Executive Summary
Organizational
strategy has of late become an essential element for good performance in
organizations. Organizations and companies have realized that for them to
achieve success in their business operations they have to embrace organizational
strategy. This presentation looks into Thorntons Company’s management of
organizational strategy and issues pertaining to it.
Introduction: Background of Thornton
Thorntons
Company is United Kingdom’s one of the leading chocolate manufacturers and
retailing companies, as well as a number of other confectionary commodities.
The company has been in operation since its establishment in the year 1911 and
has had its 30% shares owned by the Thornton family. The company’s products
mostly include chocolates, toffee and fudge, though it also deals in candies
among other stuff (Smith, 2001). It has been committed to delivering quality
products. It is led by Peter Burdon as the chief executive and boosts of at
least 500 retail shops in over 568 countries across the globe.
Part A: Strategic Position of Thornton
External
Environment: PESTLE Analysis
Quite
involved is the external environment of Thorntons Company which is associated
with a number of activities. Its external business environment has suppliers,
customers, competitors, as well as a number of regulations which are of direct
influence to its business operations. The company has made efforts to ascertain
that its ultimate role and purpose as regards its immediate environment enable
it understand its position and place in the entire chocolate industry (Treanor,
2000). The company has therefore acquired a stable position in its business
environment alongside suiting its capabilities
and resources. The company has also been able to align itself towards different
needs form various governments. The same has been its case with regulations and
legislations in its various markets in different countries within which it
operates.
In terms of economy, Thorntons Company has been stably placed
in the market and it has been seen to be favored by trends in interest rates.
Its employment is also well supplied and viable as far as its business
operations are concerned along with reliable income distribution which is
pinned on the same (Lee, 2001). The company has also been stable in it market
amid inflations and recessions which have of late struck the entire global
economy. In addition, Thorntons Company has been in the forefront in regard to
corporate social responsibility. This is depicted as having positioned it well
in terms of its relationship with the communities within which it does operate.
Jenkins (2001) observes that this has also been the trend with people’s eating
habits which have been seen to incline more and more to Thorntons Company
products even in foreign markets. The company has therefore been able to
influence a magnitude in its business environment. It has also adopted
technological approaches such as in its products’ preservation and packaging.
Its link to suppliers has also been electronically enabled hence efficiency (Cyert
and Williams, 1993). The company also embraced internet sales and marketing of
its products, as well as branding of the same. This has made easy and enhanced
its operations especially following the fact that it is operating within a
competitive market alongside helping in its management of data and information.
Putting
basis on environment and natural resources conservation, Thorntons Company has
also been an advocate for green consumerism as have been identified with its
operations and business activities (Edelman and Suchman, 1997). It has embraced
recycling as well as environment sound and friendly packaging systems alongside
energy efficient systems in its operations. Legally, the company has also been
able to adhere to stipulated legislation requirements in various countries it
has business in. this is evident in terms of health and safety requirements, in
its planning systems and employment requirements.
Strategy
Capability Analyses: Using Value Chain to Analysis
A
number of strategies have been developed in the company to help in exploiting
more sources of competitive advantage. Thorntons Company has been determined to
have its resources and capabilities suit it into competitive advantage. In
terms of resources, it has continually achieved good economic performance and
its capabilities have been key drivers of its competitive advantage in the
competitive market environment. Resources utilization in the company has been
viable in conceiving and executing the company’s strategies and on the other
hand it has made use of its capabilities as a subset of its resources (Littmann,
2003). This has enabled it to have control of all available resources it has.
Some of its resources and capabilities have been skilled workforce, operations
strategies and machinery, and they have been quite immobile hence developing
the company further.
