Analysis Tyrrells Crisp Business - Assignment Example

Case Study Analysis Tyrrells Crisp Business Question A Using appropriate theory and models identify and discuss the strategy employed by Mr. Chase to develop the Tyrrells Crisp business. The story of Tyrrells is of how a farmer turned a crisis into an opportunity. This started when started when a big manufacturer rejected a batch of his potatoes. Chase sent them to a leading purveyor of "premium" crisps and found a market for spuds that were a bit dark and knobbly. Yet he was unimpressed with the end product. "I tasted them and thought: we could do better than this.1 But how do you define better. Tasting better is not a quantifiable quality. The only definition of "better" in Business is if the customers think it is better. And for there to be success with customers or Market, there has to be a clear competitive advantage. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.2 What are the strategies which provide this competitive advantage Following on from his work analyzing the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The four strategies relate to the extent to which the scope of a businesses activities are narrow versus broad and the extent to which a business seeks to differentiate its products The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. We will analyze in this case study how Tyrrells utilized each of these business strategies to gain a competitive advantage. Strategy 1, Differentiation: This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products. Now how are Tyrrell's Chips different. In Will Chase's own words "It's not rocket science. We're only chopping up spuds." But there a few differentiating factors which have made a very strong impact in the customer mind. They are called "chips" to differentiate between the thick-sliced, hand-fried delicacies and the cheap as, crisps alternative. But it is more than that It's not just the quality, the packaging, or the story. It is all of them combined .The Tyrrells story - from field to fryer in the same day - has found an audience in the small but growing number of consumers who want to know the provenance of their food and are willing to pay 85p for a packet for the freshness. Tyrrells uses its own produce and bans additives or pesticides. Rather than rinsing out the starch, the company fries fat slices in sunflower oil for an "all natural" snack. Its 12 flavors - from the no-salt Naked Chips to Smoked Salmon Horseradish and Capers - do not contain GM ingredients. Tyrrells aims to be certified organic in 20 months' time. All of these things create a Niche market of Customers who want fresh environmentally friendly and healthy snack. Strategy2 - Cost Leadership: With this strategy, the objective is to become the lowest-cost producer in the industry. Many market segments in the industry are supplied with the emphasis placed minimizing costs. If the achieved selling price can at least equal the average for the market, then the lowest-cost producer will enjoy the best profits. This strategy is usually associated with large-scale businesses offering "standard" products with relatively little differentiation that are perfectly acceptable to the majority of customers. Occasionally, a low-cost leader will also discount its product to maximize sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can further increase its market share. Tyrrells definitely have cost leadership since they have direct control over the raw material, since they farm their own potatoes. They have total control over the margins and clear advantage over any other producer in the Industry who depends on outside farmers. Strategy - Differentiation Focus: In the differentiation focus strategy, a business aims to differentiate within just one or a small number of target market segments. The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. The important issue for any business adopting this strategy is to ensure that customers really do have different needs and wants - in other words that there is a valid basis for differentiation - and that existing competitor products are not meeting those needs and wants. Differentiation has already been achieved for Tyrrells by its all natural, organic and healthy snack image. The market is still a niche one. And Tyrells caters to that Niche. The Tyrrells message is a home-spun one: crisps are fine as long as we eat fresh fruit and veg and exercise more. Tyrrell's total focus is on this Niche and is not looking to dilute it. Strategy - Cost Focus: Here a business seeks a lower-cost advantage in just on or a small number of market segments. The product will be basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers. Tyrells has total cost advantage and has sufficient margins and does not need to focus too much on costs. But rather keep a close eye on it and not lose this advantage at any point. Question 1 B Indicate a strategy which could be employed to take the business forward. As explored earlier, there are quite a few things which are going for Tyrrells. It has leadership in the luxury chip business. And it is perceived as environmentally healthy snack maker. There are a few things which perhaps can be construed as negative. The Pound is certainly very expensive making exports difficult. However at the same time the concept of farm fresh luxury chips is catching on in the rest of the world. The following should be the strategy which could be employed by Tyrrells going forward. 1. Globalize: It already exports to over 20 countries. It should continue down that route. It should take advantage of the strength of the British Pound and acquire businesses and farms in low cost countries and elsewhere. 2. Diversify: It already has an image of an environmentally friendly company. It should get into other areas where this brand image can be used. Like right now it is going into purchasing organic Apple farms to produce Cider. It is the same concept as the crisps and will cater to a similar market. 3. Optimization: Tyrells already has cost leadership, but this can even become stronger. Like the recent initiative to manufacture Vodka from Potatoes which cannot be used to produce crisps. Previously those potatoes would be wasted or sold at a lower price, now there could be value addition and additional revenue for Tyrrells. 