Lion Nathan
Lion Nathan is a premium alcoholic beverages company that operates in Australia, New Zealand and China. Lion Nathan began brewing in New Zealand since 1923. By the late 1980s, Lion Nathan has established itself as one of New Zealand largest company and in 1990, Lion Nathan became an Australian business when it enter into the Australian market and took over some of Australia owned brewers. In 1999 Lion Nathan started its operation in China. Lion Nathan is listed in the New Zealand stock exchange (NZX) under the code (LNN). The brewer produced many beers brands in New Zealand which include Lion Red, Speights, Waikato draught, Canterbury draught, Steinlarger, Mac's series and premium beers like Steinlarger Pure and Speights Summit. Apart from brewing beers, the company is also involved in other operations which include distribution of wine, spirits under licensed and production of Ready to Drink (RTD) beverages. The company are also involved in other sectors of the business market, in retailing, the company owns the liquor King brand name, in New Zealand there are 38 liquor king store nationwide. In the export market, the company has a sector called Maltexo which produce and export product for craft or home brewing in bulk for the food industry overseas.
This paper attempts to analyze the internal and external analyses plus the competitive advantage of Lion Nathan using SWOT (Strengths, weakness, opportunities, and threats) analysis and PESTLE Analysis.
Internal
Lion Nathan can be recognized for its strengths in terms of identifying its core purpose in the business, alongside its vision of making itself Australia's and New Zealand's leading alcoholic beverage company. This is undertaken with a stronghold on the company's identity in the wine industry while making known its values of integrity, passion, acing together, and being sociable. (Lion Nathan, 2008) These values, particularly the last one, are usually not found in other beverage companies, making Lion Nathan different from other brewers. In most other alcoholic beverage companies they frequently finds it hard to build positive values and carry them out to the public due to the nature of the business, but Lion Nathan is able to identify the values that may be appropriately attached to the product. This suggests that the company demonstrates that it cares for its customer and stakeholder in the business, a strategic task that is proved both effective and practical. This is how the company provides sustainable competitive advantage.
One of Lion Nathan aims as quoted from the company is acting with integrity and doing the right thing for the long-term health of its business and the communities in which it operates is indicative of a long-term perspective. (Lion Nathan, 2008) These are the strengths of Lion Nathan in terms of sustainable competitive advantage. The company's does this by providing investment in community partnerships, responsible marketing, education, research, reducing its water usage and carbon dioxide emissions, which are viewed as strengths, leading it towards commitment with the general public and society. It may be expressed that sustainable competitive advantage begins with the very core purpose of the organization, with its vision and values, acting as one that help uplifts the organization towards it. This is one distinctive competency of the company, which is why Lion Nathan operates successfully in the Australian and New Zealand markets.
Other strengths of Lion Nathan is that the company has operation in China as well. This is a strength because it enables the company to have a larger customer base. This also enables the company to experiment on new product for the Chinese market. Lion Nathan also exports different types of alcoholic beverages to over 50 countries worldwide, this enable the company to keep a strong foreign customer base with funds coming from other countries while also making money here locally in New Zealand. Lion Nathan is the forth biggest brewers in the world, this gives Lion Nathan a name to be recognized in the world brewing industry and thus enabling the company to conduct business easily.
The operations of Lion Nathan, which are limited only to Australian, New Zealand and China markets, are viewed as a weakness. Lion Nathan will need to look at operation in more country to dominate the global market. In today's globalizes world, organizations must increase their competitiveness. According to Lion Nathan, New Zealand beer volumes at the year to date were down 5%. The decline was due to weakness in on-premises trading since new legislative was introduced by the government, other factors includes competitive pricing for packaged beers.
The value chain also plays an important part of Lion Nathan operations to provide competitive advantage. The value chain reviews how the different functions of a company can help in the process of driving down costs and increasing the perception of value through differentiation (Hill & Jones & Galvin & Haidar 2007, p. 106). Lion Nathan value chain is one that has works well for the company and that is why the business is so successful. (Lion Nathan, 2007)
External
The opportunities posed for Lion Nathan include making good use of the company's innovation strength and export opportunities to drive growth. The future of Lion Nathan lay in harnessing new market in particularly ones with export prospective. Lion Nathan opportunities also lies in e-business, the company does little outsourcing for their operations. Many large organisations have realized that out sourcing will potentially save millions. Another opportunity is meeting society's outlook of business, an external scope which are ever changing, and to which Lion Nathan has to continue developing in order to meet them. This would pose challenges on the part of the company, which sees forth incredible gains when addressed properly and timely.
Threats faced by Lion Nathan include the ever continuing presence of other brewery companies trying to gain market dominance in New Zealand. Another threat faced by the company is the ones mentioned in the weaknesses that is the lack of operations outside New Zealand. Due to limitation in operations, a threat that may be possibly faced by Lion Nathan is the potential dominance of other leading brewery companies that have a greater expansion worldwide. Fuel prices have been on the increase in recent years, this may be a treat to the business as transportation cost increases as well. This will reflect on liquor prices as Lion Nathan will be forced to increase the price of their product. Tariffs increase is also a possible treat for the business in the exporting sector.
The macro-environment (PESTAL Analysis)
The macro-environment is the studies of the environment that can affect a business through political, legal, technological, economic, social culture and demographic forces. (Hill & Jones & Galvin & Haidar 2007, p. 73) The main aspect that will impact Lion Nathan and can be analyse in depth is the social cultural factor and legal matters.
Alcohol is one of the most commonly used drugs in New Zealand. (ALAC, 2008) New Zealanders enjoy the odd drink or two most of the time but studies has shown that there are negative health impact if alcohol are abuse and social consequences are also cause by alcohol. Consequences include accident, assault, hospital admission or even death. Binged drinking in New Zealand is a big problem and it is dimmed to most young people that it is socially acceptable. New Zealand drinking culture is costing the country dearly. A study conducted by Easton in 2002 estimated that the total cost of social costs of alcohol harm in New Zealand vary from $1 billion to $4 billion per year. Breaking it down into section, the public health sector cost $655 million due to alcohol abuse, crime and related costs are around $240 million, social welfare at around $200 million and other alcohol harm related government spending is about $330 million.(ALAC, 2008) New Zealand has a drinking culture and it's harming us dearly so the government is currently addressing the issue by introducing new legislation and educating the public about alcohol awareness. The most recent campaign the government is trying to put across is it's not the drinking, it's how we're drinking ads. Being a social responsible organisation Lion Nathan are aware of the current situation facing New Zealand, that is why the company is fully committed on encouraging responsible drinking and minimize the misuse of alcohol through funding agencies like Alcohol Advisory Council (ALAC) and also funding for other organisations like Student Against Drunk Driving (SADD) and continuous promoting anti-drink driving messages.
The internal and external analysis has revealed a number of strength within Lion Nathan that shows the business competitive advantage and also some weaknesses that the company poses that may need to be look at in the future. There are a numbers of opportunities and threats that Lion Nathan posses in its external operating environment that may hinder operation in the future as well. In the future it may be feasible for Lion Nathan to come up with more innovative premium beers invention like the Steinlarger Pure in the market today which is a premium beer that is free of additives or preservatives, a healthier option and a healthier lifestyle for consumers.
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