Internal Environment analysis: SWOT
Analysis – TOWS Matrix
|
External Factors
|
Internal Factors
|
|
|
Strengths
for Thorntons
|
Weaknesses
|
|
|
Opportunities
for Thorntons
|
SO
Strategic Options
Unlike
most of its competitors, the company has the strength of its market knowledge
and experience in business trends which have enabled it to tap into
opportunities of new business systems and new operational strategies. It also
has the strength of already existing market with a strong base. This is
relevant in ascertaining its continued growth as well as maintaining its
market base amid competition which has been rife in the market. Its strength
in differentiation and diversification has also enabled it to acquire more
opportunities terms of gaining customer preference.
|
WO
Strategic Options
The
company’s cultural strategies are handy in ensuring that its market which is
already crowded with a number of competitors
remains its base and sure opportunity to keep its operations viable in
the industry. The company’s new business systems and operation approaches
have enabled it to check on its tasking penetration into new markets which
has been its potential weakness. Applying its opportunities in
differentiation and diversification has also been handy in gaining control of
more market locations and customer bases.
|
|
Threats
|
ST
Strategic Options
The
company’s experience in the market has enabled it to devise ways of managing
its prospects to gain control of its position in the competitive market. This
has also enabled it to enhance customer satisfaction as far as its products
and services are concerned. Furthermore, the company has the strength
accruing from its diverse and expanse of market in the international environment
which is handy for it to keep in stable operations within its markets amid
the threat of competitors and new entrants.
|
WT
Strategic Options
The
company has had its difficulties especially based on legal requirements
minimized by way of devising ways of compliance thereby avoiding threats of
its markets being taken over by other players in the industry. The company
also has the potential which poses as its opportunity to innovations and
developments in technology through which it can maneuver into new grounds and
market segmentations. This is amid possible weaknesses which might be
identified in the case there are barriers towards its future plans to
penetrate o=into new markets.
|
Analysis of Its Stakeholders: the
Purpose of Thornton and Stakeholders of Thornton
Like any other
company, Thorntons Company has had its purpose especially regarding
stakeholders of the company. The company has played the role of cleary
identifying its stakeholders and associating them by way of understanding the
company’s its business. This has enabled the company manage its stakeholders’
power and their interests, as well as their influence on the company’s culture.
The company’s purpose has also been to determine a course of actions that have
been enabling it achieve performance. The main stakeholders herein who take in
economic, social, community, political and technological stakeholders are the
company’s customers, suppliers, employees and the communities within which its
operations are found (Littmann, 2003). Through these stakeholders, the company
has been able to recognize the need of formulating strategies while at the same
time observing aspects pertaining to its cultural values yet at the same time
esteeming its stakeholders’ views.
Thornton’s Culture to Strategic
The focus of Thorntons
Company’s culture has been it’s beliefs, values, particular behaviors and
paradigm. The company’s mission and goals have been attributed to this and has
been attached to the way people associate the company by way of their actions
and/or talks. The company’s daily activities and operations, as well as the
main communal experiences which are aligned to the company have also been
strategic features which have been mutual to the company’s culture. The company
has always ensured that these features are mutually shared among all its
members thereby defining its views and its environment on the basis of its
cultural needs. Finch (2001) notes that this has been evident in the way
Thorntons Company has always perceived its operations structures, power
structures, systems control and organizational routines which have inclination
towards its specific preferences within its business environment and focusing
on its cultural values.
Part B Strategic Options of Thornton
Strategic Choices
Thorntons
Company has had in place some strategic choices as strategic clock and Porter’s
Generic Strategies highlights. This follows the fact that like any other
company, Thorntons Company has been faced with a number of challenges which
have always called for strategizing. Even if it were to exist without any
challenges, the company would still need to strategize for its future and for
the fact that it is in a changing business environment. This has compelled it
to be as flexible as possible. It has therefore been initiating some strategic
choices especially following the fact that its business environment comprises
companies with varied strategies following the competition in the market (Finch,
2001). Thorntons Company has therefore had its strategies put in place to help
in aligning its operations into performance delivery and achievement of
organizational success.
One
area that the company has made strategic choices is in its organizational
strategy, rivalry and structures; the company’s management and leadership have
ensured these are generic with regard to its strategic choices. The company’s
strategic choices in this case have been done in a way that allows the company
to manage its operations in a manner that keeps it in the frontline as far as
its market is concerned (Treanor, 2000). Therefore, it has been able to
maneuver through the competitive market while at the same time having a
structure that is viable in as much as its market is full of competitors. Its
position has thus been stabilized amid threats especially from its rivals in
the market.
