Strength of Fuller Smith & Turner PLC - Essay Example

Introduction With the current high competition being witnessed in all industries, companies are increasingly being faced with new challenges to comeup with new managing and marketing strategies that can ensure that they retain or even increase their market share. To achieve this, companies can undertake market research which is a process that involves gathering of information, recording and analysing the data. This process involves gathering information concerning competitors and customers that exist in the market. Market research is very fundamental in monitoring the companies' sales and product performance. It also helps organisations get vital information that helps in expansion to new markets. It has also become increasingly important that companies evaluate their management structure and culture to ensure that they don't hinder a company's objectives and goals. Studies show that organization performance is highly affected by its management. Philip (1988) stresses this point when he points out that an organization management and marketing strategies defines the overall success of a company in a competitive market.( Philip, 1988) This paper will examine the general overview of the fuller's company, take a critical look on projection of company and also include a market analysing using various tools market research such as SWOT, PESTEL, 5 Forces, and Consumer Behaviour. The paper will then make a recommendation on areas for improvement and make a conclusion based on the findings. Company profile Fuller Smith & Turner PLC is a company engaged in brewing and retailing. The company business activities include fuller's Inns which consists company managed pubs, leased and tenanted pubs, and company's managed hotels. Other business consists of fuller's Beer Company that consists brewing and also distribution of spirits, wine and beer. Fuller has been brewing beer wine and spirits for more than 350 years, over the past the company has grown to become much strong in terms of market and production. The company has a high reputation currently in managing good pubs and brewing excellent beers like , London pride and Chiswick bitter have remained outstanding over the years claming many awards. In 2005 fuller company acquired Gales company, which was the biggest achievement of the company. The acquisition meant that the company had a total of 362 pubs under its control and another great beer brand in the name of HSB. The company has continued to invest and develop to ensure its market position in the industry. The company posted a pre-tax profit of 137.6 million sterling pounds in the first quarter of the 2007 quarter. The success of the company according to Michael Turner the Chief Executive of the company is based in investing in quality. The company is becoming an impressive operation, which incorporates managed and tenanted hotels, pubs and brewery at in London. The share capital stands at 68.1 million sterling pounds. (Fuller's, 2007) The company logo source; www.fullers.co.uk/ir/home SWOT Analysis Most companies, organizations and institutions today are using SWOT analysis as a strategic method/tool for evaluating their strengths, Weaknesses, Opportunities and Threats with reference to strategic planning. SWOT analysis identifies the internal and external factors that determine the achievements a company has specified in its goals and objectives. First, it specifies the internal factors i.e. strengths and weaknesses of Fuller's company. Secondly, it categorizes the external factors that have been identified to boost or hinder the achievements of the company especially in terms of growth and expansion. These external factors are the opportunities and threats. (Lee and Carter, 2005) Strengths Strength of Fuller's is the image it has, market leadership, financial resources good customer care. Fuller's is among the biggest company in brewing and retailing business having subsidiaries in other foreign countries. It has more than 360 branches located in different countries around the world. They driving force has been introducing good and high quality beer and wine, good service delivery, cleanliness and customer care. Another strength as been Brand image of the company which makes the company to standout from the rest. (Lee and Carter, 2005) Technology Fuller's has employed the latest technology in their production delivery, for example the company has the latest production plants also have innovative bottling. Fuller company has also incorporated information technology in its marketing and other processes make the company more effective. (Lee and Carter, 2005) Quality products Fuller's is currently a powerful brewer and retailing boosting of some the best beer and wine brands on the market in the whole world. It has a good reputation for its quality beers such as the London pride, Chiswick and ESB. The company's other ventures such as hotels and pubs are also offering good quality services and posting strong performance and increased profits. The company has grown substantially in the recent years going inline with globalization and franchising The Company's assets make it one of the richest companies in the industry. (Lee and Carter, 2005) Weakness A weakness can be defined as any aspect of the company which may hinder the company from attaining its objectives or goals. Usually, it covers the firm's assets, resources, and capabilities. Latest research indicates that Fuller's Company is faced with few weaknesses which if not taken care of it may hinder the company's success. The company's rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly. Also the human resources, that is, the workers and the management have been performing poorly of late in their respective responsibilities. Laxity on the side of the marketing managers has been pointed out and reports suggest that they have not come up with suitable marketing strategies to cope with the ever increasing competition in the industry. The organization culture of doing things and reputation has been questioned by many people outside the Britain. (Lee and Carter, 2005) Employee motivation Employees motivation at Fuller's may be hard to ascertain, yet again the by the fact that most employees working at Fuller's seem to belong to the lower segment of social economic level, monthly paycheque may thus be the only motivation the employees seem to have. However, in order to recognize the employees each month an employee is recognized as an employee of the month. Employees mostly focus on themselves rather than the group work because they are not actively involved in the actual planning of the goals and objectives of the