Strategic Management of Thorntons - Case Study Example

Strategic Management Portfolio Strategic Management Portfolio Titus Rock Manickam Order No. 233436 27 July 2008 Table of Contents: Thorntons Case Study Part 1 3 Thorntons Case Study Part 2 4 Thorntons Case Study Part 3 5 Manchester United Case Study 4 6 Strategic Positioning Case Study 5 8 Sources 10 Strategic Management Portfolio Learning Portfolio Assessment Option 1 Thorntons Case Study Part 1 Thanks to its domineering policy, Thorntons have been able to maintain a strong and steady lead in the market albeit its presence in some places like London and South England needs to be revved up and they are doing well in that the company is aware of this fact. The company has strong competitors, the chocolate and packaging industries are vibrant, its strategy of vertical integration enables it to maintain a good feel of the customers' needs and expectations at the grassroots levels and its profit margins have been favorable enough to have the company concentrate on upgrading, expansion and growth. The company's unswerving concentration and consistent strategies on its retail activities are also noteworthy and undoubtedly one of the main reasons for the company's stellar performance records over the years. (Micha Gisser and Raymond D. Sauer) By and large, this industry is attractive to existing players but difficult for new entrants. This is because of the strong oligopoly of existing players. Nonetheless, Thorntons needs to keep tabs on its competitors at the top level. There is no mention of the margin of lead between Thorntons and its competitors whose performances are better than that of Thorntons. The company needs to put together its act on horizontal integration too. In the current market scenario of mergers and acquisitions, if aggressive policy of horizontal integration is not in place, the company is in danger of having the rug pulled from under its feet. And the threat is not always from the top players. The global economy is full of eyes waiting in the wings like a hawk to scoop down on its prey from unexpected regions. (Globalization Challenge) The company also needs to exploit its in-house manufacturing resources. There is no mention if this supply base is allowed to cater to competitors' requirements. Thorntons is sourcing some of its products from outside suppliers. Hence, it makes business sense to allow part of its manufacturing activities to be used to meet competitors' needs. (Michael Porter's Five Forces) Learning Portfolio Assessment Option 2 Thorntons Case Study Part 2 Thorntons' strength lies in its popular brand name which it has assiduously built over the years. Its hold over its product ingredients, market maneuverability based upon differentiation, marketing and manufacturing expertise, influence over retailers and customers, ability to secure outlets at key locations, and traditional family ownership, albeit professional management policies play key roles in Thorntons' market presence as a worthy entity. The company has also done well in building up strong presence in Midlands and North England. Nevertheless, Thorntons must aggressively pursue its agenda in London and South England where its presence is vulnerable. There are strong contenders in the form of existing players such as Cadbury and Nestle, and potential competitors. The company has wisely invested in a strong in-house supply base in Midlands and North England. It can begin its marketing operations in London and South England on a stronger note to shore up its sales figures. It can supplement its inventories from its own manufacturing plants in Midlands and North England, keeping its options to begin manufacturing operations in London and South England as soon as opportunities unfold. (Carol Propper et al) Thornton must also begin its sales activities from its own retail outlets. Besides serving as deterrent to ever present threat from strong retailers and manufacturers as potential competitors, this strategy also helps add to core competencies and strengthen the company's net assets value. The prospects of full scale competition from large retailers and manufacturers must keep the company prepared with its own agenda to blunt competition from these sources. The global market has thrown open immense opportunities as well as threats from marketing as well as manufacturing sources. The need to act locally and think globally has never been more acute or intense. (Competition Authority) Learning Portfolio Assessment Option 3 Thorntons Case Study Part 3 Thorntons' unique sales propositions have been its traditional market presence, successful product differentiations and packaging, fairly long and successful presence in Midlands and North England, and its family hold over the business which again has been benevolently and professionally handled. The company has enjoyed good business relations with their retailers and suppliers, and obviously followed healthy give and take policies with them. They have retained their good customer base. And, unlike many large, traditional corporations, Thorntons have unwaveringly run the business on professional lines. However, it is time for the company to shift its focus from following policy of vertical integration to one which allows for healthy vertical as well as horizontal tie ups. The opportunities and challenges in the local as well as global markets are undergoing sea changes where marketing strategies are playing key roles in business prospects and survival. The current business environment does not treat stagnation with respect. If the brand is strong, it has the option of shaping up to the existing ground realities, and whet the buyers' appetite for more and more purchases daily, or ship out unceremoniously. The upcoming generation has no time for aging and stagnant systems. (Quantum) From all accounts, the company's owners and management are visionaries. It appears that past failures, or none too impressive results have made the company move very slowly or not move at all in areas with less potentials and prospects. However, it does not make sense to prevaricate in important places like London and South England. Two strategies which could see the company further develop