Another
area of strategic choice for the company has been attached to conditions on
demand. Even though this has been so sophisticated, the company’s management
and leadership have managed to ascertain that there is balanced in supply and
demand in its market. This has mainly been influenced by its customers who have
been quite demanding as far as its various markets are concerned. Thorntons
Company has also had efforts made to strategize based on its various supporting
and related industries. Marginson (2002) points out that this has been
influenced by the company’s recognition that it is not an island company but a
company that co-exists with a number of other players both in its industry and
other industrial sectors. Its choices on strategies have therefore been
institutionalized in a manner that integrates the entire environment within
which it operates. This has made it secure a steady position in its market
along with the global industrial chain through which it is linked.
Last but not
least in Thorntons Company’s strategic choices is the idea of factor conditions
in its market. There are a number of factors which have got influences on the
company’s production alongside its available resources. Thorntons Company has
made efforts to make sure that it keeps steady in as much as its production is
concerned and with regard to security of its resources (Cyert and Williams,
1993). This has enabled it to have consistency in production and well as
ascertained business operations. The company has therefore, been successful in
its strategic development – this has boosted its business operations in its
market environment.
Business level strategy (competitive
strategic):
1. Strategic
Clock
Thorntons
Company has also had a strategy based on its market prices on products and on
benefits accruing from its products. Through such a focus, it is seen that the
company has had its strategies pinned on low-price strategies, differentiation
strategies and hybrid strategies which tries to incorporate aspects of both low
price and differentiation strategies mutually. This has been its strategic
clock as far as its business operations in the competitive market are
concerned.
In
view of low price strategy, Thorntons Company has had its focus on segments
which are particularly sensitive. According to Jenkins (2001), such have mainly been associated with
“product or service having become a ‘commodity’; price-sensitive customers; buyers having
high power or low switching costs and avoidance of major competitors”. The main
aim of this strategy as employed by Thorntons Company has been to maintain low
prices on its products while at the same time maintain benefits accruing from
the products or services unlike its competitors in the market. However, the
risk in this case has been that its rivals may have ability to follow in the
same ways the company adopts even though for a short while. This follows the
fact that the company’s profit margins get minimized thereby reducing its
re-investment opportunities (Lee, 2001). The company therefore has to be keen
on ensuring that it operates at low cost base but in a way which does not match
that of its competitors in the market.
The other depicted strategy is of differentiation in
which Smith (2001) attributes to
“average pricing, but with high perceived product or service benefits that are
widely valued by buyers”. The main considerations in this case as have been
seen with Thorntons Company are based on understanding and clearly knowing the
customers. This follows the fact that customer values regarding a product or
service, as well as their willingness to pay a particular amount are essential
for business operations. Apart from this, the company has had itself keeping up
with customer values which are ever changing. Besides, Thorntons Company has
been keen on who exactly its competitors are because there are high
possibilities that its differentiation may be relatively the same to that of
its competitors in the market (Dress et al., 1997). This comes with its risks
of vulnerability to competition based on prices and imitation by other players
in the industry. But Thorntons has managed to achieve competitive advantage by
creating barriers to imitation, creating position of a low cost approach and
establishing imperfect situation for mobility.
In addition to low price and differentiation
strategies, Thorntons Company has had hybrid strategies which seek to attain
both low prices and differentiation in relation to its competitors in the
business market. Through this, it has been able to deliver benefits of high
perceived services or products to its customers while also offering them low
prices unlike its competitors. This has rendered its competitors having it
difficult to effectively compete with it since it has maintained adequacy and
sufficiency in low prices (Littmann, 2003). The company has therefore been able
to keep in operations amid cases of some products having low expectations from
customers.
2. Porter Generic Strategies
Thorntons
Company has continually enjoyed a competitive advantage in its business
environment. This has been experienced through its focusing on cost and
differentiation strategies relative to its competitors in the market. Treanor
(2000) notes that this has been amid existence of competitors some of which
include Nestle Holdings, Cadbury Schweppes, Mars UK Ltd,
Swizzels Matlow, Ferrero Ltd., Leaf Ltd., Kraft Foods Ltd, Bendicks Mayfair
Ltd., and The Wrigley Company Ltd. In a broader approach, Thorntons Company has
been determined to keep itself in cost leadership aspects. This has been
ensured through engaging of strategies which are able to keep its expenses at
minimal levels while on the other hand enhancing high profit margins in the
market. Apart from this, Thorntons Company management and leadership have put
efforts to have the company’s operations and production processes use little in
terms of costs thereby enhancing its cost leadership in its market. This has
made the company keep steady in its market amid competition from its
competitors in the chocolate market.