company and this has resulted in mistrust for the company. (Lee and Carter, 2005) Opportunities and threats An opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favourable or advantageous to the business in relation to a particular objective or set of goals to be attained. It is an attractive venture for a company's operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth. As globalizations continues to open up new markets and eliminate barriers of doing business, Fuller's company will continue to have an opportunity of opening up new franchise in other countries or increase their presence in the countries where they have already established. The main opportunities lie in Asia which has continued to witness good economic growth. Especially in expanding consumer markets in countries such as India and China or located new markets. Also there is still market in other continents as the company is serving very small percentage of the total population of the world. Threats Threat of competition and government policies Grant (2005) explains that a threat can be referred to as an environmental development or event which will present problems or challenges likely to hinder the achievement of organizational objectives, for example, competition, high interest rates, government legislations, declining real income among others. Fuller's Company is now facing stiff competition from its main rivals like the Young & Co PLC and Harvey & Son (Lewes) Ltd, thus there has been a drop in the market share thus a reduction of their profits. The marketing strategies of Fuller's company need to be reviewed in order to cope with the increasing competition. For it to continue succeeding globally the marketing managers have to incorporate recent technological investments. Being an international company in this field, Fuller's is exposed to threats from government polices in different countries. (Grant, 2005) Changing nature of market environment There have been many changes on the way market environments have been behaving especially in terms of diversity. The international marketing environments are usually done through the use of a STEP or PESTEL analysis procedure. (Baker, 2000) This analysis is worth because it determines whether the organization will be fairing well or not. Political Political factors may have a direct and indirect effect on the performance of the company. Some of the decisions made by the government of the host nation or the target market may impact negatively on the operations of organization. Baker (2000) observes that, political stability of a country is usually very important when it comes to international marketing. U.K has a favourable political environment that ensures that foreign investments are safe and secure. Inflation rates are low and the economic growth is good. Monetary regulations in the UK and other European Union countries in which the company has business encourage and enhance competitive marketing. (Baker, 2000) Economical Various economic factors are indicators of the changing international environment. These economical factors include; Fiscal policy rates, interest rate policy, currency exchange rates, consumer factors, quotas imposed on the product , import tariffs, inflation rate and national interests, expenditures, consumer wealth, etc. It is possible that the climate economy of the UK dictates how the consumers of the alcoholic products behave in the society with reference to brewers industry. Since the economy of U.K is booming, the consumers are normally spending more on alcoholic products. (Baker, 2000) Technological factors There has been a marked change in the way technology has been changing the world markets for all organizations and companies. The internet for example, has assisted companies to meet new markets and extend its global outreach. It has had a profound impact on the marketing mix strategies of many organizations. Fuller's company has kept in touch with changing technology and modernization in this ever changing world in order to remain competitive as well. (Grant, 2005) Social factors Forces within the society such as media, family and friends have affected the way Fuller's company sells its products. Social factors affect our attitude, opinions and interests on the way we view products from certain companies. Grant (2005) states that, the UK society is well educated and aware market trends in the industry, in addition the society has a moderate culture of drinking alcohol. The company has formulated marketing strategies that are in line with the UK society. (Grant, 2005) Legal factors Legal factors are another factor that must be analyzed before going business in any country. The way the company operates in terms of operating rules of law for example how Fuller's Company cope the legal rules in UK is more important because it avoids conflicts and will enhance the success of the organization. The company is engaged in legal business practice of marketing alcohol products in form of beer, spirits and wine which is permitted by the U.K laws. (Grant, 2005) Consumer Behaviour Today, the market is being driven by consumers are more informed and have more money spend than previous. (Hoyer, and MacInnis, 2001) Customers currently are shopping for quality and luxuries so that they can enhance their quality of life. With improved purchasing power consumers are turning way from purchasing material things to experimental consumerism. Thus, customers will purchase a product because quality and cost effectiveness. (Hoyer, and MacInnis, 2001) Health concerns. Since the early 90s there has been changing patterns of alcoholic consumption in Europe, and particularly in the UK. Campaigns such as "anti-drink and drive" and increase in control of alcohol advertisement for example have continued to reduce the volume of alcohol being taken in the UK. There is a lot of rising consumer concerns on the health issues since most of the people living here are becoming aware of the many benefits of consuming nutritionally approved food products. On the other hand the government continues to campaign for people to reduce the amount of alcohol they take. Thus, for the success of the company, high quality products and good marketing strategies remains an important factor for the success of the company. (Hoyer, and MacInnis, 2001) Since there are very many alcoholic drinks products in the market the company has continued to produce high quality products which are safe to drink. The company also continues to research on how best to improve the existing brands besides introducing more competitive brands on the market. Fuller's company incorporates consumers' requirements in its production process