Business Consultancy Project: Loeen Co. LTD

Executive summary

In summary, the following is a summary of the case. It puts the analysis and findings into a written report. Based on PESTLE analysis, it is evident that external factors affect the organization. The macro environment’s political, social, technological, and economic factors positively affect the Loeen Co. ltd organization. On a larger scale, there is an opportunity for Loeen Co. ltd to expand into new markets and develop new products that meet customers’ needs. SWOT analysis highlights Loeen’s opportunities and weaknesses. To increase profitability, Loeen Co. ltd can invest in new markets. It is recommended that Loeen Co. Ltd focus on increasing its online presence to create awareness of its products in its existing and new markets. The company should also apply search engine optimisation to improve its website’s visibility, thus attracting visitors and increasing the conversion rate to actual customers. Moreover, it is recommended that the company takes full advantage of social media advertising due to the high number of potential customers it reaches and the low costs involved.

Introduction

Loeen Co. ltd is a family business started in 1996. It owns approximately 180 hectares of farmland for pistachios in Saveh. The current report will include a PESTLE analysis to help identify essential components of an organization’s environment. PESTLE stands for power, technical, financial, legal, and environmental factors (Buye, 2021). Loeen Co. ltd has a strong competitive structure with reasonable financial returns supported by its good technical, economic, and overall capabilities. SWOT analysis will help to analyze the firm’s strengths and weaknesses, opportunities, and threats. It also involves conducting a Value, Rarity, Imitability, and Organisation (VRIO) to analyse the resources and advantages that give Loeen company limited a competitive edge against its rivals.

Situational analysis

PESTLE Analysis

PESTLE analysis, or the five forces model, is a popular tool used by marketers and analysts. This tool looks at ten factors that affect businesses and evaluates them in terms of four different categories: political, economic, social, technological, legal, and environmental landscape (Matovic, 2020). The model identifies the strengths of each force and provides a visual representation. It is a useful tool to evaluate external factors that can enhance or undermine a business’s success; however, it should not be used as a decision-making matrix. A PESTLE analysis is one of three analyses that provides information on internal and external factors, giving insights on financial, legal, and political impact:

Political Factors

The political factors are related to the government and its agencies including the regulatory agencies. Political factors and governments can determine environmental impacts (Siddiqui, 2021). Loeen is subject to government regulations, for example, there may be government policies that affect the way Loeen makes its decisions and conducts its business. Some political factors in countries such as advanced democracy in Switzerland favour the company by giving it a good business environment to carry out operations. It has to carry out its business operations following the rules and regulations in different jurisdictions including Iran, Italy, France, Switzerland, and Qatar. The company is negatively affected by high restrictions in Europe on growth and purchase of Pistachios. It also has to acquire various certifications such as the DPP is a certification to allow the company to deal in food products. For instance, Pistachios have high restrictions in Europe, which would affect decision-making in Loeen’s design.

Economic Factors

Economic factors include the factors of raw material and energy prices, labor costs, economic growth, consumer spending, and the cost of credit. The rate of economic growth is a key factor that determines the development stage of a business (Siddiqui, 2021). Pistachios have different quality requirements, so product development would be affected by economic factors. For example, Loeen may have to reduce profit and increase sales volume to cover costs and provide more jobs for people. Loeen company limited is negatively affected by the expensive cost of labour in countries such as Switzerland.

Social Factors

Social factors involve relationships within society, including family, friends, neighbors, community, cultural background, and ethnic origin. These are very important in making decisions about products or services (Siddiqui, 2021). Loeen Co. ltd is an international business, but it still needs to consider social factors. For example, if Loeen Co. ltd wants to expand its market, it must understand the local social factors and knowledge of local languages so as not to offend the local people.

Technological Factors

Technological factors affect a business by creating, changing, or destroying technology or the environment. The key elements in this category include equipment and machinery, research, development, and innovation (Siddiqui, 2021). Technological factors include information technology and communication (IT&C). The capacity of technology is another important factor for business success. Pistachios have a big market in North America, which has good IT&C infrastructure and highly specialized machinery. For example, Loeen can use Pistachios’ experience in the Pistachio production process to enhance Loeen’s operations and manufacturing ability.

Legal Factors

Legal factors involve laws such as those based on International Environmental Law, Administrative Law, and the United Nations Convention on the Law of the Sea (Matovic, 2020). Loeen is subject to laws regarding things such as patents, trademarks, product liability, and intellectual property theft. These factors can be affected by government regulations and the laws of different states in which the business operates.

Environmental Factors

Environmental factors may be physical or human-made that have effects on the planet and in turn affect humans (Matovic, 2020). Effects include land use, climate change, natural resources, and natural disasters such as floods and fires. Loeen Co. ltd. uses natural resources that are subject to environmental factors. For example, Loeen Co. ltd is subject to the conditions of nature when harvesting and farming. Loeen has a global environmental responsibility policy related to the environment, environment-friendly management, product quality, and corporate social responsibility. The company takes active steps in protecting the environment in areas such as reducing energy consumption, reducing production emissions and radioactive substances at workstations, providing environmentally friendly products and packaging, treating wastewater, and reusing water that is not “.