Alongside cost leadership strategies,
Thorntons Company has also been in the forefront with differentiation
strategies. This has enabled the company to maintain its attractiveness in the
market while at the same time gaining more sales from its production and
operations. Through differentiation, the company has been able to be successful
unlike most of its competitors who have not been able to really employ well
defined product or service differentiation (Smith, 2001). Thorntons Company has
therefore had a competitive advantage through differentiation especially in its
foreign markets some of which do lack some of the product tastes it has
introduced.
In the narrow approach, Thorntons Company has had focus
directed towards costs thereby ascertaining that it keeps consistent in with
its competitive advantage in the market. This has mainly been in regard to its
customers who have been rendered with the desire to associate the company
products more and more (Marginson, 2002). This has come about following the
fact that through cost strategies, product prices are influenced in a manner
that keeps the company more attractive. The same has also been true with its
focus on differentiation which has kept it away from its competitors reach.
2. Cooperative Strategies: Direction of
strategies - Ansoff Matrix
Products/services
Existing
New
Existing penetration and services and products
consolidation
Market
New
of market products and services
The model which
has been selected is Ansoff Matrix as indicated above. Ansoff Matrix model has
been chosen since it is useful in summarizing any probable strategic guidelines
alongside promoting thoughts regarding options for strategizing which may as
well not be considered. The model is also essential in analyzing organizational
performance, as well as generation of clear understanding of how organizational
strategy has been achieved over time apart from giving an insight into the
same. The model therefore, is viable for cooperative strategizing since it is
essential in acquisition of relevant details especially when it comes to
analysis.
Thorntons Company’s Achievement of the
Strategic Aims and its Sustainable Competitive Advantages
So
as to achieve these organizational strategies, Thorntons Company will have to
strategize on how to penetrate into markets so as to add onto its share numbers
from the existing markets alongside its existing range of products in the
market. Further to this, Thorntons Company will have to consider safer options
while working within markets it has experience with and deal mostly in products
it is familiar with. Following these, the company will benefit from enhanced
market share through increased purchasing power, power over its customers among
other benefits (Lee, 2001). Through consolidation, Thorntons Company will have
to put focus on both current products and current market while at the same time
minding being defensive so as to ascertain it defends its market and engage
downsizing.
Besides,
Thorntons will have considerations on development of product either as new or
modifying existing ones. This will help it enhance changing preferences from
its customers. This also comes with market development through considerations
placed on new market locations, segments and new users of its products and
services. This implies that the company will have to look into new capabilities
based on distribution, marketing, management of relations as well as logistics
management. Diversification is another important area that the company will
have to employ into its business operations so as to gain efficiency through
existing capabilities or resources on the basis of economies of scope (Dress et
al., 1997). Corporate parenting is also pinned onto this aspect and will
involve managing a range of products or services.
Part
C: Evaluation of the Major Strategic Options Facing Thorntons
Company
In regard to
evaluation of Thorntons Company’s strategic options, there are a number of
concerns attached to its organizational strategy. The concerns are based and mainly
focus on suitability, feasibility and acceptability standards.
Suitability
One
aspect that should be considered while doing evaluation of strategic choices of
an organization is suitability. This
entails the measure or determination of the extent to which any given strategic
choice or opinion is held consistent with regard to a number of issues and
factors. One of the factors and issues include organizational objectives in
which in this case the organization is Thorntons Company, which form part of the
features or elements which drive an organization in its business operations (Finch,
2001). Another issue that needs consistency with is the company’s competences
and resources as well. Furthermore, there is the company’s environment along
worth how the environment is associated with the company. Besides, there is a
concern placed on resources of the company as well as competences alongside its
structure and cultural values. Following all these aspects, there is the need
to engage in certain thoughts as far as suitability is concerned in the company
as tackled herein below.
One
of the thoughts that are crucial is assessment of suitability with regard to
competences and resources. In this case, the focus is placed on the strategy’s
ability to exploit strengths that are available for the company to employ into
its business operations (Smith, 2001). Apart from this, the strategies are to
ascertain weaknesses are avoided as much as possible from the company’s
operations. Furthermore, the strategies are to help identify potential for
exploiting the company’s key competences. Another assessment need is placed on
the company’s environment whereby the strategy is geared towards exploiting
opportunities while at the same time avoiding any existing threats for the company.
