Tuesday, September 19, 2006

Blackmores - A Strategic Analysis (Part 3)


Value Chain Analysis: Primary Activities

Inbound Logistics
  • Extensive supplier checks means that Blackmores only receives the highest quality materials from its suppliers.
  • All warehouse employees are given extensive training to ensure the most efficient use of human resources possible.

  • Blackmores is moving its headquarters to a central location at Warriewood in order to more efficiently handle its operations.
  • “Everything we do in our Operations area is dedicated to delivering a quality product.” (Blackmores, 2006)

Outbound Logistics/Distribution Channels

  • Blackmores has various distribution arrangements depending in the country it is operating in. For instance, it has an extensive distribution network in New Zealand, with 1700 distribution outlets. In Hong Kong, however, it only distributes through one pharmacy chain store, as competition is highly intense in that market.
Marketing and Sales
  • Great reputation for quality.
  • Blackmores has the highest brand awareness in its category and is the most trusted. (Blackmores 2006 annual report)
  • Effective use of TV commercials to support the debut of new product lines, including Blackmores expansion into the arthritis segment with its Glucosamine product in 05/06.
  • Changes in the Therapeutic Advertising Code have allowed Blackmores to use health professionals in its advertising.
  • Use of the popular Blackmores website to actively communicate with consumers, including 164,000 active subscribers.
  • Blackmores is committed to becoming a source of information regarding health issues:
  • Effective use of the Blackmores website to communicate with its customers. The website won the Hitwise Top Site in the Health and Pharmaceutical category, and has 164,000 active subscribers who receive a fortnightly newsletter of health news.
  • Blackmores Naturopathic Advisory Service fielded 55,000 calls over the past year, providing alternative health information to consumers and professionals.
Value Chain: Support Activities

General Administration

  • Stable leadership over 30 years: Marcus Blackmore retains a 31% stake in the company.
  • Strong commitment to core values which are reflected in all aspects of Blackmores’ business. These core values are: Trust, Leadership, Superior Performance, A More Natural Approach to Health
  • Ability to successfully lobby for regulatory reforms.
  • Strong professional ties with other healthcare professional bodies such as the Pharmacy Guild of Australia, the Pharmaceutical Society of Australia, and the National Pharmacy Students Association.
  • Extremely strong commitment to quality at all costs creates a culture equally obsessed with quality.
  • Strong commitment to social responsibility, with substantial donations to charity and a focus on environmental sustainability, provides an ethical culture and helps enhance the brand image.
HR Management
  • Places great importance on recruiting, training, and retaining high quality staff, and this is reflected in the fact that Blackmores one of 12 Hewitt Best Employers awards for 05/06. This helps Blackmores in attracting new employees, important as the company expands its business into Asia.
  • Blackmores has a profit share arrangement where 10% of its Australian profit is shared between all permanent staff, and recently it gave each of its employees 50 shares in the company to reflect the value it places upon them.
  • Training provided for Blackmores employees through the Senior Consultant Training course is recognised and in some cases interchangeable with the Pharmacy Guild’s National Training Course.

Technology Development, R & D

  • Blackmores sends large contingents of staff to the main pharmaceutical and healthcare trade conventions around the world in order to stay in touch with the latest trends in healthcare.
  • Blackmores regularly funds research into new alternative healthcares, a recent example being a study into the immune benefits of the milk protein lactoferrin, which culminated in a new Blackmores’ product, Immunodefence.
  • Blackmores has relationships with several universities around Australia to ensure it stays on top of the latest research relevant to the industry. One of these universities, Southern Cross University, is the base for the Blackmores Research Centre, and the combined effect of all this research is to help Blackmores regularly produce new products.
  • Focus on procuring from quality suppliers over cheaper ones has meant Blackmores has a greater reputation for quality than many competitors, and allowed it to dominate in the wake of the Pan Pharmaceuticals collapse of 2003.
  • Extremely strong commitment to only procuring quality materials from suppliers:
  • Use of quality control teams to ensure that suppliers are of the highest quality.
  • Extensive product testing.
  • Regulatory compliance.

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