Aug 8, 2020 in Case Study

Case Study Sample

Benary is a German company that operates in the ornament plant breeding industry. This business has a rich history that dates back to the 19th century. Besides, presently, it is a multinational corporation that operates in 110 countries. However, despite these accomplishments, Benary continues to lose profitability. To identify the reasons of the decreased turnover and provide recommendations that can return the companys competitiveness, it is appropriate to conduct PESTEL and SWOT analyses and discuss the possible options to solve the issue choosing the most appropriate one.

PESTEL Analysis

Political

Presently, political environment does not pose considerable threats or limitations to Benary. Hence, it is appropriate to mention that the companys history reveals that it was negatively affected by the two World Wars. Despite the fact that both times Benary was rebuilt, the violated financial sustainability might have a negative impact on the present firms revenues. For instance, the wars caused massive disruptions, death of skilled employees, and deteriorated international relations for decades. Given that Benary is a global producer of seeds, it is not surprising that the company was almost destroyed twice. Thus, it is natural to conclude that the former unbeneficial political environment prevented the accumulation of capital.

Economic

Economic environment poses moderate challenges for Benary. The main issue is connected with the high costs of breeding and research, which turns this business into an unprofitable one. Moreover, considerable rivalry encourages the company to maintain competitive prices. Besides, the purchasing power of its customers is not high. Given these factors, one may deduce that economic environment poses the average threats and limitations.

Social

Social factor of Benarys external environment is beneficial. In particular, the discussed company enjoys the advantages of a good reputation, which assures the support of local community as the biggest stakeholder. Besides, the ornament plant breeding itself has a positive reputation of a non-harmful and aesthetic industry. In addition, the firms products have strong decorative and aesthetic value as well as contribute to the healthy and eco-friendly lifestyle. Therefore, Benary may enjoy the advantageous social environment.

Technological

Benary benefits from a friendly technological environment because it allows producing the new kinds of flowers during a short period of time. Besides, technology reduces manufacturing costs. In addition, the development of the Internet makes it possible to connect the markets of different countries, in which the discussed company operates. This approach is crucial for studying customers needs, which predefines excellent market segmentation. Successful market segmentation can be further used in conducting online advertising campaigns that are intended to increase the sales. Moreover, monitoring and processing the entire business performance becomes easier and more time- and energy-efficient with the help of electronic software. Therefore, one can rightfully deduce that technological environment is beneficial for Benary.

Environmental

Environmental factor is challenging for Benary. Specifically, this company spends a lot of money for creating in Germany the climate needed for breeding the warm climate kinds of plants. Therefore, the native cool climate does not allow reducing manufacturing costs. Besides, breeding requires consuming a lot of natural resources, for example, fresh water, fertile soils, and others. It is not surprising that the local green activists may be highly opposing Benarys performance, which can create a negative reputation, such as lack of environmental sustainability. To become environmentally sustainable, Benary needs implementing the eco-friendly techniques and combine this approach with donating for nature conservation programs. Both strategies require money, which the firm does not have.

Legal

Legal environment does not pose challenges for Benary. Without a doubt, the company is required to adhere to labour safety standards and assure social protection of its employees. These approaches are costly to maintain, and in spite of this fact, the firm is legally encouraged to arrange performance in accordance with these norms. Apart from that, other legal burdens are not identified.

SWOT Analysis

Internal

Strengths. Undoubtedly, the idea to strengthen control over the work of the companys managers improves Benarys organizational chart; however, this positive change is not drastic and, thus, it is not reflected in the firms profitability. Another positive organizational alteration is the approach to assure that all employees are well-motivated to increase the companys revenue. Without a doubt, this is an important initial step on the way towards aligning business performance with the market-oriented strategy.

Moreover, Benary creates a considerable range of products including those plants that require renewing seeds every year or two. In addition, the firms plants vary in their external qualities, for instance, size and colour, as well as in terms of the internal features, such as robustness to draught and high ratio of germs. This diversity of products allows fulfilling various clients needs and encourages them to buy the same seeds again. This strategy is advantageous for creating a loyal customer base. In this regard, a reputation of a good quality seeds contributes to the increase of customer loyalty. Furthermore, to keep clients pressure under control, the company works with 5-6 main brokers, which adds sustainability to Benary.