Another thought on the basis of assessment of suitability is whether strategy
takes account of real and potential needs of the customers while also
perceiving their values on company’s products and services (Lee, 2001). Apart
from this, the strategy has to take account of any impacts caused on
distributors who are at the same time perceived as the company’s customers in
one way or the other. The strategies should also take care of effects on the
company’s competitors within its market environment.
Assessment
should also take concerns with the company’s culture and structure. In this
case, the strategy has consistency with the present business culture and is
mindful of what particular changes might be required in as far as culture is
concerned. Last but not least is the need for the strategy to change activities
of the company’s business based on value addition.
Feasible
Feasibility
entails the company’s practical viability to its strategies, as well as if the
strategies are capable of developing and obtaining necessary competences,
resources and organizational systems for its business operations. In this case,
the company is mindful of what particular strategy its resources will require.
One consideration made regarding this is whether the resources are able to be
acquired easily and cheaply in case they are needed (Littmann, 2003). This in
on the basis of financial feasibility and some other aspects related to it are
labor being skilled enough, technology need and company’s brand name also
important in this case is whether the company’s business operations have
relevant competences in its strategic choices or options. This is mainly
depicted in the company’s skills and human resources. In addition to these,
there is the aspect of whether the company’s business operations have necessary
systems to enable the company deliver according to its strategy. This entails
company’s management f change. These considerations have been made by Thorntons
Company especially with regard to attain positive outcomes from its laid down
strategic choices (Jenkins, 2001). The main concern in this case is on
ascertaining that the company is relevant in employing its strategy in its
business operations so as to gain rather than end up with loses.
Acceptable
Another
aspect of evaluating the company’s strategic choices is acceptability which
entails whether strategy results are acceptable to the company’s stakeholders
or not. This is in regard to company’s business. In this case, there is need to
figure out if the company’s choices of strategy are acceptable to shareholders
as well on the basis of forecasted profitability of the company’s business
operations (Littmann, 2003). This is also concerned with the strategy being
acceptable to the company’s shareholders and its employees in terms of
potential risks. Apart from this, the company is focused on having its strategy
be acceptable in terms of it giving sufficient benefit not only to its
suppliers about also its distributors so as to ascertain their support for the
company’s business operations in the market. Another essential concern is
whether the company’s strategy is capable of being welcomed by the company’s
employees with regard to its impacts based on working environment and
conditions (Lee, 2001). Moreover, acceptability puts focus on whether the
customers will find the company’s strategy worthwhile and acceptable in terms
of ethical aspects.
When
it comes to assessing acceptability, there are three main aspects of concern
namely return, risk and reactions from the company’s stakeholders that the
company has put focus on. To start with is returns and in this aspect,
Thorntons Company has had its strategy evaluation based on the need of
profitability so as to ascertain that there is relevance in its business
operations within its wide market. The company has also focused on cost benefit
analysis thereby ensuring that it operates within expenditures that are well
below returns to guarantee good profit and revenue returns from its business
operations (Treanor, 2000). Shareholder
values have also been taken into account by the company so as to generate
confidentiality in the company.
Another aspect
depicted is on risk issues whereby the company has had evaluations based on
financial ratios as well as sensitivity analysis (Littmann, 2003). These have
been focused on since they are of crucial concern as far as risk management is
concerned in an organizational setting. The last aspect is shareholder
reactions which are also of great and essential consideration in as much as the
company’s operations are to be guaranteed with positive outcomes.
(Summary of Thorntons Company Strategic
Evaluation)
|
|
Suitability
|
Feasibility
|
Acceptability
|
|
Consolidation
|
√
|
×
|
√
|
|
Development
of product
|
×
|
√
|
√
|
|
Development
of market
|
?
|
√
|
×
|
|
Diversification
|
√
|
×
|
√
|
|
Differentiation
|
×
|
√
|
√
|
Recommendation
Entry Modes: License, Franchise,
Joint-Venture
There are some
important considerations which Thorntons Company needs to make. The most
recommended one is execution of keeping its strategies in a more viable
approach through joint-ventures and alliances. This should be as far as its
business operations are established in embracing competitive advantage in its
competitive market. By embracing joint-ventures and alliances, Thorntons
Company will gain the advantage of getting its shares invested thereby avoiding
any risk of dormant shares. The company will also be enabled to have its
resources complemented following the fact that ventures and alliances make
considerations of full utilization of resources. Furthermore, the company will
have it easy to access not only its already ventured into markets but also gain
entry into more markets.
