Major Situation Faced by the Lockwood Group - Case Study Example

The Lockwood Group Table of Contents Introduction 4 Major Situation Faced by the Lockwood Group 5 Financial Services 5 Energy 6 Packaging 7 Forest Products 7 Analysis of the Lockwood Group 8 Strengths 8 Weaknesses 9 Opportunities 9 Threats 10 Recommendations 11 Pros and Cons of the Recommendations 12 Conclusion 13 Works Cited 14 Bibliography 15 Introduction Lockwood Group was started in 1904, with a huge number of competitors in the market. Several strategies were taken by the company’s CEO to get into the competitive market. Previously, the Lockwood Group used to deal with the packing, fiber drum and cardboard business and had maintained strong position in this field. In 1970s, Lockwood had become one of the leading companies in the packing segment (The Lockwood Group, Inc, “New Strategies for the 21st Century”). In the similar context, it can be stated that rather than paper and packing business, Lockwood had expanded its firm with the food industry. The company had gained long-term profitability in the market related to the food and packing industry. Further, they had expanded the business into other fields (The Lockwood Group, Inc, “New Strategies for the 21st Century”). The main purpose of this paper is to analyze the major situation faced by the Lockwood Group. Though the company had faced certain problems in the competitive market, it is essential to analyze their marketing situation and provide appropriate recommendations for the company. Therefore, it can be stated that the main motive of the paper is to provide recommendation for future by analyzing the Lockwood Group’s present as well as past marketing scenario (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Major Situation Faced by the Lockwood Group Lockwood Group had faced major change in the competitive market, as the company had initially started the business with packing and paper section. During the second part of the 20th century, Lockwood Group was engaged in producing auto parts, electrical equipments, metal alloys, electric motors, communication equipments, furniture, appliances, power equipment, specialty equipments and consumer products. However, Lockwood could not succeed in the above mentioned businesses. All the segments were sold or liquidated at losses (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Though the Lockwood was bearing a loss, the CEO of the company has taken various majors in the 21st century to set up long-term profitability in the competitive market. Their main business was financial services, energy, and packaging along with forest products. The company had reinvested the funds in vicinity promising the expansion of cost-effectiveness. In 2001, Lockwood had increased its sales from the four main businesses due to adoption of various strategies as it has been stated earlier that the company had expanded the business in the four sectors (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Financial Services Lockwood had started financial services in 2000s. The company had appointed the investment banker to trade the unwanted business and had invested the capital in financial business. Lockwood insurance sector had good profitability in the market. Visualizing the profitable financial scenario, the company had extended to insurance operation. In 2002, Lockwood financial services had three broad categories i.e. life insurance, real estate and causality insurance. Though the company was strongly positioned in the financial sector, its competitors were high, because Lockwood financial division was petite by the national standards (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Energy Lockwood had operated in the energy business since 2004. The company had entered into energy businesses through the acquisition of the EasyGas Energy. Previously, Lockwood had small businesses in the offshore and onshore oil industry but later on expanded the firm into Gulf of Mexico and Mississippi. Lockwood had gained long-term profitability in the energy business. EasyGas was the supplier of natural gas to peninsular Florida and it was one of the six US companies selected by the PEMEX, which is a Mexican National Oil Company. In addition, to the gas industry Lockwood had also operated with the pipeline operation that assists the company to gain strong cash flow at a relatively low cost. Prior to the easy gas, Lockwood begun to investigate a number of major and very expensive projects including a 1,500 mile slurry pipeline that would transport coal from the eastern Appalachia and the Illinois basin to the Southeast (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Packaging Lockwood had commenced the packaging business in 2002. Packaging sector mainly involves oligopoly market and it is very difficult to gain long-term profitability. Presently the book value of the entire division is about 70%. From this analysis, it can be notified that the packaging industry of Lockwood was serving at a risk (The Lockwood Group, Inc “New Strategies for the 21st Century”). Forest Products Lockwood was the largest producer of bleached folding carton board in the US and it was ranked in the sixth position of the total production. However, their competitors’ profitability was higher than the Lockwood. Regardless of the competitor’s success, Lockwood aimed to sell their bleached pants of paperboard for around $650,000,000. The company possessed 1.45 million acres of timberland situated in the southeast. According to the annual report, the timberland which was previously used for the business purpose as a supplier to the deprived mills can be presently run as a ‘non-integrated profit center’. The company could not succeed in the forest business because as compared to their competitors Lockwood’s product was of lower quality. A team of expert had indentified that the company plants displayed signs of meager preventive maintenance related practices along with insufficient training (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Analysis of the Lockwood Group Lockwood is one of the largest companies in the production of forest products, energy, packaging and the financial services. For analyzing the company’s prevailing scenario, SWOT analysis is used. This enables to recognize the strengths, weaknesses, opportunities and threats of Lockwood Group. Strengths Strengths identify the capabilities, the better performance level and the potential of the company. Lockwood is the one of the largest companies in the packaging sector that has gained profits in the market. The company had extended their business into various sectors that had assisted it to gain competency in the market. The main motive of the company was expansion of long-term profit and growth. Lockwood