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CASE STUDY

PREPARED BY

HASSANUR RAHMAN

STUDENT

OF

MASTER OF BUISNESS ADMINISTRATION

MARKETING MANAGEMNT

LONDON SCHOOL OF COMMERCE

Topic Page no.

INTRODUCTION 1

EXTERNAL ENVIRONMENT ANALYSIS 2

STEM FOR COMPETITIVE ADVANTAGE 6

CORPORTE SOCIAL RESPOSIBILITY 8

DIVERSIFICATION STRATEGY 10

CONCLUSION 13

INTRODUCTION

Johnson Matthey a world leader in chemical industry build up excellent reputation for its concern about the environment and public health issue .It innovate and develop product that reduce emission ,Improve crop yield ,fight disease and preserve nonrenewable resources .To identify , anticipate and satisfy customer demand ,it focus on being a marketing organization .In this assignment we deal with external

and competitive environment ,core competency , CSR activity and diversification strategy of Johnson Matthey.

EXTERNAL ENVIRONMENT ANALYSIS

For effective marketing strategy Johnson Matthey has to evaluate it’s external and broader business environment and all the interrelated variable where any form of correlation exist. Market analyses often involve close examination of macro-economy as well as micro factors. Evaluation of external environment consider as first step of formal marketing plan. External environment analysis guide marketers to formulate and implement successful marketing strategy. Marketer often use different approach for external environment analysis such as pest, swot, porter five force, competitor analysis, market analysis , country risk assessment etc.

Pest analysis is most common tool to evaluate external environment. Pest in acronym of political, economic, social and technological .it is often called pestel where two more dimension has been added are environmental and legal. Johnson Matthey should consider different economic factors in wider economy include economic growth rates, levels of employment and unemployment, costs of raw materials such as energy, petrol and steel, interest rates, monetary policies, exchange rates, inflation rates before market a new product .positive macro-economic indicator rise the opportunity to new business. Similarly if income level rises than consumer may will to pay higher price for eco-friendly product. Social factors represent the culture of the society include demographics, age distribution, population growth rates, level of education, distribution of wealth and social classes, living conditions and lifestyle. Since, everything is not sold to every one Johnson Matthey must fragment the market and identify the specific segment as target market .analysis of social factor will provide important insight about the consumer of buyers behavior .for example educated young post baby boomers are more environmental conscious and technological oriented and subject to target market . Technological factors refer to the rate of new inventions and development, changes in information and mobile technology, changes in internet and e-commerce or even mobile commerce .recent trend in social media explosion has encourage Johnson mattheyincreasingly interactive engagement with the consumers via facebook , youtube and twitter .pest analysis support Johnson Matthey successfully deploy four p of marketing .

Businesses apply pest analysis to evaluate the organization’s internal strength and weakness along with the opportunity and threats that arise from the external environment. Johnson Matthey should match their internal capabilities of highly intellectual workforce and ultra-modern technology with the demand for new innovative product. By leveraging the strength Johnson Matthey able to stay in the market place without compromising it’s value position to the customerwhen economic downturn challenge Johnson Matthey to reduce cost and increase efficiency exercise. Weakness should be identified before they turn into competitive disadvantage or damaging reputation. Such pitfall could be addressed through benchmarking, kpi, gap analysis, position audit, brand audit, market research etc. Opportunity comes from recognizing the market gap where customers need and want are not satisfied from the current product or service. Growing awareness about the health and environmental issue create new horizon of opportunity for it’s product.Johnson Matthey also need to identify the risk that exists in the market place like technological development that might obsolete their product. Some third world countries do not enforce intellectual property right regulation strictly or not at all. Johnson Matthey product are subject to counterfeit at those counties .this counterfeit product not only eat market share but also damage brand image. Anticipating and managing risk associated with brand value are one of the most challenging tasks for any brand manager.

