1.

0 Introduction
This case study is aimed at introducing Blackmores, a famous Australian wellness
company, and how does it adapt to changes in the vibrant market nowadays and deal
with challenges that it has been through in recent decades and providing proper
suggestions for the company to apply better change management strategies in order to
reach better business performance in future, backing up with analysis of the
company’s current strengths and weaknesses, managerial theories and models.

2.0 Blackmores’ background and current challenges

Blackmores is a leading health and wellness brand in Asia and Pacific region,
with more than 15,000 distribution points including 10 well-being centres and four
airport stores under its own brand and recently they have launched a series of
pharmaceutical stores in association with a local medical company called Kalbe
Pharma in Indonesia. Blackmores in its origin country Australia, is a pioneer of
wellness and healthcare industry, established in 1930 by Maurice Blackmore as a
natural health company, it has been working wholeheartedly on the combination of
traditional naturopathic expertise with scientific research to help the general public to
enjoy the best possible health and wellbeing products.
Committed to developing innovative natural health products and services of the
highest quality, Blackmores reaches consumers in 16 international markets, most of
which are located in Asia-Pacific region.
Blackmores is a company listed in the Australian Stock Exchange 200, with a total
market value of around AUD$1.8 billion in Australia alone as at December 2017. The
Group hires over 1,000 employees from different countries in Asia-Pacific and owns
several subsidiary brands such as Blackmores+, BioCeuticals, PAW by Blackmores
and Blackmores International (Scattergood, 2021). 
In recent years however the leading Australian supplements and vitamins brand
Blackmores has gone through some harsh times, and has experienced huge drop in its
full-year profit due to large amount of adverse and management costs in challenges
related to Covid-19. The company used to have a lot of valuable export trade with
emerging-market countries such as China, Indonesia and Malaysia, due to the
influence of Covid-19 though, this trade has since shrunk a lot.
In a statement published at the end of year 2017, the company revealed that the first-
half net profit after tax is expected to be AUD$18.3 million, which has shown a
significant drop from AUD$34.3 million in same period last year. “The quality of
earnings and underlying net profit after tax has not met with ours expectations,” one
of the board of directors commented in the statement. 
Regarding the issue of coronavirus outbreak, the company expressed that even though
an increment of demand for key immunity products in both Australia and Asian
markets has been observed, the impacts of sales had “been countered by supply chain
disruptions and other technical issues across the region as a result of the massive
contamination”.
Blackmores said the sales in China had also been largely impacted by local strict “stay
at home” instructions in many parts of the country, while channels which depend
heavily on the free flow of passengers such as duty-free products, had also been
negatively affected.
Other critical factors influencing profitability mentioned in the statement include
efficiency improvements at the company’s main factory at Braeside Australia, where
expenses related to following new labeling requirements and measures being applied
to deal with margin erosion. 
The company recently published its Sustainability Report for the 12 months to June
2021, detailing how it has performed against a raft of benchmarks, including its
ambition to achieve net zero carbon emissions by 2030.
Recently, a series of advancement plans of sustainability has been revealed by the
Australian supplements giant, Blackmores, based on its business performance in the
past 12 months. In detail, aspects of carbon emission reduction, improvement of
supply chain and packaging design, facing challenges of fast-changing markets, and
also environmental issues like dealing with its massive waste from manufacturing
activities every day are all included. These plans or strategies are published at the
beginning of July, 2021 with details about how the organization is going to align with
a series of standards, among which a grand target of reaching net zero carbon
emission before year 2030.
Here are the headline findings:
The road to net zero: On paper, a modest 1% reduction in total group carbon
emissions doesn't seem overly impressive. However, this is the first year the firm has
reported a full year of emissions relating to a manufacturing facility at Braeside in
Victoria, which it acquired in October 2019.As the company states:"The Net Zero
carbon by 2030 initiatives have already facilitated a 24.7%reduction in the group's
footprint trajectory compared to the prior year, had the Net Zero pathway not
progressed."
Furthermore,25% of energy is now from renewable sources,up from 8% the prior
year, and 6% of the corporate fleet is now hybrid vehicles.