their competitive positioning are restructuring to explore new opportunities. To begin with, there must be quick and facile revamping and upgrading of activities in London and South England. Secondly, the company must come to terms with horizontal integration that addresses mergers, acquisitions and even global excursions. (Christine A. Varney) Learning Portfolio Assessment: Option 4 Manchester United Case Study 4 Vision, Mission and Strategic Objectives are the invisible wheels and structure of an organization. They are fundamental to an organization because they provide the direction and means to survive, grow, and improve functionally. It is difficult to imagine an organizational without vision, mission and strategic objectives. Without clear vision, mission and guiding objectives, an organization is not only in danger of losing focus but also cease to exist sooner or later. Vision, mission and strategic objectives are the raison d'etre for the existence of an organization. Vision may be defined as clear insight of a visionary about his future plans. Mission is the single minded pursuit of the visionary's goals, the translation of a vision into active organization, and people and departments in the organization. Strategic objectives are the human and material resources necessary to achieve the targets. (Voluntary Works) The cultural web analysis for Manchester United illustrates the club's origin, its history, symbol, current status, routines, power and organization structures, control systems and overall paradigm. The Manchester Union came into being as Newton Heath L&YR F.C. But there was a name change in 1902 and the organization was rechristened Manchester Union. Eight members of the football team tragically died in the Munich Air Disaster on 6th February 1958. Its symbol is the devil, deriving its design from the crest of the city of Manchester. The traditional routine of the team is the combination of pure heartedness and precision. Sir Alex Ferguson runs Manchester United. The owners are Manchester United Limited, a public limited company comprising Joint Chairman, Directors, a Chief Executive, and Chief Operating Officer. The club fans play vital role in the running and controls of the organization. The popularity of the club, its corporate outlook and function, and its immense resource serve as the overall paradigm. (Johnson, Scholes & Whittington, 2005) Learning Portfolio Assessment: Option 5 Strategic Positioning Case Study 5 Differentiation is the strategy a corporation uses in its range of products to retain its position in market as also customer base. It is the unique feature or features found in the corporation's product which is different from those of its competitors. Basically, it is the unique sales proposition (USP) of a product comprising brand image, sales network, technology, innovation and customer service. At times, the company may carry out some changes in its existing product in order to achieve greater satisfaction among existing customers or even expand its customers' base. (Sougata Ray & Sathyajit Gubbi, Raveendra Chittoor) Differentiation is an important strategy all business organizations follow to sustain brand loyalty. Apart from this, differentiation also helps to keep the company retain its market position. Some examples of firms differentiation strategies are: companies' claims about the superiority of their refrigerators, air-conditioners, etc, claims about better or best services by banks, insurance companies, telecommunication firms, etc. (Arvetica) By differentiating on their products like refrigerators, companies like LG and Samsung have been able to quickly occupy top market positions. Even in the deterrent soaps sector, local entities Nirma are giving global monolith like Unilever a run for their money. (Nirma) Hybrid positioning is low cost and differentiation firms use to achieve high sales volume in a competitive environment. Hybrid positioning and differentiation must be followed after thorough research and analysis. A cursory attempt at hybrid positioning and differentiation could yield negative results, and must be avoided. Also, it is safer to try hybrid and differentiation in an open market after making a trial attempt before a full scale launch. Rigid market controls and governmental interventions disrupt and distort hybrid positioning. For hybrid positioning and differentiation to work flawlessly, the economic environment must be totally market oriented. (Sougata Ray & Sathyajit Gubbi, Raveendra Chittoor) Sources: Arvetica, Differentiation and Positioning in Private Banking, http://www.banco.ch/Banco_images/Images_Rubriques/fr/FinancialNews/News367_Etude_E.pdf Carol Propper et al, Competition and Quality: CMPO Working Paper Series, No. 03/077, Internal Market 1991-1999, May 2003, http://www.bristol.ac.uk/cmpo/publications/papers/2003/wp77.pdf Christine A. Varney, Vertical Merger Enforcement Challenges at the FTC, PLI 36th Annual Antitrust Institute, San Francisco, California, July 17, 1995, http://www.ftc.gov/speeches/varney/varta.shtm Globalization Challenge, IIMA & Tata, Confluence, www.iima-confluence.com/globalization.html Competition Authority, Response to the Competition and Merger Review Group, Report on the 1987 Groceries Order, http://www.globalcompetitionforum.org/regions/europe/Ireland/10.pdf Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy Micha Gisser and Raymond D. Sauer, The Aggregate Relation Between Profits and Concentration is Consistent with Cournot Behavior, University of New Mexico and Clemson University, http://hubcap.clemson.edu/sauerr/working/profits.pdf Michael Porter's Five Forces, Competitor Analysis, RAPIDBI, http://www.rapidbi.com/created/porterfiveforces.html Nirma, http://www.nirma.co.in/ Quantum, Be Unique, Unique Selling Proposition, http://www.iquantum.com.au/unique-selling-proposition.htm Sougata Ray & Sathyajit Gubbi, Raveendra Chittoor, Do Emerging Economy Firms Need Ambidextrous Strategies for Internationalization Working Paper Series, Indian Institute of Management, Calcutta, http://www.iimcal.ac.in/res/upd/WPS610.pdf Voluntary Works, Vision, Mission and Strategic Objectives, http://www.voluntaryworks.org.uk/Portal/ChangeUpVision.asp Read More