Midsized Brewery Business in UK - Case Study Example

Case Study Contents Executive Summary 3 Section a) 3 Section b) 6 Section c) 7 Section 2 8 Section 3 10 Conclusion 13 References 15 Executive Summary The modern business world has become significantly competitive in nature. Under the environment of cut throat competition designing business strategies in proper way is significantly important. Here in this case Adnams has developed their business strategies according to the needs of their business. The organizations have utilized their resources suitably, according to their business strategies. It has helped the organization to maintain differentiation strategy and to gain competitive advantage in the market. Section 1 (a) Core elements Physical resource information Adnams is a midsized brewery business organization based in UK. Financial resource information In 2012 the organization recorded a turnover of £ 50 million. Human resource information The company has employee strength of 420 people and it has almost 1200 shareholders. Over the years the current CEO of Adnams, Mr Wood has played significant leadership role in the context of the organization. Market share and key competitors Close relationship with customers and supportive leadership of the CEO are the core elements of the organization. From the period of Simon Loftus the organization has tried to maintain close relationship with the suppliers and customers. Adnams shares the stories of suppliers to the customers. It helps the customers of the organization to relate themselves with the company. This kind customer relationship over the years has kept the organization separate from other players in the market. Hotel and pub business are the core operating factors for the organization. Environment of Suffolk and Norfolk is also a core business element for the company. The organization faces serious competitions from the other market players. UK customers have volatile attitudes towards the alcohol and drinking habits. That is why all the competitors of the organization have given significant importance towards the innovation. In UK market sales of the wet-led pubs has fallen down significantly and large breweries corporations are consolidating among each other (Kossowski, 2007). All this trends have created cut throat competitions for the organization. Super markets are also eating into the market share of the company. In UK market the brewery industry is significantly broad in nature. Halewood international is a significant competitor of Adnams. The organization faces competitions from local as well as regional players. The company has significant market capitalization. Current market capitalization of the company is $29.3M. Recently the sales of Halewood international dropped significantly due high competition in UK market. Critical evaluation Currently the UK based company is facing significant competitions from the other competitors present in the market. In the current market situation significant amount of business is being done through on-line. That is why the CEO of the company is trying to use the internet as a defensive mechanism. The case study will critically analyze the business situation of the organization. The report will provide significant focus upon the core elements, market share and competition. The report will also identify the key driver of changes related with the organization (Sengupta, Bhattacharya and Sengupta, 2006). The report will also analyze the critical success factor of the company. Past ten years business strategies of the organization will be analyzed on the basis of porter’s generic strategy. Evaluation of the organizational resources will be done on the basis of VRIO framework. The critical evaluation of Adnams can be extended to a proper analysis of its external environmental conditions. There are certain factors which can be included in this framework such as economic, technological, social, ecological, political, ethics and legal. Political conditions relate to factors affecting business operations in Suffolk, UK. Adnams is a mid-sized brewery organization and faces tough competition from larger corporations. Political conditions are stable in UK with respect to alcohol industry. It can be stated that growth of large sized firms in this region has been due to extended support from the government. However certain laws and regulations are framed by UK government in context of tax regulations. These regulations have to be followed appropriately by brewery industry since there is high percentage of tax rate imposed on breweries. Economic conditions are favorable for Adnams to a great extent and it facilitated future growth of the firm. On the other hand, purchasing power of consumer market in UK is relatively high in comparison to other firms. Brewery industry is highly dependent on the buying power of consumers. Hence the firm can offer quality products at desirable prices and acquire maximum market share. It can be stated that stable economic conditions of a country enables smooth flow of business operations. Economic scenario of UK even indicates that funds shall be available for Adnams in order to conduct their global operations. Ecological conditions affect the procedure of operations of an organization. These conditions are strictly followed by firms operating in UK market. Adnams has adopted the best practices so as to make its business operations eco-friendly. Light weight bottles which are disposable in nature are incorporated by the firm. Technological advancements have posed major threat on this mid-sized brewery firm. Adnams was initially focused on traditional business procedure but in the present competitive environment it needs to adopt technically advanced devices. Social conditions for Adnams highlight that consumer market has high demand towards consuming alcohol. However they prefer to have alcohol in their homes rather than visiting a pub. Legal factors for the firm comprise of laws or regulations related to customer relationship, employee relations, etc. Ethical conditions on the other hand deal with delivering quality products and not compromising on any ethical standard. Section 1 (b) Comment Evaluation Competitive