VRIO (Value, Rarity, Imitability, and Organisation) Analysis

The VRIO analysis alludes to an analysis process which takes a capability or resource using the value, imitability, rarity, and organisation dimensions. The analysis uses the dimension to evaluate if the capability or the resource is easily replicable, unique, or if the organisation in place is sufficient to capture value (Madsen, 2022).

Value

The dimension involves the assessment on whether the company owns a resource that creates additional value for its customers. It evaluates whether it has the ability to take advantage of an opportunity or overcome competition (Madsen, 2022). The company owns a 180 hectares farm in Saveh, Iran; thus its able to produce its own pistachios thus sell at a better price to the customers. Loeen company limited owns advanced and sophisticated machines in its production facilities, thus able to provide better taste, higher quality, and fresher products to its customers as compared to its competition.

Rarity

The dimension involves the evaluation of the company’s ability to control scarce capabilities or resources. It is focussed on whether the company owns something which has a high demand on the market but cannot be found easily by its competitors (Knott, 2015). Loeen Ltd has a comparative advantage due to its access and knowledge of suppliers in different countries. It acquires its pistachios from the suppliers at the best prices which reflects on the prices it charges its customers. Also, the company has a unique way of packaging where its packages cater for individual preferences possible due to its unique production facilities. It differentiates its offering through using rigorous mechanisms and procedures in the growth of its pistachios to ensure high quality of harvest every year. It has enabled the company to build a reputation in the local and international market due to high quality of products it offers in the market.

Imitability

It refers to the possibility of duplication of the compoanys capability or resource by its competitors. It evaluates the level of difficulty for the competitors to introduce a substitute equivalent to the companys offerings (Amaya et al., 2022). Loeen company limited has a comparative advantage due to the companys ability to offer a wide variety of products, and equipped production sites that enable packaging of offerings as per the customers personal requests, and exact quantitities. It is difficult for other firms to invest in such production sites and access the international sources due to the high costs involved.

Organisation

It refers to the level of organisation of the companys structures, processes, culktures, and management systems to enable it maximise on benefitting from its capabilities and resources. It evaluates the internal support, and organisation ability to identify and utilise the potential of its costly to imitate, valuable and rare resources (Knott 2015). Loeens company limied has a qualified, and dedicated CEO keen in gaining latest information on marketing, and who takes charge of its laboratory, packaging, and transport. The company liases with powerful business partners including Swiss 1848 SA to launch markets in new markets in the Middle East and Europe. The company has multiple plans to expand its reach to the customers by collaborating with kiosks to get into B2C business.

Reason for Using the VRIO Analysis

I use the VRIO analysis because it is the most effect tive framework to allow the determination of the unique value of Loeen company limited. It helps to identify the competitive advantages that the company has over its competitors thus enables thje management to make future plans and allocate resources optimumly to maximise on the advantages. The analysis brings out the advantages and strengths of the company which increases the potential of the company to stay ahead in the market (Madsen, 2022).

Internal Analysis

The internal analysis includes five areas: corporate governance, financial analysis, economic value analysis, organizational structure analysis, and internal environment analysis (Naciti et al., 2022.).

Internal Governance: Corporate governance is the process that ensures that management is working in the interest of shareholders (Bae et al., 2018). It includes structures that oversee how business decisions are made. Loeen has a well-balanced board of directors.

Financial Analysis: Financial analysis refers to the financial statements and other financial information used to evaluate a company’s financial performance, position, and prospects (Mahzura, 2018). Pistachios are one of the main suppliers of Loeen’s business. Financial analysis assists managers in making decisions on the prospects of a company. Financial statements are very important in decision-making, such as pricing and purchasing.

Economic Value Analysis: Economic value analysis (EVA) is a method used to evaluate whether a project generates sufficient returns on investment to be considered profitable or worthwhile (Tanjung and Wahyudi, 2019). It is the process of identifying the value that each product adds to the total value of all products produced by a firm. For Loeen Co. ltd, EVA can help identify opportunities for developing new products and services that meet customer needs, as well as help with power management and energy consumption. Organizational Structure Analysis: Organizational structure refers to the hierarchy of authority and responsibility within a business that determines how tasks are performed. Internal Environment Analysis: Internal environment analysis is the assessment of the characteristics and dynamics of an organization’s internal environment that affect its strategy, structure, systems, processes, culture, and climate. For Loeen Co. ltd., internal environment analysis can identify factors such as the size of Loeen’s growth potential in different markets as well as product development opportunities such as new product designs or adopting new technology. Internal factors also relate to the company culture and social impacts regarding product safety (e.g., Bhopal Disaster) due to human error in society.