Another commonly used tool for external environment analysis is porter five force theories. These five competitive force arise from supplier bargaining power ,customer bargaining power ,competition among the rivals ,threat from new entrants and substitute product. Johnson Matthey has to evaluates its supply chain process and identify relative power of it suppliers. For production Johnson Matthey required skill labor, raw material, bank finance, transportation etc. Depending only one source such as recruiting stem

professional from only one country may hampers its production. Since, Johnson Matthey offer innovative environment friendly product, price sensitivity for their product should be low and as patent holder for some industrial goods company enjoy monopoly power. However, Johnson Matthey need to cover huge r&d cost and has to charge high price. So marketing manager has to understand customers perceived value about its product and how much premium customer willing to pay .substitute product also could reduce the demand of the product. ”if a new technology replaced the internal combustion engine, catalysts converter may no longer be needed”. New firms that imitate Johnson Matthey product particularly in india and china where intellectual capital right law is not enforced strictly could erode sales and profitability. Marketing manager need to monitor the market and competitive environment consistently to anticipate the threat that may arise from substitute product and new entrant. Competition among the rival firms force Johnson Matthey to cut price, reduce margin, shrink investment and halt growth. To manage risk marketing manager need to understands it competitors very well.

External environment and competitor analysis is the first step of strategic marketing plan .With the reliable and timely information about the external environ assist marketing team to develop marketing plan to saisfy customer need and give itself a completive edge .

STEM FOR COMPETITIVE ADVANTAGE

Stem stands for science, technology, engineering and math. Stem skill often require for technological field and latest innovation. Many blue chip companies consider their employees who are trained in stem field as core human resources. For successful strategy business need to align its internal core competency with external opportunity. johnson Matthey developed and leveraging its stem skilled people to be the market leader of its industry.

Identify new market

Johnson Matthey use stem skill to explore untapped market through new innovation and technological advancement. It creates catalyst converter which help to control pollution in oil refining process. Similarly, they are the pioneer for catalyst converter to reduce vehicle emission .identifying and anticipating customer’s latent need is one of their key strength. They design and develop their product that meet customer future requirement in uncontested market space. These unknown, untainted markets where industry does not exist today are considered as blue ocean. In blue oceans, demand is created rather than fought over. Through ″blue oceans″ strategy Johnson Matthey creates value for the company, its buyers, and its employees, while revealing new demand and making the competition irrelevant. Stem skill could be considered as a very important tool to foster Johnson Matthey's ability to systematically create and capture blue oceans and enjoy ample opportunity for growth both in profitability and sells. As a result one third of all cars manufactured in the world has catalyst converter made by Johnson Matthey. The foundation of Johnson Matthey’s blue ocean strategy is 'value innovation' driven by r&d department.Because value to buyers come from the offering’s utility minus its price, and value to the company is generated from the offering’s price minus its cost, Johnson Matthey simultaneous pursuit of differentiation and low cost with it’s emphasis on innovation and efficiency.

Core competency

Stem skills built up core competency for Johnson Matthey.it built its corporate strategy and allocate resource to exploit market opportunity and minimize the threat from competitor, supplier, customer, new entrant and other factor in macro environment based on its internal core competency. It is a unique resource for Johnson Matthey which hard to imitate and created sustainable competitive advantage. Stem give Johnson Matthey unique ability to innovation that stave off competitor and enable it to enjoy the high margin of early life cycle market.Understanding the value of core competencies allows Johnson Matthey to invest in the strengths that differentiate them and set strategies that unify their entire organization. Since, core competency is not static Johnson Matthey and for sustainable competitive advantage it needs constant supply of high caliber graduate. Johnson Matthey market themselves as best employee and encourage more students to study and research in stem subject .it successfully able to attract highly competent graduate from stem field to it’sr&d department. With brilliant and outstanding research cell it able to come up with products that are not only superior in quality but in many cases first of its kind.

Strong brand image

Johnson Matthey build up strong brand equity through capitalizing stem skill of its man power. Customer associate Johnson Matthey with top quality and superior invention. By delivering superior value Johnson Matthey able to attract and keep customer who are willing to pay higher price .Johnson Matthey earn reputation for environmental friendly product like catalyst converter that require significant amount of research and development . Without strong in house stem skill they might not able to come with such product. Similarly, as a market leader in pharmaceuticals indigent industry that is also knowledge based industry, their concern about people’s health and wellbeing build strong image .That strong brand image sets up a formidable barrier discouraging potential rivals from entering

the market. Lastly, Johnson Matthey is built around it’s brands—everything it do is designed to enhance and protect the brand assets that are the foundation of it’s wealth.