rivalry a) existing product b)proposed product a) competition is less as is demand b) presence of competitors a) low b) very high Overall high Risk of new entrants Dominance of multiples competitors involving small competitors low Risk of Substitution a) existing product b)proposed product a) presence of suitable alternatives b) social problems may be a hindrance a) very high b) low Power of Buyers a) retailers b) consumers a) A low level of switching costs involving powerful multiples b) low switching costs with no effect on quality a) high b) high Overall high Power of suppliers a) existing product b)proposed product a) locally sourced b) whole sale a) very low b) very high Overall medium Section c) What do consumers want? Customers want close relationship with the company Value for money which is in line with quality perspective What do competitors do? Replicate products Access to cheap suppliers and enjoy economies of scale Expectation from CFS Introduction Growth Maturity Decline Critical success factors Innovation of new products and cementing image of the firm and product Sales and promotion of the product as considered in the case Not compromising quality and efficiency of cost Overhead cost is low along with rationalizing capacity Section 2 Business strategies In the past ten years Adnams has come up with several business strategies. The organization has given significant important towards the customer relationship. The company has launched the strategy of intensive customer connection (Eigenhuis and Dijk, 2007). Here it tried to create a close relationship with all the customers. It means the company has able to identify the importance of relationship management before than any other company in the industry. The organization has properly anticipated that good stories of the growers will able to influence customers about the product quality of the organization. Marketing strategies of the organization in the Suffolk area are much more direct in nature. Suffolk is a basically rural area where marketing through the billboards are not that much effective that is why the company has gone for more direct marketing activities. To address the local customers of Suffolk and Norfolk the organization has come up with mobile beach- hut and mobile boat bar (Eldring, 2009). It has also partnered with local football club like Ipswich Town. With all these marketing strategies the organization has tried to target audience in a direct fashion. In the last ten years the organization has given significant focus towards the operational strategy. The company has gone for green production with 90% recycled facilities for the wastage heats. The company has been able to reduce the usage of water for the purpose of their beer production. The company invested significantly for the purpose of production renewal (Stonehouse and Houston, 2003). It used £ 4 million for this purpose. For the purpose of increasing production capacity the organization has introduced new fermentation tank. Beer bottles of the company are the lightest in the industry and it has helped the company to create an environment friendly brand image. As far as the distributional strategy is concerned the company has spend significant amount of money for this purpose also to distribute their products smoothly. To address this purpose this purpose the company has invested £ 6 million pound. All this capacity building has helped the organization to reduce its running costs significantly. In 2010 after the implementation of all strategic factors running costs lowered significantly and it was less in compare to last five years. All the above facts and figures are clearly indicating that in last ten years the organization took several key business strategies and all those strategies paid really well for the company. It has helped the organization to create a unique brand image in the industry (Miles and Snow, 2003). During the inception period of the organization the company has tried to come up with some strategies which have helped the organization to create a differentiating image (Kourdi, 2009). Application of Porter’s generic strategy According to the Porter’s generic strategy, differentiation is all about creating different products or services to gain competitive advantage. Adnams has followed differentiation strategy throughout its business operations. With the help of this huge distribution centre the company has tried to be a superior player in compare to any other player in the industry. In their all business strategies one thing is clear that the organization has tried to keep them ahead of all competitors with their various differentiation strategies. The introduction of new fermentation tank has allowed the company to produce much more than any other company in the industry. By following the path of energy recycling the company has tried to create an unparallel image in the industry. It has helped the organization to improve its quality (Porter, 2008). High degree of relationship with the customers has made the organization separate from other players. To maintain Porter’s differentiation strategy the UK based company has pursued with all these strategies. Evaluation The organization has spent £ 6 million for the purpose of new distribution purpose. This investment is also a key success factor for the organizational prosperity. It has increased distribution capacity of the company. Strong relationship with the customers and shareholders is also a key success factor for the organization. The organization always has given significant importance to all the stakeholders related with it. It is serious reason for the organizational prosperity. Section 3 Resources Capabilities Threshold Workshop, machines, staff, working capital Innovation of new products Unique Close proximity to new houses Serve large consumers base and offer unique products Application of VRIO Value: Adnams has several valuable resources through which the company can exploits various opportunities present in the market. The organization has significant numbers of dedicated employee strength. There are 420 employees are present with the company. It means the organization has low employee turnover. Employees