to produce products that are satisfactory to the different customer needs. (Hoyer, and MacInnis, 2001) Trade issues According to the European Union membership the U.K as a member applies its rules and regulations which are enforced on all the European Union members. Even though the European Union has a rather liberal policy on foreign trade there are some major restrictions that are laid down and this affects the trade issues in all the European Union countries. This however means that the there are a number of regulation and control systems for any goods entering the territory of the European Union. (Lee and Carte, 2005) The U.K is among the largest economy globally and its access to the European Union in the enabled the country to have an open economy as well as modernize its industrial base as well. Similarly the country revised its economic legislation and this would enable the foreign and the local companies to introduce new alcoholic drinks. Thus fuller's company just like any other brewer company will face high competition in the UK because of the open market policies, the company will have to compete with other global players in the industry. Lee and Carte (2005) argue that, the implementation of Single European Market (SEM) created free movement of people, services and products across the European countries. This has created both opportunities and threats to the brewery industries as it opened new markets and at the same time brought about increased competition. (Lee and Carte, 2005) The European Union has many regulations in the brewer industry in the UK, and most of the policies concerning the brewer industry implemented by the U.K are formulated by the European Union. Some of the regulation stipulates trade policies, product standardization of the alcoholic products and issues concerning the production and marketing of alcoholic products in the UK and Europe as a whole. (Lee and Carte, 2005) Areas for improvement; the marketing mix We can therefore deduce that there is greater need to understand market behaviour in order to achieve its sales targets in the company and much attention should be directed to customer, structure, technology and the environment. market effectiveness can only be achieved if the management is be able to incorporate good leadership, motivation, a well defined product mix, forming group dynamics and setting up good sales strategies for conquering the market. Fuller's Company should also be flexible in the sense that they should be ready to cope with change without affecting their productivity especially when it intends to go international. The company should take also improve on the following marketing mix; Product Fuller's Company deals with a variety of alcohol products ranging from wines, spirits, and branded beers. The product of the company are said to be unique as compared to of that of its competitors. The alcohol products especially the wine are considered to be of high quality as compared to that of its competitors. However, the company need to increase the product range to satisfy ever changing needs of the customers. Price Philip (1988) states that, price is an important tool in competition and thus firms use it as a mechanism to outdo themselves in the alcohol industry According to research reports suggest that the company is said to be overall high cost producer of alcohol products in U.K. The product of the company is expensive and costly to its customers. Research indicates that the company is unable to explore some markets because of the expensive prices associated with the products. Thus, it is important that the company should try to examine ways in which to produce low cost wines and spirits to cater for the low segment customers who are price sensitive. Employing such strategy in will significantly increase the company's performance in terms of market share. (Philip, 1988) Place Distribution channels determine the sales volume of any company and Fuller's Company has the well distributional channels that have resulted to increase in profit levels of the company. This has enabled the company to have competitive edge over its competitors and thus has led to increase in market share, profitability, and growth rate. The company should continue increasing the distributional channels to ensure that more customers can easily access the company's products. (Philip, 1988) Promotion Fuller's Company has engaged itself in promotional activities of its beer, spirits and wine in U.K and other countries and significant results have been achieved because consumers have responded well in consuming its products. The company should continue engaging in vigorous advertising through media and bill boards to continue creating awareness of its products to attract a large number of customers to drink its quality products. (Philip, 1988) Results The above marketing improvement will lead to increase in sales volumes and more profits to the company. At the same time the company will have a competitive advantage over its competitors. Conclusion Market analysis in important in improving and ensuring the success of a company, in market analysis there are several tools that are used to analyze the performance of a company. SWOT analysis, PESTEL and customer behaviour some of the tools that are used in company analysis. Fuller's company has continued to succeed because of its strong financial base, good and high quality products and its expansive distribution channels. Offering high quality products and good customer orientation are some of the strong points of the company. However, Fuller's faces challenges in ensuring that it retains its market share because of the high competition being witnessed in the industry. Government policies in various countries and industry rivals continue to pose as a threat to the Fuller's company. Fuller's has continued to do well in its business and continue to be one of the best well known names in U.K and in many other countries that it has its presence. Reference: Baker, M. (2000): Marketing Management and Strategy, 3rd ed: London. Macmillan Business Barney, J. B. (1991): Firm Resources and Sustained Competitive Advantage, Journal of Management, 1 (January), Fuller's (2007): Company profile; Retrieved from; www.fullers.co.uk/ir/home; Accessed on 3/12/07 Grant, R.M. (2005): Contemporary Strategy Analysis; Blackwell Publishing Ltd., Oxford (U.K.) Hoyer, W.D. and MacInnis, D.J. (2001): Consumer Behaviour, 2nd Ed New York, Houghton Mifflin Company Lee, K and Carter, S., (2005), Global Marketing: Changes, New Challenges and Strategies. 1st Edition, Oxford Press Philip, K. (1988): Marketing Management: Analysis Planning and Control, Prentice-Hall Read More