SWOT analysis- Loeen Co. ltd

We can analyze SWOT from the following information:

• Strength
• Weakness
• Opportunities
• Threats

SWOT Analysis

Strengths of Loeen Co. ltd

• Low-cost and efficient methods of production. Pistachio is a high-volume, low-cost product, which makes it easy for Loeen Co. ltd to maintain a consistent rate of product production.
• Large global market and significant growth potential, with regional companies to expand business in all regions (Verbeke et al., 2018). Pistachios are an international food that is used in all continents, including Japan, Europe, and the Middle East.
• Good quality products produced by well-proven technologies. Pistachios are produced using modern technology for breaking down shells into small pieces.
• Profitable business sector. Pistachios are a profitable business sector that generates significant profits for Loeen Co. ltd.
• Good relationships with customers and suppliers. Loeen Co. ltd has successfully built a good relationship with customers and suppliers.

Weaknesses of Loeen Co. ltd

• Imports are expensive due to high transportation costs (Inmaculada et al., 2008). To import raw materials from foreign countries, the company needs to pay high transportation costs such as rail, sea, and air freight charges.
• Production conditions are not favorable in some countries. Certain production areas face problems such as drought-affected crops or floods due to bad weather conditions. This can lead to lower quantities of product being produced than anticipated. • The economic environment is unstable in some countries and regions, making business operations difficult at times. This can affect the company’s ability to pay for raw materials and transportation costs.

Opportunities of Loeen Co. ltd

• Investigate new product ideas. The business sector is a good potential market for new product ideas that are aimed at different markets, ages, and genders. Loeen Co. ltd can develop a new variety of pistachios that meet customers’ needs in terms of flavor, texture, appearance, and price.
• Further develop expansion markets in existing markets. Pistachios are already used in all continents, including Japan, Europe, and the Middle East.
• Develop new distribution and marketing channels. Loeen Co. ltd can develop and expand distribution channels (e.g., retail outlets, wholesalers) to meet growing demands for products.

Threats of Loeen Co. ltd

• The economic environment is unstable in some countries and regions, making business operations difficult at times (Dabla-Norris et al., 2015). This can affect the company’s ability to pay for raw materials and transportation costs.
• Raw material prices are likely to increase, which will lead to higher production costs soon.

Problem Identification

Based on the analysis of Loeen Co. ltd, the following problems were identified:

• If Loeen Co. Ltd. can increase its production, it will get more orders from its customers and generate more revenue. However, to produce more, we need to hire more workers and purchase more raw materials. However, there is also a shortage of skilled workers in the country and so expensive to import raw materials from other countries. Loeen Co. ltd will be profitable if we can figure out how to produce products cheaper (e.g., hire fewer workers) or find new sources for raw materials (e.g., expanding into countries where production costs are low).
• The price of pistachios is so high that if we want to compete with larger competitors, we need to reduce production costs and make our products cheaper.
• The economic environment is unstable in some countries and regions, making business operations difficult at times. This can affect the company’s ability to pay for raw materials and transportation costs.

Problem Identification

Loeen company Limited needs to improve on its marketing to create more awareness of its products and attract more customers. The company’s low online presence has a negative effect on the company’s attraction of new customers and retention of the existing customers. Loeen company limited should focus more on increasing its presence in the digital channels because they are highly accessible to customers thus increasing the chance of increasing the demand and sales of its products in the local and international markets.

The company needs to put more emphasis on its search engine optimisation(SEO). Search engine optimisation alludes to the process undertaken by a company to improve its website with the aim of increasing the website’s visibility in search engines such as Google and Microsoft Bing (Killoran, 2013). The company needs to ensure its online pages are visible in search results to increase the likelihood for the customers to find and click on its products and other information. It will attract more website visitors and increase the chances of turning the visitors to an audience, clients, or visitors who will keep coming back to the company’s website.

Loeen company limited does not take the advantage provided by the social media advertising. Social media advertising refers to a form of digital marketing that uses social networks, including Twitter, Instagram, and Twitter to reach the target audience. The company needs to take maximum advantage of this form of marketing which is a more effective and quick way to reach and capture the attention of a huge number of consumers thus boost its marketing campaigns. The use of social media will boost the leads for the company’s business as it puts its product offering in front of millions of people, thus contributing to the expansion of the customer base. Besides, social media advertising provides the company with a low cost alternative for advertising as the advertising platforms charges are based on a pay perview or pay per click thus pays only when a potential customer views an advert (Lee and Hong, 2016).

Increased online presence will enable the company to increase its chances of success with the new line of products it intends to launch in partnership with Swiss 1848 SA. It will also significantly contribute to the success of the Business to Business (B2B) and Business to Customer (B2C) transactions as other businesses and individual customers will get the information about the companys offering quickly and easily through the company’s digital platforms.

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