For this project the main focus will be on Reverse Vending therefore this section will be analysed thoroughly. TOMRA provides complete solutions for handling the return of beverage containers and are typically deployed in retail locations such as supermarkets, convenience stores and gas stations, but also in other public areas such as parks, universities, hotels, arenas, etc.
A microanalysis of TOMRA will be conducted to show the tangible and intangible assets of the company, its capabilities, success factors and weaknesses. As a large company with approximately 65% market share in the Reverse Vending Machine sector an analysis will be done to reveal a concise internal overview of the business to describe reasons for its current position.
MISSION OF THE COMPANY
The mission of the company is important to state in order to understand the direction of the company in the future.
“TOMRA’s mission is to creates sensor-based solutions for optimal resource productivity”.
TANGIBLE ASSETS
TOMRA’s global tangible assets for Reverse Vending Machines include collection machines, transport, sorting and processing plants and recycling facilities.
These assets help to assist operations and business objectives when utilised by employees.
-
Global Resources:
A 2012 statement by TOMRA reveals that the company has 70,900 Reverse Vending units globally and has business activities in 80 markets worldwide. TOMRA’s head office and research and development offices are based in Asker, Norway where the company was originally established. Currently their global presence and Reverse Vending Machine products are also in the North American, South American, European (categorised into: Nordic, Central and Western Europe, and Southern and Eastern Europe) and Asian markets, as seen in the image below.
TOMRA is a mature level, global Norwegian company that focuses on the following business areas of collection services and sorting solutions:
A major strategy of TOMRA in 2012 was to transform the company’s entities under one brand and divide the business into sorting and collection business areas. The company stated “as a unified brand, we will be stronger when it comes to providing concepts and system thinking that embrace and consider our partners, our own people, and society at large” (Reuters, 2012). This allowed the company to follow a single mission therefore have a clear direction.
Another key reason for the success of the company is the strategy to function with pre, purchasing and after sales services offerings. This offering strategy allowed the company to improve its customer relationship management practices.
-
First Mover Advantage:
As the company responsibly for the innovation of Reverse Vending Machine sensor technology, TOMRA had a competitive advantage as the first mover into the market. This led to the success of the company overall as they had no immediate competition. They also were able to establish themselves as the premium brand in their product and service offerings.
-
Market Share:
TOMRA has proven to gain further market share through its acquisition of competing companies and suppliers. By gaining these companies TOMRA has had the ability to streamline the process of their distribution, logistics and manage their supply chain. This has created greater efficiency and the growth of the company has allowed greater scale in their overall operations.
KEY WEAKNESSES
-
Scale of Company:
The overall size of the company may become a weakness in relation to management challenges across different markets. Issues with different regulatory bodies and cultural differences may cause troubles with the ease of business. TOMRA currently has a corporate social responsibility plan in place to guide the way operations occur. It is important for the company also to consider the standard of quality and testings across different markets. The scale of the company also adds distribution challenges, which the business must confront. The company may also be perceived by potential customers too large to understand and service the needs of individual customers.
-
Uncertainty:
A standard risk that must be considered is the risk involved with contractual agreements from customers and suppliers.
-
High Cost:
The short term high cost of a customer to purchase and service a Reverse Vending Machine may be a deterrent to gain long-term results. The premium pricing of the reverse vending machine may be threatened when competitors with lower prices enter the market. The competitive landscape discussed later reveals the existing competitors in the market who may offer lower pricing strategies to gain market share.
Micro Level
-
Financial Position:
The monetary assets of the company in 2012 were NOK (Norwegian Kroner) 5.159 billion in total assets, NOK 4.073 billion in revenue and NOK 2.283 billion in total equity (TOMRA Annual report, 2012). TOMRA reported that the total market growth is expected at a rate of 7-9% per year. In 2012 Reverse Vending accounted for 43% of the total sales at TOMRA. TOMRA has experienced rapid growth throughout its 40-year history. Growth has been driven by a number of strategic shifts involving a combination of organic initiatives and acquisitions.
-
Recent Acquisitions:
The company has strategically acquired competing companies to gain further market share. The most recent acquisitions include the following companies:
- 2005: Orwak (Compaction).
- 2006: Commodas (Mining).
- 2008: UltraSort (Mining).
- 2011: Odenberg (Food).
