Strategic Thinking: Todays Business Imperative - Case Study Example

Capstone Introduction J. M. Smucker Company is a reputed food company in America. This company is a listed company of New York Security Exchange. Itis a food producing company based on North America. The company basically produce ice cream toppings, beverages, natural pea nut butter, fruit spreads, health and natural food, coffee, shortening and more other products. This company was founded in 1897. The headquarters of the company are located in Orrville, Ohio, United States. Jerome Monroe Smucker was the founder of the company. He sold the first product of the company and that product was apple butter. The company has a strong root in the American market throughout last 115 years. “With a name like Smuckers, it had better be good! "; “Bread, jam and jelly, in your belly, lick your spoon and cut your bread, then you will be Smuckers well fed” these are few slogan and taglines for promoting the products of this company. Mission, Vision and Impact on Shareholders The company produce food products and the product has a brand value in the market. The company holds No. 1 position the respective food products category since past few decades in the market of North America. Company’s vision and mission statements are as follows: The company wants to achieve balanced and steady growth in the market. It wants to increase the number of market share by selling their branded products. The company wants to acquire other leading and famous food brands in the market. Products which the company is offering will fulfil customer’s satisfaction and requirements. Selling the products at fair price Company beliefs on its principles and values. These will guide the company’s strategic direction and behaviour. The quality of the product will be best the products will be convenient (Abrahams, 2013). The Board of Directors of the company generally provide a report to its shareholders in a gap of 6 months. The report describes that how tactfully the company manage the environmental and social risks, the future plans of the company and what are the opportunities the company get to enhance its business and improve the supply chain system. The company provide corporate social responsibility report and give information to the shareholders about the upcoming plans and decisions of the company. For example it can be said that if the company is going to plan for purchasing some green coffee seeds then this will be mentioned in the corporate social responsibility report. As the company is the market leader and achieve success throughout the decade so the shareholders of the company are very happy on its success. They are very much supportive for more future growth of the company (Jackson, Schuler, and Werner, S., 2008). Five Force Model Porter five forces model is framework that is used to analyse the business strategy and the situation of industry. These five forces are threat of new entrants, threat of substitute products or services, bargaining power of customers, bargaining power of suppliers and intensity of competitive rivalry. The company J. M. Smucker is also faced the mentioned threats. The risk of new entrants in this industry is less. The company already is in matured stage in the market. So chances for such kind of risks are very low. In case of new entrants huge capitals are required to start the business of food products. J. M. Smucker is already established in the market and hold huge capital for investment. So the company is not worried about the threat of new entrants (Poza, 2013). Strong brand name is important to win the market share. The company has this positive side and major percentages of customers are loyal to its brand. Again the company provide economies of scale to its customers by reducing cost of production. This practice is impossible for new entrants company in the market. But there are so many substitute products in the market. So the company is facing huge threat in this case. Food product industries are continuously trying to develop and launch new products in the market. There are varieties of fruit spreads, pea nut butter, ice cream toppings in the market and so the company is developing their brand value and quality of products on daily basis to sustain in the market. Large industry size and multiple firms in the same industry is a big threat to the company. J. M. Smucker has a significant positive long term impact in the market. The company always try to launch new products to remain competitive in the market and maintain the high degree of transparency in case of production. The company does not face threat from the suppliers as there are diverse distribution channels. This is a cost effective factor and reduce the price of the product. As there is large number of customers so bargaining power of customers is also very less and as the company is offering food products so these are very important products for the consumers. They consume these products on daily basis. As these are very much required product for them so they are not involved in bargaining procedure. Here this kind of threats is very less to the company (Feinberg, Kinnear and Taylor, 2012). SWOT Analysis Discussion about strength, weakness, opportunity and threat of J. M. Smucker Company are as follows: Strength Capture the maximum market share in the domestic market. Established brand value which is good and famous in the market Provide quality products at an affordable price As the company is in matured stage so there is stable financial condition of the business. This financial strength has a long term positive impact on the business. Well known reputation in the industry Geographically diversified business which reduce the risks of the business Provide economies of scale to the customers Continuous positive response from the consumers regarding new brand addition, product innovation etc. Maintain corporate social responsibilities Strong existing sales and distribution network Weakness Limited presence in the international market Increasing expenses in case of distribution, selling and marketing procedure Higher amortization expenses which are related to intangible assets Low cost store brand feature which has a negative impact in the market Small business unit is another point of weakness Tax structure Increasing production costs Opportunity Growing business and increasing demand in coffee based products Ability in case of successful acquisition and merger by using appropriate time and cost effective procedure. Adding new varieties of products to match up with the changing taste of the customers Significant presence in the global and international market Threat Existing strong competitors [ Unilever, ConAgra Foods, Inc. etc.] in the market Affect from natural disasters and accidents such as storm damages, crop failure etc. Trends on price of crude oil which fall an impact on transportation packaging, fuel and energy. Rising cost of raw materials Increasing rate of interest of taking loan Global economic crisis and recession Rigid and stringent rules and regulations of Government Growing competition in the domestic market (Hutt and Speh, 2012). Strategies Based on the SWOT analysis the company can take the following strategies to capitalize its strength and opportunities and minimize the weaknesses and threats. The company