1 (a) Illustrate the theory available to carry out an environmental analysis, with

examples from the case.

The environmental analysis of company can be conducted through many methods. To use this analysis is a tool to make decisions it is more that both internal and external components are looked at. Porter’s five forces can be analyzed to understand the internal and external environment of Royal Numico. They relied heavily on research and development and marketing ad had to think about internationalizing and growing as a company to recover these costs. They decided to buy Rexall Sundown Inc. Porter’s Model looks at rivalry with the competition but the acquisition by Numico had to do more with expanding and recovering costs. Another reason was to acquire a higher market share and obtain more products. “The acquisition reinforces Numico’s leading position in the growing nutritional supplements market… The acquisition of Rexall Sundown, major supplier to the mass market, will provide Numico with leading nutritional supplements brands and the largest distribution network in the U.S.The acquisition will allow Rexall Sundown to enhance its string market position in the U.S. mass market and provides access to the European market.” (Eppink 729)

Royal Numico had clearly analyzed each of the aspects of the acquisition and what the environment was like at the moment. They knew that their distribution network was commendable and would a lot of value to the Numico Company as a whole and help with making more sales. They also analyzed their current market share to understand the environment and sought to expand it with the acquisition. They also analyzed the buyer and supplier power. “WE bought the US companies and their distribution channels to be in a position to sell our clinical and diet foods on a large scale. We did not buy them just for selling vitamins…More than half of the turnover in the USA was diet and sport nutrition.” (Eppinks 729) They knew that they had to get their hand on all the suppliers so they can distribute their product effectively and they knew that the product was being sold because of the high turnover.

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