Introduction:
This paper will be focusing on Resene Paints in particular. The company’s current business strategy will be identified. There will also be an analysis regarding the firm’s marco-environment – specific external opportunities and threats that will challenge Resene Paints in its external environment. There will be an appraisal as to the impact of the industry on the firm’s strategic competitiveness. A competitor analysis will also be done which will examine Resene Paints’s competitive advantages, in addition to future and probable objectives, strategies and capabilities of their competitors. This paper will also identify the internal resources competencies and capabilities that the firm is controlling for competitive advantage. Major implementation issues regarding the firm’s sustainability in maintaining competitive advantage will also be identified. Finally, there will be recommendations and suggestions as to future strategies that the company can employ for future leadership in the industry.
Resene Paints: A Company Overview and Its Current Business Strategy
The firm, originally named Stipplecote Products Ltd, was first established in 1946 by Ted Nightingale who invented Stipplecote, paint for concrete. Today, the firm is an international company with four manufacturing operations in New Zealand, one in Australia and one in Fiji. It has over 55 company-owned ColorShops and 40 resellers and stockists all over New Zealand operated by over 500 staff, in 1951, the first waterborne paint was launched by the company in New Zealand with the brand name “Resene” (from the word resin) and during the mid-seventies, the firm changed its name from to Stipplecote Products Ltd to Resene Paints Ltd.
Resene Paints, determined to compete with international paints giants in the New Zealand market, succeeded competitively as the firm’s insatiable investment appetite gave momentum to the company’s growth. Company’s product line included a full variety of paints and specialist coatings designed for residential and commercial buildings, as well as marine, heavy industrial, road marking, automotive and agricultural use. Resene Paints is well-known for innovation throughout its history in association to its water-based paints, color development and environmental awareness. Innovation has kept Resene Paints a step ahead in the paint industry.
Resene Paints is recognized for leading the development of environment-friendly surface coatings from its basic innovation of waterborne paints to its removal of lead from its decorative paints in the late sixties. It is reported that in 1996, the firm has continuously pioneered in manufacturing “green” paint with the introduction of New Zealand’s first full range of Environmental Choice approved paints. The firm is also known as a technological leader in the international field. Most recently, the firm started exporting a tinting technology system to countries such as China, Indonesia, South Africa, Zimbabwe, the Dominican Republic and Malaysia. Furthermore, the firm has concentrated in the commercial sector and developed the necessary requirements to meet its needs. The company has established a close relationship with architects as a principal sponsor of the New Zealand Institute of Architects Resene awards for Architecture, in addition to sponsoring the Architectural Designers New Zealand and the New Zealand Master Painters.
The ongoing success of Resene Paints has been attributed to its opportunities for innovation as well as its management stability. As an innovative company who currently maintains tough competitive advantage, Resene Paints has turned manufacturing and selling of paint into a form of art .
Macro-Environment Analysis
Political. The Hazardous Substances and New Organisms has come into which controls new plant and animal imports and genetically modified organisms, in addition to new hazardous substances. Hazardous substances are anything that “is flammable, explosive, corrosive, toxic, eco-toxic or able to oxidize. It includes a wide range of industrial and agricultural products such as chemicals, resins, paints, inks, solvents and cleaning agents, food additives, aerosols, pesticides, fertilizers, petroleum, fireworks, etc. the aim of the Act is to assess hazardous substances before importing or manufacturing them. Furthermore, to protect consumers from hazards of chemicals such as lead, NPCA (National Paint and Coatings Association) has warned major paint industries in the lead content of their paints to ensure the safety of their consumers. There is also a Building Act in New Zealand that includes details planning, environmental and health controls, some in the paint industry has accused the law of being vague and unclear in parts and permitting some building officials to be stricter than they need to be regarding to the implementation of the regulations, including the use of paints and other coatings.