used to deal with the financial sectors, energy industry, forest products and packaging business. The company had extended various schemes in the financial sectors and oil industry (The Churchill Corporation, “Product Brief Development Tools”). Weaknesses Lockwood’s expansion and foray in a number of businesses such as power equipment, electrical equipments and airplane wings among others were unsuccessful. The financial and human capitals devoted towards these businesses were mainly lost. Further, the diversion of the capital and the management contributed towards the company’s failure. Supplementary to this issue, the company started their business with packaging. This firm had to deal with several issues as it was not able to maintain long-term profitability in the packaging sector due to the oligopoly market. The packaging sector brought a significant proportion of losses. Taking the forest products sector into the consideration, Lockwood’s forest products sector had to deal with large number of competitors while entering into the market. Presently, the forest products of the company are utilized as a non-integrated revenue centre (Humphrey, “SWOT Analysis”). Opportunities Lockwood has got opportunity to diverse their products that can assists to gain competency in the market. As stated earlier that the company was fetching loss from the packaging sector, electrical equipment, specialty chemical and consumer product. These all businesses were sold and started a new foray into the forest industry, energy industry, financial industry and packaging sector. The overall financial condition was well established due to the implication of diversification strategy in its business (Risk Management Agency, “SWOT Analysis”). Threats Lockwood’s prime threat was from their competitors. In forest production industry, other firms were producing high quality products as compared to Lockwood. This had affected in the company’s reputation as well as the financial growth. Lockwood also failed to improve capability utilization and line efficiencies rather they focused on the long-term profitability standards (Shahzad Trading and Consultancy, “Understanding SWOT Analysis”). Recommendations Lockwood had faced losses in the previous business sectors but they had taken turn in a diversified direction and established the business field in the forest and energy products, the packaging and the financial sectors. Rather than focusing on the long-term profitable market, the company should adopt various marketing strategies such as brand segmentation, innovation and production of quality products (The Lockwood Group, Inc “New Strategies for the 21st Century”). Lockwood had diversified in the paper industry and adopted the business of packaging sector. As stated earlier that the financial and human capital dedicated towards certain unfruitful businesses caused losses to the business. Therefore, it is vital factor for the organization to manage the employees’ relationships with the management in an efficient way (The Lockwood Group, Inc “New Strategies for the 21st Century”). Lockwood had various competitors while entering into the forest business. Lockwood should produce better quality products as compared to its competitors and should also offer the product at a reasonable cost. This in turn would assist to gain the customer satisfaction level and preference along with the high return (The Lockwood Group, Inc. “New Strategies for the 21st Century”). Pros and Cons of the Recommendations In this case, pros and cons are evaluated from the recommendations given above. The company had focused on the long-term profitability and elaborated in the industry in various sectors. In the previous business sectors the company was facing loses and by selling the businesses they had diversified to other fields in the business sectors. Diversification has made possible to create long-term stability in the market (The Lockwood Group, Inc. “New Strategies for the 21st Century”). If Lockwood did not diversify their products then it was impossible for the company to maintain suitable growth in the business field. Though the company had to suffer certain losses, they had obtained profit from the oil and energy industry. The main problem which Lockwood had to deal with is the related to the competitors, in the forest product industry if the company had produced better products than its rivals then it was possible for them to gain long-term profitability in the forest business sector (The Lockwood Group, Inc “New Strategies for the 21st Century”). Lockwood should focus on the brand segmentation and should also provide the products at an affordable cost. Therefore, both pros and cons are essential to recognize to analyze the marketing strategy of an organization (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Conclusion Lockwood Group deals with the several of businesses such as packaging, forest products, energy industry and financial services. Various strategies were taken by the CEO of the company to gain long-term sustainability in the market. Previously, the company had assumed the business of paper industry that would not be able to stay for long time in the production sectors (The Lockwood Group, Inc “New Strategies for the 21st Century”). The company had adopted new strategies in the 21st Century. Various agreements were introduced that were, to reduce holdings in operation that fall short of performance goals or do not sustain for the long-term strategy in the organization, to reinvest the capital of the company in order to gain profitable growth, and to strengthen the company’s balance sheet to analyze the credit standing of the company (The Lockwood Group, Inc “New Strategies for the 21st Century”). In 2001, sales of the company had increased due to the energy and financial service production. Therefore, it can be stated that though the company had faced certain difficulties in establishing up the organization, it had also gained profits and determined long-term profitability in the business sectors (The Lockwood Group, Inc, “New Strategies for the 21st Century”). Works Cited Humphrey, Albert. “SWOT Analysis.” September 27, 2011. SWOT Analysis Example, 2004. Risk Management Agency. “SWOT Analysis”. September 27, 2011. What’s a SWOT Analysis? 2008. Shahzad Trading and Consultancy. “Understanding SWOT Analysis.” September 27, 2011. Example, No Date. The Churchill Corporation. “Product Brief Development Tools”. September 27, 2011. S.W.O.T. Analysis, 1991. The Lockwood Group, Inc, No Date. New Strategies for the 21st Century. Case. Bibliography Bohm, Anja. The SWOT Analysis GRIN Verlag, 2009. Brightman, Eugene. Financial Management Theory and Practice Cengage Learning, 2010. Cant, M.C. Marketing Management Juta and Company Ltd, 2008. Read More