Hp 's Core Competency Lies

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HP’s core competency lies in its ability to produce a unique health beverage, creating value with the simple process of adding water to the special concentrate, the core product. This is its main strength and distinguishes it from its competitors, which can provide it with a sustainable competitive advantage in the long term (Kak and Sushil 2002, p. 23).
However, there is high risk caused by HP’s reliance on a single product, as a fall in sales will decrease its only source of revenue. Whilst the business benefits from higher sales in hotter months, the seasonality of the product further increases risk, with sales on average falling by 43.5% from quarter 1 to 2 from 2012 to 2014. Instability in sales can cause cash flow problems in colder months and affect business profits (Koenig and Bischoff 2005 cited in Shields and Shelleman 2013, p. 37). Relying on a single supplier exposes the business to the risk of having to temporarily close if the supplier is unable to deliver stock, which is further increased by the vagaries of weather.
There is opportunity for HP to expand and gain greater market share by diversifying into a larger product range in the functional beverage market. Whilst competition is strong in the market, it has had an average annual growth of 5.4% since 2009, with health beverages gaining increasing popularity with Australian consumers due to a greater awareness of ‘personal wellbeing’ and ‘health complications’ (IBISWorld 2014).
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