Blackmores CEO Alastair Symington wrote:"In the first year since committing to Net
Zero Carbon Emissions by 2030,we have taken clear steps to address our greenhouse
gas emissions impact. This is the first year we have reported a full year of emissions
relating to the manufacturing facility at Braeside in Victoria which we acquired in
October 2019.Even with this increased activity,overall emissions remained broadly in
line with our prior corresponding report as a result of the first interventions that are
part of our pathway towards the Net Zero goal. Group manufacturing emissions
intensity was down 17%, compared to the prior year which is a good indicator of our
underlying progress."
Packaging progress: The Australasia Recycling Label-an evidence-based system for
Australia and New Zealand that provides recycling information-was added to a further
115 products and now appears on 51% of Australian and New Zealand products. This
has already exceeded the company's 2025 target.Blackmores states it has also
undertaken its first comprehensive group packaging audit, confirming more than 98%
of current packaging is recyclable, and affirmed its commitment to 100% recyclable
packaging by 2025.
In addition, a waste optimization project at the Braeside manufacturing facility
removed 3.5 metric tonnes of cardboard and 780kg of plastic bags from its processes.
Symington added:" Even though more than 98% of our current packaging footprint is
recyclable, there is more work to be done to achieve our vision for 100% recyclability
and to contribute to a circular economy where we are more conscious of our resource
footprint without compromising our product quality."
Supply chain and human rights: Blackmores reports that it has now completed a
sustainability risk assessments on 100% of raw material, packaging, packing and
contract manufacturing
suppliers. It has engaged 41% of Tier 1 direct suppliers in its 'Partnering for
Adaptation Programme to collaborate on climate risk and biodiversity impacts. More
than 340 human rights training modules have been completed to boost employee
capability and awareness, and the firm has published its first Modern Slavery
Statement. It has also improved Board diversity with more than 60% female
representation.
Symington said:" This year we have developed a financial model to enable us to
quantify the risk assessment in relation to our supply chain,which will enable us to
prioritize our sustainable sourcing initiatives and improve our climate-related
disclosures in future reports. As we deepened our understanding of the impact of
climate change on the ingredients we source,it was evident that we also needed to
develop a framework for understanding biodiversity impacts in our supply chain, and
we were pleased to take the first steps this year towards that goal."
Waste woes and other challenges: The major problems highlighted in the report
concern waste management. Waste diversion from landfill declined to 48%, down
from 68% in the prior period. largely as a result of the need to find an alternative
outcome for coloured gelatin waste. The company also identified extending its
emissions and safety reporting across all regions as a future focus.
Symington added:"This progress has not been without challenges, with our waste
diversion from landfill declining significantly because of changes to the waste export
market."
Blackmores' Board chair Anna Templeman Jones added:"The Board will be focused
in the coming year on supporting management's extension of our human rights
program-Partnering for People-to assess and address the risk of modern slavery in our
supply chain and to extend the programme to understand climate change and
biodiversity impacts also.
"The most recent scientific assessment on climate change released last month by the
Intergovernmental Panel on climate Change (IPCC), was a timely reminder on the
importance of our focus on achieving Net Zero Emissions by 2030 and continuing to
assess changes to the physical environment on our operations. We will continue to be
transparent in our approach to disclosing the potential impacts of climate change,
guided by the recommendations of the Task Force on Climate related Financial
Disclosures."

3.0 Methods Adapting to Change

Australian supplements giants Blackmores' ongoing hunt for a new CEO in the wake
of Richard Henfrey's resignation may soon come to an end, as owner Marcus
Blackmore has confirmed that the firm is now looking at its final candidates.
Speaking to Nutralngredients-Asia on May 31, Blackmore revealed that the Board had
narrowed down its options after conducting an international search for Henfrey's
replacement, and hoped t make a formal announcement by mid-June.
He said:"I have a contender sitting in the next office waiting for me as we speak, and
today might be t last of the interviews.
"We're certainly down to the lost two or three candidates and hopefully, we can make
an announcement in the next couple of weeks."