Economic. New Zealand has a small economy which heavily relies on commodity production in agriculture, fishing and forestry. Consequently, there us a small open economy which is vulnerable and sensitive to fluctuations in commodity prices and the impact of the weather on agricultural output. In the recent years, there has been a shift towards further processing of primary commodities, to add value and to counter fluctuating world commodity prices. The manufacturing sector, which until mid-1980s stressed on production for a small domestic market and was assisted by import protection, has progressively more geared towards export markets. In addition, the country’s economy has grown by 0.2 percent over the quarter of December 2005, which significantly eases from the 1.2 percent recorded over the quarter of September 2005. On an annual average basis, New Zealand’s economic output rose by 2.7 percent over the 2005 calendar year. The country’s economy is expected to grow and continue easing, with the continuing high level of the exchange rate, high interest rates and associated drop in business and consumer confidence
Socio-cultural. Latest researches on consumer behavior and attitudes to direct marketing and privacy of people from New Zealand reveal that the successful direct customer contact is achieved through relevance, trust and control. As people are more associated with the organization, there is likelihood for positive response to direct contact. The positive response among young adults shows that they understand the power and the choices they have regarding direct marketing and cautious deliberation needs to be given. Companies must then respect the consumers’ need for relevance, trust and control.
Technological. As the world has been characterized by innovations, New Zealand keeps up with the trends of the fast-changing world. The era of information technology and the Internet has drove businesses as well as consumers to transact business electronically for firms to gain global competitive advantage and for consumers to have more choices and knowledge on specific products. Online shopping has become a trend in businesses which has considerably altered traditional business transactions as physical presence is no longer needed.
International. Globally, the paint industry is an essential part of daily life. In the world economy, paint industry plays a very vital role as no domestic or commercial field is unaffected by it
Industry Analysis
New Zealand may only have a population of just over four million; however, it has a paint manufacturing industry of some note. For the first quarter of 2005, recent figures of paint manufacturing reached to NZ$120.7 million. The figure was said to decrease a little compared to NZ$137.3 million in the final quarter of 2004 Over the past few years, industries in New Zealand have been fairly motionless including companies conducting paint manufacturing. The wide majority of paints that are manufactured in New Zealand are usually bought in New Zealand with New Zealand Government illustrating its paint exports as “very small”. states that industries in New Zealand are secretive that statistics like annual production levels and market share are very confidential and either difficult to extract or simply unavailable.
There are three companies dominating the retail paint market – Orica, Resene and Wattyl/Taubmans – with Orica having the largest market share in the retail market, adds that one of the biggest latest changes to the market has been attributed to the development of color tools and color ranges which offers a higher variety of choices for customers. Another major development that has affected the paint market has been caused by big box retailers stressing attention on price and pushing cheap deals which, as some in the paint industry say, has distracted consumers away from quality and service. Finally, the industry is also trying to come to grips with the Building Act, recently introduced by the government.
Competitor Analysis
As mentioned earlier, leading companies that are currently head to head with Resene Paints are Orica and Wattyl/Taubmans. It is reported that Orica has the largest market share in the retail market. According to Liebelt, Managing Director and CEO of Orica, Orica’s strength lies primarily in its strong market positions, trusted brands, privileged assets and an ongoing commitment to technology and innovation, in addition to the firm’s team of skilled, dedicated and enthusiastic people. The firm’s main priority continues to be the support, nurture and development of their employees. Moreover, the growth of the firm will provide greater opportunities for the professional advancement and personal development of their staff. Business operations for Orica are involved in three major aspects: strategy, efficiency and culture. The firm’s strategic moves which plans for business growth is built around three simple principles. First is market leadership, the company’s leadership position, either globally or locally, which provides the business the best ability to recognize economies of scale and scope, attract and develop technology and deliver sustained customer and shareholder value. The second is focusing on growing to be the best performing business which meets the firm’s financial performance targets. Lastly, the firm is focused growing “close to the core” which means those in related businesses, expertise can be controlled and synergies are more likely to be available and leveraged. Also part of the firm’s growth strategy is international expansion of their specific businesses that have global strategic advantage. Another aspect in the firm’s business operations is efficiency which includes productivity improvement and capital management. The company aims to maintain their efficiency momentum. They have adopted a more systematic approach to efficiency and effectiveness to build further capabilities and processes within Orica. Such systems and processes have already been fixed to enable their staff to productivity improvements that will in turn deliver superior returns. The last aspect of the firm’s business operations is culture which aligns employees of the company to common goals, behaviors and ethics that will allow and motivate them to attain long-term sustainable results.
