Strategic Analysis : Healthy Potion

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INTRODUCTION Healthy Potion is currently experiencing steady growth and profitability due to its success in the early stages of business development. However, as the business begins to grow out of the establishment phase it has become increasingly evident that the reliance on a single product is not a sustainable business plan. Healthy Potion requires a diversification strategy to grow their business and to ensure that it remains competitive in the long run. If successful, the implementation of this strategy will ultimately contribute to a balanced scorecard. STRATEGIC ANALYSIS Prior to formulating a diversification strategy for Healthy Potion, an evaluation of the business’ strength and position in the market must be undertaken. This is…show more content…
This will mitigate the overall instability of returns by ‘diluting the impact of failure on any single income source’ (Villagra 2005, p. 18). This opportunity is further supported by the growing trend of health consciousness in Australia which ‘is now both aspirational and mass market’ (Griggs 2013). Whilst there are many opportunities for Healthy Potion, the business must also take into consideration a variety risks emerging from external influences. One of the strongest influences currently affecting Healthy Potion is the power of suppliers. Healthy potion currently relies on a single supplier to import their concentrate from China. As the concentrate is a unique product, it would be fairly difficult for Healthy potion to switch suppliers. This means that the power of the supplier is relatively high and that the price of input is extremely volatile. It is clearly evident that the need for diversification is imminent for Healthy potion as it gives the business something to fall back on if their relationship with the supplier becomes unstable. In relation to competitive rivalry, Healthy Potion faces strong competition in the beverage market. Although it is able to separate itself from other beverages by being ‘healthy’, many larger corporations are also starting to adopt this health trend. This is reflected with Coca-Cola which geared the majority of their marketing efforts in 2013 towards the Coke Zero and Powerade Zero sugarless brand (Carey 2013). This is further
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