If all goes according to plan, Blackmores will achieve its goal of securing a new CEO
by 1 July, just one time for the next financial year.
Employment ennui
However, even as the firm moves closer to hiring a new CEO,Blackmore implied that
it would have fewer employees overall,at least in the short term.
"There is quite a transformation going on at the moment, some people will leave and
others will be hired, though I think more will be leaving than joining us at the
moment."
One such leaver was the former MD of the firm's Australia and New Zealand
operations, Dave Fenlon, who resigned in early May, a mere three months after
Henfrey. He subsequently joined Australian natural beauty company BWX as its new
CEO.
Blackmore was unreserved in publicly expressing his views on Fenlon's resignation,
saying that above all, he felt disappointed.
"I have to soy I was very disappointed that Dave left.He was more thanjust an
employee-he was a friend.I think he's quite talented and he works hard; he certainly
contributed a lot to Blackmores,"he said.
However,amid industry speculation that Fenlon may have decided to leave after not
being offered the vacant CEO position, Blackmore maintained that his resignation
was more a matter of timing and opportunity.
He said:"I don't think Dave expected to take over after Richard left.'m sure he would
have liked to,but he'd gotten an offer from BWX in Melbourne, where he used to live
and where his family still lives. He is more like a Melbourne boy at heart, even
though he is really an English descendant."
When asked if Fenlon was actually considered for the position of CEO at Blackmores,
he said:"It's the Board's responsibility to hire and fire people in upper management.
I'm sure Dave was considered in the picture, but he elected not to participate because
by then, he'd been offered another job.
"Besides, after Richard, who was an internal appointment, the Board wanted to look
outside the company for his replacement."
Changes and the Chinese channel
In terms of its wider business strategy, Blackmores plans to reduce its operating costs
by A$20m annually over the next three years, a move that Blackmore insists is "more
about efficiency than cost"
This is part of a 'substantial change' the firm is undergoing in order to reverse its
recent muted performance (particularly in China), which saw its share price plunge by
23%.
Blackmore said:"We're hoping to come out the other end with a reinvigorated team of
people. As I have said before, we had gotten too fat and bureaucratic, and our new
organizational structure is designed to address all the issues we've identified in our
business."
He also admitted the company had not been sufficiently prepared for the impact of the
daigou platform on its business.
Despite having an 'inkling' when the Chinese government began clamping down on
daigou sellers, Blackmore said,"Unexpectedly,we had pharmacies ringing us up
saying they wanted 100 of this product and 100 of that product (to meet demand from
daigou sellers), which made me wonder what was going 07."
Still,he believes Blackmores stands to gain from the daigou channel, though the
stricter rules and regulations mean there may not be as big an opportunity as there was
in the past.
To take maximize the company's potential in this regard, the Blackmore Institute has
established a dedicated programme designed to educate and engage with daigou
sellers.
Blackmore said:" We're doing things to embrace the platform in any way we can. The
opportunity for us may not be as big as it was before, but I think we can still benefit
from it.
"In fact, within the next couple of weeks, well have some daigou sellers coming into
Blackmores to have a look around.
Apart from engaging more actively on the daigou platform, Blackmores continues to
look into the possibility of a joint venture with a domestic Chinese firm that can
provide logistical and distribution support for the company in China.
"We have a joint venture with Kalbe in Indonesia, and that's going extremely well. We
would like to have a similar relationship with a local Chinese company."
Under the partnership between Blackmores and Kalbe, 42 of Blackmores' products
are marketed and distributed in Indonesia.The company reported a 72% growth in
Indonesian sales in H2 last year, with net sales of As6.6m in Q3.
"We're not sure exactly what we want to do in China right now,but we know that
before we partner with any Chinese company, we need to make sure it not only has
distribution capabilities we don't have in China, but that it also understands the
market. government, environment and regulations well,"said Blackmore.
However,amid industry speculation that Fenlon may have decided to leave after not
being offered the vacant CEO position, Blackmore maintained that his resignation
was more a matter of timing and opportunity.