has to take strategy for growing market share of the existing brands. Introduction of new products which can fulfil the demand and requirements of the customer. Acquisition of other’s business will minimize threats and weaknesses of the company. Providing highest quality of food products [jam, jelly etc.] at affordable cost Using good raw materials for the purpose of production Advance promotional strategies which will also help to compete in the international market (Duhaime, Stimpert, Chesley and Chesley, 2012). The following strategies the firm may use to maximize its profitability and competitiveness: Vertical integration strategy will maximize the profitability and competitiveness of J. M. Smucker Company. This is known by all that vertical integration is such kind of strategy by which a company can operate more than one level of distribution. There are two types of vertical distribution. Those are Forward and Backward vertical distribution. This strategy will reduce the cost of production, distribution and transportation. When a manufacturer becomes the supplier or distributor of a product then turn around time will also be less and it can offer economies of scale to its customers. The company have to make strategy in case of payment of dividend. Dividend payout ratio should be 40% to maximize profitability of the business. This payout ratio will help to reinvest more amount of capital and at the same time increase the value of shares in the market. Customer focused growth strategy also can be applied to remain competitive in the market. Communication Plan Outline of the communication plan of J. M. Smucker Company is mentioned below: At first the company has to define a clear message that it want to send to its customers at the time of strategic communication campaign. Reinforce any new idea, re branding the company and its products, introduction of new leaders or any organizational changes can be included in these messages. Intimation with media is very much required to enhance corporate image in the domestic and international business context. Strategic communication is required with employees and stakeholders. If they will not get the proper information then achieving the targets of the organization will be hampered. Company should disclose its range of products, its features and exclusiveness than the other rival products through its web site. For this reason detailed information on the web site and advertisement through internet is essential for the business. News release should be created by the company to provide push messages to the loyal and potential customers. Corporate Governance Mechanism Corporate Governance can be defined as rights, duties, obligation and structures by which organizations are controlled and directed. There are two major mechanisms in the industry and those are internal mechanism and external mechanism. In case of internal mechanism, roles of directors and committee are very much significant. The responsibilities of directors are as follows: Review of company strategy and financial performance against financial planning on regular basis Ensure effective control procedure Evaluate effective planning for succession Approve significant actions related to work and monitor various compliance of the company. Committee will identify new candidates for director position, develop guidelines regarding corporate governance, make succession planning, conduct training for directors etc. External mechanism includes some entities such as governments, regulators, trade unions, independent auditors etc. The roles of independent auditors are to provide unbiased opinion and highlighting mal practices within the organizational activities. Evaluation of Effective Leadership The leaders of the company J. M. Smucker have some effective leadership quality to control the overall work procedure of the organization. These qualities are- Sharp perception to analyze the business strategies Knowing the organization’s overall goals and purposes Understanding ability about the customer’s needs and requirements Excellent communication skill from bottom to top level of the organization Setting proper and appropriate goals and objectives Risk taking ability Building a strong team for better performance Motivating employees, stakeholders and customers for more improved work One recommendation can be given to improve the leadership quality of the J. M. Smucker Company. This is nothing but to improve communication and build recognition in the international market. Segments of the general environment that affect the industry and its firms The segments of general environment that affect the J. M. Smucker Company are Political / Legal Segment, socio cultural segment, global segment, technological segment etc. The socio cultural segment is in favour of this business. The local people of North America love to consume apple butter, coffee, natural pea nut butter, fruit spreads etc. Globally the Company is going to build its recognition. It has to give effort in this segment. Political segment is not problematic to run the business. High technology is used for the purpose of manufacturing food products. Information technology is also used to exchange information related to business, taking orders, doing registration, conducting survey, participating contest etc. Social networking sites are also used for the purpose of promotion. Ethical Steps The company has taken so many ethical steps for giving benefits to the society. It is committed to provide better quality food products to the nation at affordable price. This is a socially responsible company which also take responsibilities to support various schools, projects, programs and organizations financially and other ways. It has some special commitments to education and for this reason the company helps Heartland Education Community, Inc which is a school for developing students. It has some environmental responsibilities also. It believes that the environment is natural resource of any country’s heritage. The company purchase green coffee seeds from small farmers and not from the big suppliers. Through this procedure it helps to poor farmers of the country. Conclusion After detailed analysis about the company in different business aspect it can be concluded that J. M. Smucker is already the market leader in the market. The above mentioned strategies will help to hold the position in this competitive era. The variety of food products, affordable price, better quality of the products, wide range of channels for distribution, high frequency of demanding the products and company’s corporate social responsibilities will help for further growth in near future. References Abrahams, J. (2013). 101 Mission Statements from Top Companies: Plus Guidelines for Writing Your Own Mission Statement. Canada: Random House LLC. Duhaime, I., Stimpert, L., Chesley, J. and Chesley, J. (2012). Strategic Thinking: Today’s Business Imperative. London: Routledge. Feinberg, F., Kinnear, T. and Taylor, J. (2012). Modern Marketing Research: Concepts, Methods, and Cases. Boston: Cengage Learning. Hutt, M. and Speh, T. (2012). Business Marketing Management: B2B. Boston: Cengage Learning. Jackson, S., Schuler, R. and Werner, S. (2008). Managing Human Resources. Boston: Cengage Learning. Poza, E. (2013). Family Business. Boston: Cengage Learning. Read More