Innovation

to lead the market, Johnson Matthey turn into the industry leader in establishing an innovation-friendly organization, developing new business process and new products or services. Stem skills aid Johnson Matthey to become cutting edge of new technologies and innovative business processes. Johnson Matthey establish the culture of innovation though it’s emphasis on stem skill. It invent catalyst convertor car that reduce emission ,control pollution in oil refining processes ,technical ceramic ,ingredient for pharmaceutical and fertilizer etc. Johnson Matthey also innovate new and improvised production that require less precious material and less energy .

First mover advantage

Strong stem skills in research and development aid Johnson Matthey to invent new product or sell existing product with minor modification into new market. According to harvard business’ review a first-mover advantage can be simply defined as a firm’s ability to be better off than its competitors as a result of being first to market in a new product category. First-mover status brings important competitive advantages and gives Johnson Matthey an almost insuperable head start. . By starting earliest, Johnson Matthey have more time than later entrants to accumulate and master technical knowledge and build customers base who would find it inconvenient or costly to switch to the offerings of later entrants. Strong brand name, substantial financial resources, and excellent marketing skills allowed it to make the most of its first-mover status.

The cornerstone of Johnson Matthey‘s value on health and safety and developing sustainable environment friendly product and production process .Johnson Matthey bring latest product and processes that reflects its fundamental value through extensive research and investigation . In that context we can conclude that stem skilled people are the backbone of Johnson Matthey’s philosophy. They are also the driver of commercial success as explained

CORPORTE SOCIAL RESPOSIBILITY

Corporate social responsibility (CSR) is frequently consideras the way that industry integrates economic, social and environmental obligations into their activities. It is now common for any business to undertake social responsibility and the importance of being good corporate citizens. CSR has three broad dimensions

External CSR encourages the quest of positive impacts on society (including economic) and the natural environment from corporate activities and actions. It motivates reporting on social and environmental impacts. It endorses accountability and transparency through the reporting process it institutionalizes, which enriches democracy, and benefactors’ social development. CSR can be considered aemergent movement, still in its infancy, and in many cases is still seen as corporate philanthropy. Johnson Matthey is a icon in CSR activities. Its core philosophy is based on social responsibility .It promote CSR thought out the value chain it operates.

As a corporate citizens Johnson Matthey fully commit to sustainable development and address principal global challenges, including climate change, public health, energy preservation, and the efficient management of resources particularly nonrenewable precious metal. It cultivates strong organizational corporate culture and constant awareness of the possibility of doing the right thing. Johnson Matthey committed to ensure that companies not only conform to the law and regulatory obligations, but perform to a higher standard than that which is required by law.It addresses the wider financial, environmental, and social impact of all that a company does. It involvement in all phase production process to reduce emission and development of ingredient for fertilizer to improve food production indicate it entails maximizing the positive effect on stakeholders as well as on the communities .

Currently, it addressing the issues that have a dramatic impact on the future of the globe, such as climate change, food shortages, access to food, education, and information technology.

Johnson Matthey extend corporate social responsibilityas the transformation ofsocially and environmentally responsible ideas into products or services. It comes up with innovative ideas to address the specific social and environmental needs of the communities in which they are living. Example is its catalyst converter that reduces carbon emission from car engine and contributes the well-being of society. Today, Johnson Matthey integrate its concern about public health and environmental concern into their core activities by actively channeling their research-and-development capabilities in the direction of socially innovative products and services.”Its products aim to have a positive impact on society and the environment, values which are at the heart of Johnson Matthey’s operations”. Michael porter, a harvard business school professor, and mark kramer, the managing director of fsg social impact advisors, wrote in the harvard business review in december 2006. "each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit," porter and kramer added. "when a well-run business applies its vast resources, expertise and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization."