4. Public Relations: Being Green is in now. That is definitely good for the World. And it is good for the Companies which are perceived as green. Tyrrells should continue to do this, but it should take various initiatives to reach the public, by sponsoring various campaigns which would not only help the environment but keep Tyrrells in the spotlight. Question 2 In order to develop the business, Will Chase will need to devise a human resources plan. Provide some advice to him on the following. Tyrrells is a closely held company with a global reach and about a 100 employees. So an HR plan is essential for it. HR Planning involves gathering of information, making objectives, and making decisions to enable the organization achieve its objectives. Surprisingly, this aspect of HR is one of the most neglected in the HR field. When HR Planning is applied properly in the field of HR Management, it would assist to address the following questions: 1. How many staff does the Organization have Tyrrells has about a 100 employees. 2. What type of employees as far as skills and abilities does the Company have The Skills required at Tyrrell's generally are Farming (especially Organic), Crisps manufacturing. There is a requirement of various Agricultural, Manufacturing and logistics skills in this Company. 3. How should the Organization best utilize the available resources If it is not broken, don't fix it. Tyrrells already utilizes its HR in best possible way. However this must be replicated globally and over various cultures and countries. 4. How can the Company keep its employees Tyrrells must strive to get employees who share its vision of producing environmentally friendly fresh and healthy snacks. They must also be shown that such a commitment would be good for them and their careers. So they must be shown a vision and a plan of action. HR planning makes the organization move and succeeds in the 21st Century that we are in. Human Resources Practitioners who prepare the HR Planning programme would assist the Organization to manage its staff strategically. The programme assists to direct the actions of HR department. Tyrells needs to have a HR department which needs to clearly share corporate strategy and vision. HR policies and practices that are appropriate when an organization is pursuing a quality business strategy should consider all of the following. It should include all the employees at all the levels of the company. It cannot be a policy which remains in the company manuals but there should be a permeation of the policy throughout the company. The line managers should especially be involved, and be held accountable for the implementation of the Strategic policy. The line managers should be very clear about the workforce strategy and their role as a manager of talent should be made very clear to them. HR professionals generally associate Strategic with practices that are firm wide covering a broad range of employees along the lines of a core behavioral competency. Instead there needs to be a differentiation which needs to be based on individual employee characteristics and behavioral competencies. In other words instead of trying to put every person into a predefined job, it would be better to find out what each person is most competent at from a temperament and an ability stand point of view and invest in increasing their talent and put them in positions where their ability and temperament would maximize the returns for the company. Differentiation clearly follows from that. Investing in everybody in equal measure is counterproductive. In a factory there are no two types of machines which are exactly equal and require equal investment. Why should this not be true for Human resources Organization and job staffing play a very important role in SHRM. Most managers do not have either access to HR strategy or consider it irrelevant. When that is the case, the people they hire and put in various key positions will not reflect the strategic needs of the organization. What they need to show and convinced that an appropriately designed and implemented HR strategy will benefit the Firm's finances and it is not just some esoteric academic literature. The right person for the right job has been important for a long time in management. And they need to be shown that then what is being done currently. Performance appraisal variations will be much greater in a differentiated system and it would also result in employees leaving, who do not meet the company's performance objectives. The rewards will also greatly vary. This would require a fundamental change in the mindset of managers. Everybody in the firm is not equal. There are employees who are more valuable to the firm than others and should be rewarded more. Indeed employees with different roles in the value creation process should be managed differently. Communications with employees should be a two way street. Like employee surveys should be for clear cut reasons and it should be made clear to the employees that their talent is valued and the firm intends to maximize the value by providing encouragement to their talent and training to help them use it best. This is true especially for a firm like Tyrrells which seeks to differentiate itself externally. It needs to implement the same in the HR department as well. Tyrells Strategic HR Set up would look something like this: 1. Farming: Agricultural workers, Biotechnologists etc. 2. Manufacturing: Crisps producers, packagers etc. 3. Logistics: Transporters etc. 4. Global setup: Export/import agents, international representatives etc. 5. Outsourcing: Contract manufacturing, Outsource farming etc. There is a huge variety of employees and skill sets involved here. The HR program should take all of it into consideration The programme does not assist the Organization only, but it will also facilitate the career planning of the employees and assist them to achieve the objectives as well. This augment motivation and the Organization would become a good place to work. HR Planning forms an important part of Management information system. HR have an enormous task keeping pace with the all the changes and ensuring that the right people are available to the Organization at the right time. It is changes to the composition of