Weaknesses. For years, the advisory board headed by Katrin Benary-Timm, is struggling for fruitful collaboration with the management that inhibits the companys development. The failure of the advisory board to effectively monitor and control the work of the firms management causes significant decline in revenues. Besides, the lack of knowledge about customer segments and the changing demand they set make it impossible to meet the realities of the rapidly changing market. As a result, Benary fails to satisfy clients needs - the shortcoming that correlates with the absence of profits.

Starting with the 21st century, the companys annual turnover has declined by 1/5. This situation negatively affects the stakeholders. Benary struggles to maintain financial responsibility, but the reduction of turnover reveals alarming signs for the shareholders and, in overall, it may create a negative reputation for the discussed business. Without a doubt, unbeneficial financial conditions intensify the conjunctive weaknesses.

Besides, the process of breeding requires much time and money for research, which complicates getting profits in a short-term and even in the medium-term perspective. In addition, this business conducts only generative breeding, which limits its customer base. What is more, despite the firms efforts to increase its products diversity, the list of plants is not extensive enough to assure adequate compatibility.

External

Opportunities. The company presently operates in the markets of 110 states. This global expansion provides opportunities to increase Benarys market power, at least, in some of these countries. Besides, this fact implies good potential for increasing the companys intangible assets. Specifically, a recognizable name in a half of the world offers good chances to turn into a world-wide famous brand.

Threats. Being a medium-size company in the global industry of the ornament plant breeding, Benary possesses a limited market power. This position is dangerous for the discussed firm because it limits its options for development, by this, affecting its financial sustainability. Moreover, simultaneously with the fast development of industries at the beginning of the 21st century, customers behaviour (their needs and preferences) becomes volatile and unpredictable. As a result, Benary is missing market opportunities.

Furthermore, a prolonged time for breeding and accompanying financial investments poses a risk for this business. Specifically, it is impossible to predict whether or not a volatile market appreciates a new kind of plant in 10 years. In addition, a strong probability for consolidation of seed brokers may intensify buying pressure imposed on Benary.

What is more, strong competitors pressure and medium pressure of substitutes endanger the companys sustainability.

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The Ways to Improve Benarys Sustainability

To improve a lack of financial sustainability and competitiveness, Benary can apply the following strategic, marketing, and operational options. Firstly, it is recommended to cooperate with complimenting industries, for example, landscape designers, construction, and others. Secondly, this business should consider starting vegetative breeding, which will increase the range of produced plants. Thirdly, the company is advised to conduct a massive international online advertising campaign. Fourthly, Benary can start making seed pelleting to fulfil own demand in this service and, potentially, increase revenue by diversifying the range of services. Fifthly, the costs of production can be reduced if the company relocates the breeding of plants that require the warm climate into their native areas, for example, such as South Africa, China, and other regions. Sixthly, horizontal integration needs to be considered since it can enhance financial sustainability of the discussed firm. Another option is selling certain companys share to investors to obtain necessary financing for the future research and breeding processes.

Evaluating the viability of these options, the less risky and the easiest to implement are accepting proposed investing, developing collaboration with complimentary industries, and conducting online market segmentation and advertising. These strategies bring new opportunities, for instance, creating a blue ocean strategy by blending interior design and ornament plant breeding industries. Besides, these approaches presume acquiring a new role in terms of liability (most likely partnership). To begin with, it is necessary to agree for investors proposal because the companys recovering, in the first place, requires money. In addition, this strategy can be combined with a profound advertising campaign.

Summing up the above-mentioned, one should stress that, in spite of certain positive findings, in the meantime Benary is at risk of bankruptcy. In particular, the above-revealed PESTEL and SWOT analyses illustrate that the discussed company has considerable strengths and opportunities. Besides, this firm enjoys beneficial technological, social, legal, and political environments. Despite these positive aspects, Benary endures strong rivals pressure and moderate pressure of buyers and substitutes. What makes the things even worse is that this business fails to meet the realities of the todays markets. Moreover, the company does not implement any effective strategies that can save it from bankruptcy. Therefore, the proposed investing is vital as well as the approaches to advance marketing techniques and strengthen brand image. Furthermore, collaboration with complimentary industries can help reviving Benary, which will require rebranding and changing the range of goods and services.

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