Internal csrfocuses inside the organization: what can bedone internally to improve the well-being of workforce, theirlives and productivity as well as its impact on profitability atthe bottom line. External and internal csr are closely interconnected. Since, Johnson Matthey CSR strategy is aligned with the company’s core business it can lead to a wide range of benefits, such as better recruitment, increased employee motivation and retention, higher productivity, strong organizational culture, reduced absenteeism, efficient production techniques etc. Johnson Matthey implement lean production technique that create a more sustainable production and eliminate waste and inefficiency from its production process. Johnson Matthey promote stem subject and encourage student to build expertise in stem field. Johnson Matthey consider its people as it greatest asset. Operational excellence along with highly skilled employee give Johnson Matthey uninitiated competitive advantage and make it world leader in the industry.

DIVERSIFICATION STRATEGY

Diversification means branching out into new business opportunities and expanding into different areas, such as industries and product lines. Companies typically do this in order to grow the business rapidly. Companies might wish to build and utilize economies of scope, in which the company tries to exploit its existing resources and competences in other markets. If companies have under-utilized resources or

capabilities that cannot be easily disposed or closed, they might pursue this strategy. Through diversification strategy, companies may therefore be able to utilize all its capabilities or resources, and able to attract new business from market segments not catered to earlier.Corporate diversification may also be used to offset the financial risk. By expanding, a company is not dependent on a limited number of products, locations, or markets in order to survive. For Johnson Matthey diversification strategy can be either related or unrelated to its original business. In related diversification, Johnson Matthey should have strategic fit with the new venture to capitalize the competitive advantage that already established. On the other hand, Johnson Matthey could investment in business that would have no direct relation with existing operation or its internal capabilities. This unrelated diversification aim to minimize the risk by not putting all egg in one basket. Different industry or different business has different risk profile and often return from one business negatively correlated with return from other. Unrelated diversification is a strategic risk management policy.

There are two types of related diversification concentric and horizontal. Horizontal diversification involve acquiring or developing new products or offering new services that could appeal to the company´s current customer group. The company adds new product line that are technologically or commercially unrelated to existing products, but which may appeal to current customers. In this case, jm could offer ingredient that make pesticides less harmful for environment .since, farmers are the final consumer for both fertilizer and pesticides Johnson Matthey brand image and marketing channel could be synergistic. The advantages of developing pesticides that are environmental friendly are numerous.

1. Since pesticides are major water pollutant, this development certainly in line with organization mission and objective.

2. Most pesticide manufacturer aware about Johnson Matthey because they are already in agriculture industry.

3. Pesticide industry are negatively correlated with fertilizer industry .if crop grows well farmer need more pesticide .if crops production fall down farmers need more fertilizer . So, whatever the case they ensure their sell.

There are two main problem of this strategy

1. Their existing connected customers are in fertilizer industry not pesticide manufacturer.

2. Pesticide manufacturer may not put emphasis on environment and not willing to use Johnson Matthey’s product.

Another form of diversification is horizontal diversification. Company often diversify to new business and operation in a technologically similar industries, where the firm is able to leverage its technical know-how to gain competitiveadvantage .for Johnson Matthey introducing catalyst converter for ship to

reduce sea pollution will not only broaden its business aria ,it also stick to basic. Johnson Matthey already has the cutting edge technology to develop specific catalyst for marine fuel .advantages to diversify to shipping industry are many but not limited to.

1. Johnson Matthey could capitalize market skimming pricing by charging high price at introduction and gradually reduce price to increase sell and maximize profit.

2. Johnson Matthey will enjoy competitive advantage as they have experience in producing fuel catalyst and highly efficient r&d department.

3. It is align with Johnson Matthey’s core value and proposition.4. They can utilize stem skill to innovate and improvise marine fuel catalyst.5. Sea pollution is a major concern for many politicians and pressure group, Johnson Matthey

might get policy support from government or opposition.