He said:"I don't think Dave expected to take over after Richard left.'m sure he would
have liked to,but he'd gotten an offer from BWX in Melbourne, where he used to live
and where his family still lives. He's a Melbourne boy at heart, even though he's really
English."
When asked if Fenlon was actually considered for the position of CEO at Blackmores,
he said:"It's the Board's responsibility to hire and fire people in upper management.
I'm sure Dave was considered in the picture, but he elected not to participate because
by then, he'd been offered another job.
"Besides, after Richard, who was an internal appointment, the Board wanted to look
outside the company for his replacement."
Changes and the Chinese channel
In terms of its wider business strategy, Blackmores plans to reduce its operating costs
by A$20m annually over the next three years, a move that Blackmore insists is "more
about efficiency than cost"
This is part of a 'substantial change' the firm is undergoing in order to reverse its
recent muted performance (particularly in China), which saw its share price plunge by
23%.
Blackmore said:"We're hoping to come out the other end with a reinvigorated team of
people. As I have Said before, we'd gotten too fat and bureaucratic,and our new
organizational structure is designed to address all the issues we've identified in our
business."
He also admitted the company had not been sufficiently prepared for the impact of the
daigou platform on its business.
Despite having an 'inkling' when the Chinese government began clamping down on
daigou sellers, Blackmore said,"Unexpectedly, we had pharmacies ringing us up
saying they wanted 100 of this product and 100 of that product (to meet demand from
daigou sellers), which made me wonder what was going 07."
Still, he believes Blackmores stands to gain from the daigou channel, though the
stricter rules and regulations mean there may not be as big an opportunity as there was
in the past.
To take maximise the company's potential in this regard, the Blackmore Institute has
established a dedicated programme designed to educate and engage with daigou
sellers.
Blackmore said:"We're doing things to embrace the platform in any way we can. The
opportunity for us may not be as big as it was before, but I think we can still benefit
from it.
"In fact, within the next couple of weeks, well have some daigou sellers coming into
Blackmores to have a look around. "
Apart from engaging more actively on the daigou platform, Blackmores continues to
look into the possibility of a joint venture with a domestic Chinese firm that can
provide logistical and distribution support for the company in China.
"We have a joint venture with Kalbe in Indonesia, and that's going extremely
well.We'd like to have a similar relationship with a local Chinese company."
Under the Blackmores-Kalbe partnership, 42 of Blackmores' products are marketed
and distributed in Indonesia.The company reported a 72% growth in Indonesian sales
in H2 last year, with net sales of As6.6m in Q3.
"We are not sure exactly what we want to do in China right now,but we know that
before we partner with any Chinese company, we need to make sure it not only has
distribution capabilities we don't have in China, but that it also understands the
market. government, environment and regulations well,"said Blackmore.
4.0 Recommendations
Based on above information and analysis, certain suggestions can be given to
Blackmores to improve its business operations and adapt better to changes in future.
First of all, adapt to multiple new emerging economies like China, India, Taiwan and
Malaysia and adjust its product research and development into these new markets.
Secondly, Blackmores need to adjust its marketing strategies more flexible and adapt
to the fluctuations of product demands of main types of health and wellness products
in respective countries in an efficient manner.
On top of that, the company need to face and combat the strong waves of Daigou
business which could ruin both the brand image and profitability of the company, with
measures like transferring more marketing and advertising efforts online to its main
websites and social media platforms, and encourage customers to purchase
Blackmores product directly online using certain promotional vouchers or discounts.

5.0 Conclusion
To put everything in a nutshell, despite being quite successful on creating continuous
revenues and profits, owning a quite positive brand image in major Asian and
Australian markets, and being a leader in health and wellness industry in many
countries, Blackmores still need to adapt to multiple changes and challenges in its
business operation and broadening journey, and at the same time face intense
competition from new entrants from same industry, also the dilemma of adopting new
technology on product innovation and human resource management.
However, with efficient management team, diversified products and firm partnership
with suppliers and pharmacies, Blackmores is expected to continue its glory in
providing high-quality supplements and healthcare medicines to those necessary and
success in broadening its horizon to more unexplored areas such as health monitoring
machines and medical aid equipments.