise over their core proficiency of much healthier foods.
• The growth I sales as compare to the business's financial investment in NHW Method are rather various. It will take long to alter the understanding of individuals ab out Alpha Natural Resources as a company offering healthy and nutritious items.
• Introducing more health related items makes it possible for the business to capture the market in which customers are quite conscious about health.
• Developing countries like India and China has largest markets worldwide. Thus broadening the marketplace towards establishing countries can improve the Alpha Natural Resources service by increasing sales volume.
• Continue acquisitions and joint ventures increases the market share of the business.
• Increased relationships with schools, hotel chains, dining establishments etc. can likewise increase the number of Alpha Natural Resources Case Study Help consumers. For instance, instructors can suggest their trainees to buy Alpha Natural Resources products.
• Economic instability in countries, which are the potential markets for Alpha Natural Resources, can develop numerous issues for Alpha Natural Resources.
• Shifting of items from normal to much healthier, results in extra expenses and can cause decline business's earnings margins.
• As Alpha Natural Resources has an intricate supply chain, for that reason failure of any of the level of supply chain can lead the business to deal with specific issues.
The market division of Alpha Natural Resources Case Study Analysis is based on four factors; age, gender, profession and income. Alpha Natural Resources produces numerous products related to children i.e. Cerelac, Nido, and so on and related to adults i.e. confectionary items. Alpha Natural Resources items are quite economical by practically all levels, but its major targeted customers, in regards to earnings level are middle and upper middle level customers.
Geographical segmentation of Alpha Natural Resources Case Study Help is composed of its existence in practically 86 nations. Its geographical segmentation is based upon two main elements i.e. typical income level of the customer in addition to the climate of the region. Singapore Alpha Natural Resources Business's segmentation is done on the basis of the weather of the region i.e. hot, warm or cold.
Psychographic segmentation of Alpha Natural Resources is based upon the personality and life style of the client. Alpha Natural Resources 3 in 1 Coffee target those clients whose life style is quite busy and don't have much time.
Alpha Natural Resources Case Help behavioral segmentation is based upon the mindset knowledge and awareness of the client. For example its highly healthy items target those clients who have a health conscious mindset towards their consumptions.
The VRIO analysis of Alpha Natural Resources Company is a broad range analysis supplying the company with an opportunity to get a practical competitive benefit versus its rivals in the food and drink industry, summarized in Display I.
The resources used by the Alpha Natural Resources company are important for the business or not. Such as the resources like financing, human resources, management of operations and experts in marketing. This are some of the essential valuable factors of for the identification of competitive advantage.
The important resources made use of by Alpha Natural Resources are pricey or even rare. , if these resources are typically found that it would be simpler for the competitors and the brand-new rivals in the industry to effortlessly move in competition.
The replica process is pricey for the rivals of Alpha Natural Resources Case Help Business. Nevertheless, it can be done only in two various methods i.e. product duplication which is produced and produced by Alpha Natural Resources Company and launching of the replacement of the products with switching expense. This increases the risk of interruption to the current structure of the market.
This part of VRIO analysis handle the compatibility of the business to position in the market making efficient usage of its important resources which are difficult to mimic. Regularly, the development of management is absolutely based on the firm's execution method and team. Therefore, this polishes the abilities of the company by time based on the decisions made by company for the development of its strategic capitals.
R&D Spending as a percentage of sales are declining with increasing actual amount of costs shows that the sales are increasing at a higher rate than its R&D costs, and enable the company to more spend on R&D.
Net Profit Margin is increasing while R&D as a portion of sales is declining. This sign likewise reveals a thumbs-up to the R&D spending, acquisitions and mergers.
Financial obligation ratio of the business is increasing due to its spending on mergers, acquisitions and R&D development instead of payment of debts. This increasing financial obligation ratio pose a danger of default of Alpha Natural Resources to its financiers and might lead a declining share costs. Therefore, in regards to increasing debt ratio, the company must not invest much on R&D and must pay its current debts to decrease the risk for financiers.
The increasing danger of financiers with increasing financial obligation ratio and declining share prices can be observed by big decline of EPS of Alpha Natural Resources Case Solution stocks.
The sales growth of business is also low as compare to its acquisitions and mergers due to slow understanding building of customers. This slow growth also impede company to further spend on its acquisitions and mergers.( Alpha Natural Resources, Alpha Natural Resources Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of charts and computations given in the Exhibits D and E.
2 analysis can be used to derive different strategies based upon the SWOT Analysis offered above. A short summary of TWOS Analysis is given up Display H.
Techniques to make use of Opportunities using Strengths.
Alpha Natural Resources Case Help needs to present more ingenious products by big quantity of R&D Spending and acquisitions and mergers. It could increase the market share of Alpha Natural Resources and increase the revenue margins for the business. It could also provide Alpha Natural Resources a long term competitive benefit over its rivals.
The worldwide expansion of Alpha Natural Resources need to be focused on market catching of developing nations by growth, drawing in more clients through customer's loyalty. As developing countries are more populated than industrialized nations, it could increase the customer circle of Alpha Natural Resources.
Methods to Conquer Weak Points to Exploit Opportunities.
Alpha Natural Resources Case Solution should do careful acquisition and merger of companies, as it might affect the client's and society's perceptions about Alpha Natural Resources. It ought to obtain and combine with those companies which have a market track record of healthy and healthy companies. It would enhance the perceptions of consumers about Alpha Natural Resources.
Alpha Natural Resources should not just invest its R&D on development, instead of it should likewise concentrate on the R&D costs over evaluation of cost of various nutritious items. This would increase expense performance of its items, which will result in increasing its sales, due to declining costs, and margins.
Techniques to use strengths to overcome hazards.