Another
essential recommendation for the company is licensing its entire business
operations so as to ensure that it acquires income sources which are
contractual. This comes alongside having limited monetary and economic
exposures. Following this, the company will ensure that it easily identifies
good partnerships. It will also avoid losing its competitive advantage. Apart
from these, the company needs to consider franchising so as to enjoy absence of
operational facilities especially in the countries hosting it. Through
franchising Thorntons Company will easily engage economies of scale which favor
its business operations in the market. The company will also have advantages
pinned on its locations while at the same time increasing its export
intermediaries. Besides, it will have the ability to avoid trade barriers
alongside more costs on transportation and other operational costs.
Product and Technology Innovation
Innovations on
production and technological advancements are very crucial especially with new
developments in the market which have enhanced competition. More of the
company’s business operations will be enhanced if they are based on new
technological developments. Therefore, Thorntons Company needs to embrace new
ways of developing its products while at the same time employing technological
innovations in its operations and business activities in its market
environment. Through advanced product development and use of technological
innovations, the company will have its production enhanced and its position in
its market stabilized hence increased market acquisitions while also increasing
the company’s attractiveness in its markets and amongst its customers.
Mergers Acquisitions and Alliances
There
are many untapped opportunities in the market. Thorntons Company should also
consider merger acquisitions and alliances so as to enhance its tapping of
opportunities in its market as well as to gain coverage of more market
environments which will improve its customer base. Through mergers and
alliances, the company will also be enabled to operate in markets which it has
not been able to gain control of as a single entity. This will further increase
its steadiness of its position in the market amid presence of its competitors
while at the same time encourage its growth.
Conclusions
Following
the issues and facts demonstrated herein regarding organizational strategy with
basis placed on Thorntons Company, it is evident that there is need for
organizational strategy management in every organization or company. It is also
evident that through proper organizational strategy management, organizations
and companies are better positioned to withstand any opposing forces within
their business environment. Thorntons Company has been depicted as successful
in its overall business operations following the fact that most of its business
operations have been attributed to strategic management. Therefore, it is essential
for organizations and companies to embrace management of their strategies.
References
Cyert,
R. M. and Williams, J. R. (1993).
Organizations, Decision Making and Strategy:
Dess,
G. G., Lumpkin, G. L. and Covin, J. (Oct., 1997). Entrepreneurial Strategy Making and
Firm Performance: Tests of Contingency and
Configurational Models, Strategic Management Journal,
John Wiley &
Sons;
Vol. 18, No. 9, pp. 677-695
Edelman,
L. B. and Suchman, M. C. (1997). The
Legal Environments of Organizations, Annual Review of Sociology, Annual Reviews;
Vol. 23, pp. 479-515
Finch,
J. (Mar., 2001). "Thorntons' New Recipe," The Guardian, p. 3-4
Jenkins,
P. (Sept., 2001). "Thorntons Eyes Expansion in Hot Drinks and
Pastries," Financial Times, p. 7
Lee,
J. (May 2001). "Chocs Away with Company High Flyer," Financial
Times, p. 16
Littmann, W. (2003). The Production of Goodwill: The
Origins and Development of the Factory Tour in America, Perspectives
in Vernacular Architecture, Vernacular
Architecture Forum; Vol. 9, Constructing Image, Identity,
and Place, pp. 71-84
Marginson, D. E. (Nov., 2002). Management Control
Systems and Their Effects on Strategy
Formation at Middle-Management Levels: Evidence from
a U.K. Organization, Strategic Management Journal,
John Wiley &
Sons;
Vol. 23, No. 11, pp. 1019-1031
Smith,
A. (March 2001). "Thorntons Aims to Get Up Close and Personal,"
Financial Times, p. 7
Treanor, J. (June 2000). "Thorntons Profit Meltdown
Continues," Guardian, p. 3
0 comments:
Post a Comment