- 2012: Best (Food).
INTANGIBLE ASSETS
TOMRA has many intangible assets that are not obviously transparent at first but add value and create competitive advantages for the company. These range from services, technology, knowledge and innovations.
The company has taken many steps to acquire intangible assets within the Reverse Vending Machine sector, especially in research, development and innovation practices. This is clearly seen in the business objective of optimizing their products and services.
-
Relationships with stakeholders:
As a B2B company TOMRA focuses on building strong relationships with suppliers, customers, employees, media and shareholders. TOMRA has a large global customer network and large installed base across multiple markets. The nature of Reverse Vending Machines as a sustainable product and service means that the company aims to show stakeholders the value they attain from TOMRA. This is done through various methods, for example, public relations, service offerings, corporate social responsibility practices, education and involvement in events (for example, capital markets day). An important aspect for the marketing manager at TOMRA is negotiating and building relationships with suppliers. Further importance include the focus on building a positive business culture to boost employee moral and productivity, which has been successful in the past.
-
Brand Reputation:
TOMRA has a strong brand reputation as the leading Reverse Vending Machine company in the world due to their large market share. TOMRA's diversified operations demand a high degree of care, honesty and integrity. Accordingly, TOMRA values its company culture and reputation as key assets. The company strives to be transparent in its actions and often promotes information regarding their corporate social responsibility and sustainability. TOMRA outsources many of it public relations activities to experienced firms to promote their goodwill message.
-
Human Capital:
Statistics from TOMRA’s 2012 annual report show that the current total employee base globally lies at 2,194 employees. Specifically, TOMRA has 960 employees working in the Reverse Vending area. The role of management in the company means that TOMRA “aims to attract and retain the best people to ensure the continued success of the company in the future”. This is seen in the recruitment and attainment of highly qualified and experienced employees, especially in management.
-
Intellectual Property:
Another key asset of TOMRA is the patent it has on its Reverse Vending Machine products. The innovation of bottle recognition technologies in 1972 means that TOMRA’s competitors cannot duplicate their exact technology (TOMRA, 2013). The patent allows the company to provide premium offerings in the market.
CAPABILITIES
With the current intangible and tangible resources the company has many capabilities in operating on a global scale. As a well-established global company, the business has the knowledge, technology and operational resources to integrate Reverse Vending Machines in multiple markets. The strong asset portfolio also assists in establishing the business in new markets as well as developing growth in existing markets.
The main capabilities described by TOMRA in their CMR Report (2013), include standardized product design, effective and flexible supply chain management, international sales and service reach and the growth orientated management. These capabilities help to support the already large customer network and installed base to maintain their reputation. Further capabilities of the company include leading sensor based technology and customized industry solutions. These capabilities differentiate the product and service offerings of the company.
The capabilities can be seen implemented in the organization in the areas of technological innovation, leadership from management, positive business culture, favourable position towards trends and development.
AREAS OF ADVANTAGE
-
Products and Services:
Despite the Reverse Vending Machine being a generally standardised product the innovative nature of the product and its value offering has many advantages. The product has been successful across multiple markets leading to larger economies of scale for Reverse Vending Machines. The bundling of customised service to the product has proven to add value for customers. Offering customer solutions is an area of advantage for TOMRA in the growth of their services.
-
Technology:
TOMRA currently invests 8% of their revenue into research and development to increase their returns. By constantly striving for technological innovation the company is aiming to gain further market share and have competitive advantage. By innovating their products and services TOMRA can find ways to differentiate themselves in the market as well as offer technologically advanced products.
The use of technology is also an area of advantage the company uses to revolutionise their operations, collect and analyse data, communicate and gain market share. Existing products TOMRA plus and TOMRA trac allow customers to access ‘real time’ connection to Reverse Vending Machines. TOMRA states that this allows for optimizing in-store operational processes like emptying routines, cleaning frequencies – consequently improving the customer experience. Entering new markets has also become eased by the ability to gain insight into potential markets via existing technology by accessing information and communicating with customers.
KEY SUCCESS FACTORS
-
Structure and Strategy:
The structure of the Reverse Vending section of TOMRA consists of numerous subsidiaries, affiliates and agents/distributors as seen in the image below. This is due to the different strategies TOMRA has used to penetrate and maintain dominance in different markets globally.