Wattyl/Taubmans, on the other hand, is a multinational competitor based in Australia. It has operations in both Australia and New Zealand and employs over 2,000 people. The company dates back in 1915 when H.R. Walters developed a treatment for reviving French-polished furniture which was known as “crystal veneer”. It became and immediate success and became the foundations for the company’s future success. Throughout the past century, the company has built on previous innovations by producing a number of technologically advanced market leading products. The company has continuously met the demands and expectations of the industry by developing and producing specialist products such as protective coatings with long term exterior durability, high performance marine coating systems, UV-cured timber finishes, specialized protective coatings that enable easy removal of graffiti from treated surfaces and special effect finishes for automotive wheels and components .
Internal Analysis
In terms of raw materials, Resene Paints uses approximately a thousand raw materials in the manufacture of its paints and coatings. For each raw material, there were many global suppliers involved. In addition, due to its strong relationships with suppliers, the company became the first in adopting a number of new technologies around the world. For instance, there was this one technology that Resene had adopted in New Zealand that for two months before paint manufacturers were even aware of such technology. Moreover, the actual manufacturing of paint is involved primarily in the mixture of basic ingredients of pigment, solvents, additives and binder. In Resene, for instance, the manufacturing of paint, like majority of other paint industries, is produced in batches which varied from 200 liters to 10,000 liters.
Resene’s products ranges from two basic types of paint: water-based and solvent-based. Within these two types of paint, the firm produces literally hundreds of product types. The firm’s wide product range includes primers, sealers, undercoats and topcoats that were specifically designed for either wood, steel, concrete, plaster or any other building material.
Product developments for Resene are usually attributed to marketing (where Tony Nightingale would come up with a new idea), technical staff (developing a new product) or the suppliers (developing a new material that will allow new paints to be developed).
As for the human resources of the company, a considerable proportion of its employees have worked in the company for many years already. It was a general policy for Resene to avoid employees of other paint companies when recruiting new staff. The company is known for recruiting from other industries that had an understanding of selling a quality product for a profit.
In terms of the company’s marketing strategy, the company has placed great significance on the commercial segment of the market. The company’s marketing phrase: “Resene: the paints the professionals use” originates from the company’s difficulties in selling to the retail market. As noted earlier, manufacturing and the selling of paint for Resene has become a form of art as it had established close relationships with the New Zealand Institute of Architects, as well as sponsoring the Architectural Designers New Zealand and the New Zealand Master Painters.
SWOT Analysis
Strengths of Resene Paints includes its strong and solid commitment to excellence and quality which is examined through controlled testing in the Resene TELARC registered laboratory and in the field. In addition, Resene also provides architectural services and colors which have given the firm a strong reputation for its colors, as well as provide the quality products needed to attain optimum finish. Resene products are technologically advanced. Furthermore, it is well-known for leading in the development of environmentally sustainable coatings.
The success of the company can also be attributed to the company’s management tenure which requires their managers to have a strong orientation in the quality of their products and services. The company also has the technological advantage as they have strong relationships with the suppliers allowing the company to be on the edge with much recent technological advances.
The company has shown its capabilities in competing efficiently with multinational companies in New Zealand. Moreover, the company has made an intensive and successful effort in the retail market through its own chain of ColorShops. It must be noted that the prospects for growth and expansion in New Zealand and internationally are not limitless. The growth of the company very much leads to outside of New Zealand. The company already has small operations in Australia and Fiji.
It can be assesses that Resene has the potential for global expansion but the firm must make sure and reassess again and again that they are ready to venture globally; otherwise they will be threatened by losses for their part and be taken advantage by international companies of the same industry.
Major Implementation Issues and Recommendations and Suggestions
To remain competitive in the market, Resene is faced with issues such as global expansion. The company has indeed the opportunity to expand globally. However, there must be careful assessment must first be made with regards to the global market and the global competition. The global market is one complicated market and one company has to have the right marketing and management strategy in order to survive in the global business arena. If planning on global expansion, the company must evaluate their current competitive advantage with regards to the international field.
Furthermore, as the writer has assessed the strengths of Resene which includes its technological advantage, strong commitment to excellence and quality, etc., the writer can conclude that Resene has a more or less efficient management strategy. The writer recommends and suggests that the company utilize these strengths to remain and gain stronger competitive advantage against other paints industries.
0 comments:
Post a Comment