Alpha Natural Resources Case Help needs to relocate to not only developing however likewise to developed nations. It ought to expands its geographical expansion. This large geographical expansion towards establishing and developed countries would minimize the danger of prospective losses in times of instability in different countries. It needs to widen its circle to different countries like Unilever which operates in about 170 plus countries.
Strategies to get rid of weak points to avoid dangers.
Alpha Natural Resources Case Solution needs to sensibly control its acquisitions to avoid the threat of mistaken belief from the customers about Alpha Natural Resources. This would not only improve the perception of customers about Alpha Natural Resources but would also increase the sales, revenue margins and market share of Alpha Natural Resources.
In order to sustain the brand in the market and keep the consumer intact with the brand name, there are two choices:.
The Business ought to spend more on acquisitions than on the R&D.
1. Acquisitions would increase overall possessions of the business, increasing the wealth of the business. Nevertheless, costs on R&D would be sunk expense.
2. The business can resell the acquired systems in the market, if it stops working to execute its method. Amount invest on the R&D might not be restored, and it will be considered completely sunk expense, if it do not provide potential outcomes.
3. Investing in R&D supply slow growth in sales, as it takes very long time to introduce a product. Nevertheless, acquisitions supply quick outcomes, as it supply the business already established product, which can be marketed not long after the acquisition.
1. Acquisition of business's which do not fit with the company's worths like Kraftz foods can lead the company to face misconception of consumers about Alpha Natural Resources core worths of nutritious and healthy products.
2. Big spending on acquisitions than R&D would send a signal of company's inadequacy of developing innovative products, and would outcomes in customer's frustration.
3. Large acquisitions than R&D would extend the product line of the business by the products which are already present in the market, making company not able to introduce brand-new ingenious items.
The Company ought to invest more on its R&D instead of acquisitions.
1. It would allow the company to produce more innovative items.
2. It would provide the business a strong competitive position in the market.
3. It would allow the business to increase its targeted clients by presenting those products which can be used to a totally new market sector.
4. Ingenious products will offer long term advantages and high market share in long run.
1. It would decrease the revenue margins of the company.
2. In case of failure, the whole costs on R&D would be thought about as sunk cost, and would affect the company at big. The threat is not in the case of acquisitions.
3. It would not increase the wealth of business, which might offer a negative signal to the investors, and could result I decreasing stock rates.
Continue its acquisitions and mergers with considerable costs on in R&D Program.
1. It would permit the company to present brand-new innovative items with less threat of converting the spending on R&D into sunk cost.
2. It would provide a positive signal to the financiers, as the overall assets of the company would increase with its considerable R&D costs.
3. It would not impact the revenue margins of the business at a large rate as compare to alternative 2.
4. It would supply the company a strong long term market position in terms of the company's total wealth along with in terms of innovative items.
1. Risk of conversion of R&D spending into sunk cost, higher than alternative 1 lower than alternative 2.
2. Threat of mistaken belief about the acquisitions, greater than alternative 2 and lower than alternative 1.
3. Intro of less number of ingenious products than alternative 2 and high variety of innovative items than alternative 1.
With the deep analysis of the above options, it is recommended that the company needs to select the alternative 3 in order to keep a competitive position in the long run. As the alternative 3 would make it possible for the business to not only introduce ingenious and new items in the market it would also reduce the high expenditures on R&D under alternative 2 and increase the revenue margins. It would allow the company to increase its share prices as well, as financiers want to invest more in companies with substantial R&D costs and increase in the overall worth of the company.
Action and application Strategy
Technique can be executed effectively by establishing particular short-term in addition to long term strategies. These plans might be as follows;
Short Term Strategy (0-1 year).
• Under the short term strategy Alpha Natural Resources Case Help need to perform numerous activities to implement its NHW technique effectively. These activities are as follows;.
• Get the audit of its brand name portfolio done, to take a look at the core selling brand names, which create the majority of its earnings.
• Examine the existing target market in addition to the market segment which is not consist of in the business's circle.
• Examine the present financial data to measure the amount that should be spent on the R&D and acquisitions.
• Analyze the possible investors and their nature, i.e. do they desire long term benefits (capital gain), or the desire early profits (dividend). It would let the business to know that just how much amount needs to be invested in R&D.
Mid Term Plan (1-5 years).
• Acquire those companies in which the company has possible experience to deal with. Get most favorable organizations with a strong commitment to health, to build the client's understandings in the ideal instructions.
• Focus more on acquisitions than R&D to develop the base in the customer's mind about Alpha Natural Resources values and vision and to avoid potential danger of sunk cost.
Long Term Plan (1-10 years).
• Acquire companies with health in addition to taste element, as the base for the Alpha Natural Resources as a company producing healthy products has been built under midterm plan and now the company could move towards taste aspect too to comprehend the customers, which focus more on taste instead of health.
• Be more aggressive towards R&D than the acquisitions, as it is the substantial time to develop new items.
Alpha Natural Resources has stayed the leading market player for more than a years. It has actually institutionalised its techniques and culture to align itself with the market modifications and customer habits, which has actually eventually allowed it to sustain its market share. Alpha Natural Resources has established considerable market share and brand name identity in the city markets, it is suggested that the business should focus on the rural areas in terms of developing brand name equity, commitment, and awareness, such can be done by creating a specific brand allowance method through trade marketing tactics, that draw clear distinction between Alpha Natural Resources products and other competitor products. Furthermore, Alpha Natural Resources must take advantage of its brand image of safe and healthy food in catering the rural markets and also to upscale the offerings in other categories such as nutrition. This will allow the business to establish brand name equity for recently introduced and already produced items on a higher platform, making the effective usage of resources and brand name image in the market.