PESTEL and SWOT analysis of Glanbia with strategic recommendations

Glanbia is an international nutritional solutions and cheese Group, headquartered in Ireland" (Glanbia.com. About Us. 2011). The company has expanded revenues and profits year over year as a result of intense focus on business models aligned with "U.S. Cheese & Global Nutritionals division and Dairy Ireland division" (Glanbia.com. Strategy. 2011). The company's vision is to "be the leading global nutritional solutions and cheese group" (Glanbia.com. Strategy. 2011) through consistent delivery of value added products and services for their customers. Accomplishing this task though depends on Glanbia executive management navigating the labyrinth of challenges associated with environmental regulatory compliance. Glanbia's efforts in this regard will determine their efficacy in leveraging their core competencies to "deliver attractive and growing returns to shareholders and excellent solutions and service to our customers" (Glanbia.com. Strategy. 2011).

Pestel- Environmental

The Glanbia 2010 annual Report cites environmental regulatory compliance as one of its greatest operational risk management challenges (Glanbia Annual Report 2010. P. 30). Across Glanbia's operational divisions involving dairy production and global nutritionals; the company depends on economies of scale and scope in their manufacturing and production facilities for driving profitability via their two business models. Environmental compliance for Glanbia is certainly focused "at a minimum to comply with all regulatory and legislative requirements" (Glanbia Annual Report 2010. P. 35) however, more crucial is developing environmental solutions which can drive streamlined cost structures and efficiency through the value chain: inbound and outbound logistics and operations (Quick MBA.com. N.D.). As the company operates "manufacturing and processing facilities in seven countries" (Glanbia.com. Divisions. 2011) there are considerable regulatory environmental compliance issues ranging from: energy efficiency, carbon emissions, waste water, site waste, and recycling. Glanbia must allocate considerable resources to ensure their operations meet or exceed government specific mandates.

One such example is the "European Committee of Standardisation and the launch of Europe's newest energy management system, EN 16001" (Glanbia Annual Report 2010. P. 35). This management system regulates energy consumption as well as monitors emissions for EU companies operating across multiple industries. Glanbia's Ireland division was recognized "to be the first dairy company in the world to achieve this standard and the business unit was fully compliant in 2010" (Glanbia Annual Report 2010. P. 35). In meeting this standard, Dairy Ireland's "energy efficiency per tonne of product produced improved by 4.5%" (Glanbia Annual Report 2010. P. 35). Apart from the importance of adhering to governmental regulatory compliance; the development of technologies and operational procedures to reduce energy consumption and promote efficiency, find utility in reducing cost expenditures.

Core Competencies

"To be the leading global nutritional solutions and cheese group" (Glanbia Annual Report 2010. P. 12) depends on a company- wide focus of developing and enhancing profitable revenue channels aligned to the organizations specialties. Glanbia's core competencies are an innovation environment and "operational excellence through strategic cost management" (Glanbia Annual Report 2010. P. 12).

The global nutritionals business model underscores Glanbia's commitment to product innovation; "a focus on growth sectors and markets and expansion in nutritional solutions" (Glanbia.com. Business Models. 2011). Success in this space depends on research and development and a commitment to rigorous scientific testing and study, with Glanbia's financial allocation to R&D recorded at 8,037,000 Euros and 7,686,000 Euros respectively in 2010 and 2009 (Glanbia Annual Report 2010. P. 103). The R&D investment over the past fiscal years has allowed the Global Nutritionals division to prosper accounting now for "approximately 23% of total Group revenue" (Glanbia.com. Business Models. 2011).

Glanbia's competency in strategic cost management is their ability to manage the value chain through a vertical integration model, which allows for greater control over logistics and operations (QuickMBA.com. N.D.). In this context the company's "development of the Southwest Cheese joint venture" (Glanbia Annual Report 2010. P. 16) exemplifies management's thrust in this area.

In 2004, we formed a 50:50 joint venture partnership with The Greater

Southwest Agency. The structure of this partnership is that Glanbia built the plant and is responsible for running the business and selling the cheese and whey products manufactured, while our partner ensures that the facility has a secure milk supply. (Glanbia Annual Report 2010. P. 16)

Glanbia's Value Chain

The preceding example demonstrates the effectiveness of the vertical integration approach for Glanbia. The two distinct business models: Global Nutritionals and cheese both have been built through both organic growth, and mergers and acquisitions. Much of the Global Nutritionals growth has come from internal development of performance nutrition products however, equally crucial has been key purchases of existing companies in the nutrition space. As an example, the 2011 purchase of "BSN significantly enhances and extends Glanbia's Performance Nutrition portfolio; continuing to develop Glanbia in line with its growth strategy" (Glanbia.com.Strategy. 2011). The purchase of "BSN will significantly complement Glanbia's continued vertical integration into this high margin performance nutrition sector" (Leslie, B. March 5, 2011).

Glanbia's value chain activities regarding inbound and outbound logistics and operations are built around vertical integration to develop opportunities to capture upstream and downstream profit channels. Looking at the Ireland Dairy Unit, the vertical model can be discerned again with "three businesses aligned through their relationships with the Group's Irish farmer supply base" (Glanbia.com Business Models. 2011). The Agribusiness, Dairy Ingredients, and Consumer Products divisions are all owned and operated by Glanbia allowing for maximization of revenue, and cost controls through a streamlined supply chain.

Additionally, Glanbia supports considerable investment and spending in the areas of marketing/sales and service to enhance the organizations brand name. Glanbia's Dairy Ireland division-Consumer Products is "one of the largest branded food suppliers in the Irish grocery sector" (Glanbia Annual Report 2010. P. 11).