the workforce that force managers to pay attention to HR planning. The changes in composition of workforce not only influence the appointment of staff, but also the methods of selection, training, compensation and motivation. Inadequacy of HR Planning: A lack of plan is not an option, because the consequences of not having a plan can be disastrous to Tyrells. Poor HR Planning and lack of it in the Organization may result in huge costs and financial looses. It may result in staff posts taking long to be filled. This augment costs and hampers effective work performance because employees are requested to work unnecessary overtime and may not put more effort due to fatigue. If given more work this may stretch them beyond their limit and may cause unnecessary disruptions to the production of the Organization. Employees are put on a disadvantage because their live programmes are disrupted and they are not given the chance to plan for their career development. The most important reason why HR Planning should be managed and implemented is the costs involved. Because costs forms an important part of the Organizations budget, workforce planning enable the Organization to provide HR provision costs. When there is staff shortage, the organization should not just appoint discriminately, because of the costs implications of the other options, such as training and transferring of staff, have to be considered. Steps in HR Planning Forecasting HR Planning requires that we gather data on the Organizational goals objectives. One should understand where the Organization wants to go and how it wants to get to that point. The needs of the employees are derived from the corporate objectives of the Organization. They stern from shorter and medium term objectives and their conversion into action budgets the HR Plan should have a mechanism to express planned Company strategies into planned results and budgets so that these can be converted in terms of numbers and skills required. The strategy of Tyrrells is already in place. The HR strategy is derived from that and implemented. Inventory: After knowing what human resources are required in the Organization, the next step is to take stock of the current employees in the Organization. The HR inventory should not only relate to data concerning numbers, ages, and locations, but also an analysis of individuals and skills. Skills inventory provides valid information on professional and technical skills and other qualifications provided in the firm. It reveals what skills are immediately available when compared to the forecasted HR requirements. Tyrells has workers in five various main skill categories. Those categories and sub categories should be appropriately categorized. Audit: We do not live in a static World and our HR resources can transform dramatically. HR inventory calls for collection of data; the HR audit requires systematic examination and analysis of this data. The Audit looks at what had occurred in the past and at present in terms of labor turn over, age and sex groupings, training costs and absence. Based on this information, one can then be able to predict what will happen to HR in the future in the Organization. This will be more important for Tyrrells as we go over a diversified product portfolio spread over many countries. HR Resource Plan: Here we look at career Planning and HR plans. People are the greatest asserts in any Organization. The Organization is at liberty to develop its staff at full pace in the way ideally suited to their individual capacities. The main reason is that the Organization's objectives should be aligned as near as possible, or matched, in order to give optimum scope for the developing potential of its employees. Therefore, career planning may also be referred to as HR Planning or succession planning. Tyrrell's is a closely held organization. But Chase is not automatically committed to his son succeeding him. Will Chase feels that whoever succeeds should be the most qualified to lead the organization. His son currently is focused on Agriculture, but Will Chase feels that anybody who succeeds should have a well rounded handle of all aspects of Tyrrells, which is the right way to go here. In Summary .The questions that should concern Tyrrells are: a) Are they making use of the available talent we have in the Organization, and have we an enough provision for the future b) Are employees satisfied with their care of their growth in terms of advancing their career c) Is there assignment of individuals to planned future posts enable the administration to ensure that these individuals may be suitably prepared in advance Based on this, the following should be the actioning of the HR Plan 1) Know where Tyrells is going. 2) There must be acceptance and backing from top management for the planning. 3) There must be knowledge of the available resources (i.e.) financial, physical and human (Management and technical). Once in action, the HR Plans become corporate plans. Having been made and concurred with top management, the plans become a part of the company's long-range plan. Failure to achieve the HR Plans due to cost, or lack of knowledge, may be serious constraints on the long-range plan. Conclusion: Success at a small scale does not automatically ensure continued success as the scale grows. However if the Business has a plan which remains true to what made it successful in the first place , it will continue to remain to grow . And that is what this analysis seeks to do. Identify How Tyrrells became successful and what is needed for it to continue in that manner as it grows. References: Question 1 A Michael E. Porter, Competitive Strategy. Will Chase: Farmer making a packet out of knobbly crisps, The Guardian Friday July 28 2006. Ranjan Das, Corporate Strategy Business Life Oct 12 2005: Crisp Profits at the Potato Farm Question 1 B Global Marketing A Decision-Oriented Approach 4th Edition Svend Hollensen Apr 2007 Kotler International marketing 12th Edition http://www.brandrepublic.com/News/767735/Tyrrells-extends-crisp-brand-vodka/ Starting Out: Jerry Hirchkorn Question 2 Journal of Management / Dec 2006 Pg 919 SHRM case study. Becker and Huselid. Importance of HR planning in Organization, Vareta Strategic HR, Lepak and Snell Role Behavior in HR, Schuler and Jackson Read More