of the organization are highly efficient. In last ten years the organization has increased its production capacity significantly which has helped Adnams to increase its production. Financially the company has significant capabilities. High revenue has helped the company to invest more money for the purpose of operational development. With the help of their environment friendly resources the UK based organization has able to mitigate external threats of energy shortages. Rarity: As far as the rarity of the resources and capabilities are concerned, the company has significant advantages. The organization maintains high degree of customer relationship or connection. It is a very rare capability into this industry (Peng, 2013). This strategy is a core element for the company. This capability has made Adnams different from other companies. It means customer relationship is a rare capability of the company. Beer bottles of the organization are lightest in the industry. It is also a highly rare resource of the company which provides significant competitive advantages to the organization. The company has utilized the online social media like Twitter before any other company in the industry. Costly to imitate: The organization has transformed its manufacturing process significantly. The resource like new fermentation tank has helped the company to increase its production significantly. This kind of resources renewal caused £ 4 million for the company (Walter and Gupte, 2007). It means imitation cost of this resource is significantly high. The organization has introduced 90% heat recycling system. This capability is also very costly to copy. By spending £ 6 million the organization has developed a resource of superior distribution network. This kind of gigantic distribution network is very costly to imitate. It means several resources of the company are very difficult to imitate. Organized: The firm is significantly organized in nature. Over the years the organization has utilized their resources appropriately. It has managed all its capabilities and resources according to the needs of the business profitability. The company is organized enough to allocate their resources in the proper fashion. The company has a suitable marketing team which helps Adnams to conduct various marketing activities. It is indicating that, as far as the marketing is concerned the company is well organized in nature. The company has significantly aligned its resources and capabilities to their business strategies. Here in this case Adnams has a basic business strategy of differentiation. That strategy has been achieved with the help of several resources and capabilities. Here in this case the company has showcased high level of compatibility between organizational strategies and resources. All the resources and capabilities have been used for the suitable implementation of business strategies. As far as threshold is concerned, the organization has modern fermentation tank of production resources with which it has increased its production capacity. The organization has significant unique advantage as far as the Suffolk location is concerned. Alignment to strategies The company has showed significant initiatives to align itself with the aims. However the case study does not focus much on the resources. The case study depicts significant evidence on the utilization of the resources but there is some kind of uncertainty over the efforts laid down by the organization. Conclusion Strength: The organization has strength of committed employees and financial support Weakness: Lack of plan to make optimal utilization of resources Opportunities: The organization has high degree of opportunities as far as the global business expansion is possible. Threat: As far as the threat is concerned various foreign organizations and other local players are coming into the UK market and fighting for the finite marker share. Significant issues Adnams over the years has managed their business strategies significantly. It has helped the organization to maintain competitive advantage in the industry. The company always has stick to its core elements which has helped the UK based company to grow in a significant fashion. During the course of this report one thing has been observed that, the company gives significant importance towards the customer relationship and environmental stewardship. In all business operations the company follows differentiation strategies which help the company to gain high level of competitive advantage and long term sustainability. The above VRIO model has critically analyzed the resources and capabilities of the company. From the above report it is easy to conclude that Adnams has aligned all its resources and capabilities appropriately with the business strategies of the company. The above report has clearly indicated that, over the years Adnams has managed its business strategy in a suitable way for achieving the long term business objectives. References Eigenhuis, A. and Dijk, R. V., 2007. High performance business strategy: inspiring success through effective human resource management. New York: Kogan Page Publishers. Eldring, J., 2009. Porter ?s (1980) generic strategies, performance and risk. Hamburg: Diplomica Verlag. Kossowski, A., 2007. Strategic management: porters model of generic competitive strategies - theory and analysis. Berlin: GRIN Verlag. Kourdi, J., 2009. Business strategy: a guide to taking your business forward. New York: John Wiley & Sons. Miles, R. E. and Snow, C. C., 2003. Organizational strategy, structure, and process. Stanford: Stanford University Press. Peng, M., 2013. Global strategy. London: Cengage Learning. Porter, M. E., 2008. Competitive strategy: techniques for analyzing industries and competitors. New York: Simon and Schuster. SENGUPTA, N., BHATTACHARYA, M. S. and SENGUPTA, R. N., 2006. Managing change in organizations. New Delhi: PHI Learning Pvt. Ltd. Stonehouse, G. and Houston, B., 2003. Business strategy. Berlin: Routledge. Walter, A. and Gupte, M., 2007. Success of university spin-offs: network activities and moderating effects of internal communication and adhocracy. Berlin: Springer Science & Business Media. Read More