There is some inherent risk and drawbacks in this strategy .these are

1. Developing new technology for fuel catalyst could be expensive and costly. 2. There is few companied already developed marine fuel catalyst, so it will face head on

competition.3. Shipping industry is a big industry .Johnson Matthey will require substantial resources avail to

compete.

The basic idea of unrelated diversification is that any business that has good return projections and can be acquired on decent financial terms is a good business to diversify into. Unrelated diversification strategies surrender the competitive advantage potential of strategic fit in return for such advantages as (1) disseminating business risk over a variety of industries and (2) providing opportunities for financial return. Johnson Matthey may consider establishing insurance company .it is unrelated to their existing business and existing customer. Establishment of hospital reflects corporate mission, vision and objective. Some key benefit include

1. Insurance company often provides constant cash flow.2. Insurance company provide necessary fund for investment in research &development .3. Customer will have faith in company because group already has earned reputation.4. Insurance industries are not co related with chemical industry and reduce industry risk.

Johnson Matthey may find it difficult to manage insurance company properly and face following problem.

1. Unrelated diversifications are riskier strategy for growth. 2. Johnson Matthey do not have any experience or expertise in insurance industry. 3. It could shift their focus from doing right things .4. While Johnson Matthey is good at research and innovation; it might not have expertise in fund

management.

Conclusion

This is an analysis and application type exercise that test higher level of understanding and comprehension .To understand the case I have thoroughly research about the Johnson Matthey. I collect

information from website mainly .I read various article on sustainability and corporate social responsibility. Every question require marketing knowledge indirectly , so I attain every class to identify any knowledge gap .I read textbook methodically and tried to identify the relation between theory and scenario. I have discussed with the instructor as well as my fellow student about some key theory. I had been suggest to not to reproduce theory but apply them in the scenario. Key theory used in this assignments are SWOT ,PEST ,Porter Five Force ,Competitor analysis ,CSR ,Corporate citizenship , sell vs market orientation ,Brand management ,Innovation management and different diversification strategy .All answers introduce a related theory and explain them as preciously as possible .Then key issue or problem has been identified. Each theory has been used to analyses and interprets those issue or solve problem. When any solution has been provided proper justification has been given too.

Most of the theories included are assembling from Philip Kotler Text Book “Marketing Management Few theories used for external environment analysis are learned from the book Essentials of Marketing Management by Geoffrey Lancaster and Lester Massingham .CSR concept mostly come from different website and business magazine .For last question I have used several text usuallyrefers for strategic management course .Since ,this question deal with strategic decision. Each question also related to each other and there some cross between the questions. For example , Johnson Matthey Strength (SWOT analysis in first question ) is its STEM SKILLED employee ( second question STEM capability ) who work toward to better environment (3rd question on CSR ).So , I have assimilate knowledge of different text and other sources and use my own judgment to prepare each question .

This exercises are lot harder than it looks .In colleges most assessment are examination based .Knowing the concept and theories very well are sure fire formula for exam success .But this type of assignment require application of the knowledge . Ii is difficult for me to realize how I am doing? or I should do to improve grade ? Other than some short standard guideline, I have to complete this assignment by myself .I do not have the opportunity to ask question or seek help from examiner. I had not seen any model answer or post assignment guide .If I would know what kind of mistakes previous studentsdid ,I could be able to avoid those pitfall. This is the only task in this module. If I do not perform well in this assignment, my overall grade suffer .It is like putting all egg in one basket. I am afraid that just one piece of task may not enough to evaluate a student.

This piece of work has required lots of analytical ability , comprehensive knowledge of marketing and decision making competency .I have learned how to integrate knowledge from different field .I know in real world what I can do is more important than what I know . Employee who Know a lot but not able to apply the knowledge in the real world would add any value in the company. This exercise forces me to think and analyze. I understand there is no one answer or right answer for any problem. I also understand theory do not replace common sense as I use common sense more than theory.

I belief MBA is an professional Degree and I need to work hard now to became the business leader later This type of assignment certainly help me to reach my carrier goal and equipped me with applicable skill.

Reference

Strategy and society: the link between competitive advantage Porter M.E. and Kramer M.R. Harvard Business Review, December 2006