Family Business Analysis - Lindt and Sprungli - Case Study Example

SPRUNGLI BUSINESS ANALYSIS Lindt and Sprungli Brief history and key players In the year 1845, a confectioner known as David Sprungli-Schwarz and Rudolf Spungli-Ammann who was his inventive son had or owned a miniature confectionary store at their home town of Marktgasse an Old Town in Zurich. Given the fact that the son Rudolf Sprungli-Ammann was innovative and inventive, he prevailed upon the father David Sprungli-Schwarz to import a different recipe so as to make solid chocolates. The recipe was imported from Italy. This was a period of trial and thus the growth of the business moved in leaps and bounds. In 1859, the family of Sprungli opened another chocolate confectionary shop in a place called Paradeplatz. In 1879, Rodolphe Lindt who was one of the most popular makers of chocolate during those days, had perfected the art and know-how of making chocolate which was superior in melting characteristics and aroma. This was possible since Rodolphe Lindt used the “conche” which he had introduced so as to produce chocolate which is loved and cherished to this modern day and age. He blended delicate flavor which grew and became reputable globally as Swiss chocolate (Coady, 2006). In 1899, Sprungli family company and business which was called the “Chocolat Sprungli AG” received the request of acquiring the Rodolphe Lindt business which was smaller in stature but reputable and massive in taste and quality of chocolate which it produced. It is important to note and mention that the massive and daring step to acquire the Rodolphe Lindt store also came with the added benefit of buying the secrets which were critical and crucial in the making of the sweet chocolate by the smaller Lindt chocolate store. It would be fair to mention and highlight that the joint venture of Lindt and Sprungli enjoyed massive success and expansion because the business was managed properly. This was so because the business was under exclusive management of the family and its successors. Therefore, it is obvious and automatic that the management put in more effort and attention so as to ensure that the business did not fail under whichever circumstance or situation. The joint venture of Lindt and Sprungli ensured that the competition was eliminated thus these two companies could rise to near monopoly status in the society. This is the reason as to why in 1915or there about, the Lindt and Sprungli Company exported three quarters of the chocolate they produced to twenty different countries around the world. The feat of massive exportation was aided by the fact that there was no internal competition between the two firms. It was during this period of time that Mr. Rodolphe Lindt retired from the company and resorted to begin their own company due to conflict of interest with their partners. In law this was a breach of contract which prompted them to be sued in court where the case dragged until 1928 (Kagermann, Osterle & Jordan, 2010). It was during this time and period that the family lineage of Sprungli revived their family confectionary so as to continue with family business of quality chocolate and preserve their family business and lineage. The market and industry at large was at a period of tumultuous political war occasioned by the World Wars which had a restriction and embargoes on the importation of cocoa and sugar. These uncertainties of the market and industry dwindled and reduced the profit portfolio of the joint venture Companies. In 1977, Lindt and Sprungli acquired majority shares in “CFC Consortium Francais de Confiserie” which is a French licensee (Cidell & Heike, 2007, p. 219). Over the years, it has also moved to launch and intergrate numerous subsidiaries thereby increasing their market power and presence around the global. Lindt and Sprungli in United States of America which was activated as a manufacturing site after being commissioned in Stratham, NH. It is important to note and mention that the operational center is operational up to this current day and age where it has recorded successive feats of growth and expansion. The irreducible minimum and mark of the chocolate Lindt and Sprungli is that their chocolates have remained natural and unique in their quality. They have maintained some excellence and uniqueness in their quality since they experience could best be described as a personal touch and feel to the consumers. In brief, the chocolate from Lindt and Sprungli articulate the feeling of the natural five senses of the human person. They include taste-refers to the sweetness, smell-the unique and attractive aroma, sound-the gliding feel that comes from eating, touch-the soft texture of the chocolate and sight which is the natural appeal and attractiveness of the chocolates. Analyses of current challenges facing Lindt and Sprungli business From the outset it is imperative and important to note and mention that Lindt and Sprungli business has undergone a series of turbulent times in the line of their business. In the past, the Lindt and Sprungli businesses enjoyed a near monopoly status in the world due to the exquisite and unique nature of its chocolates. When they merged them were also the only companies or business in the world which made such kind of chocolate thus they enjoyed exclusivity of markets share and customer loyalty or allegiance. This is the reason as to why they could export most of their products to other different countries without any interference in their flow of profit stream. In the recent past and in the current society, almost each and every country in the world has a chocolate manufacturing plant or company in it (Sprüngli, 1995). Therefore the gap and leeway that Lindt and Sprungli businesses as individual ventures enjoyed in exports has been reduced greatly. In principle, the level and amount of profit that Lindt and Sprungli businesses were used to enjoying has been reduced due to the emergence of other entrants in the business. It would take an extra effort for a country say in Africa to import chocolate from Lindt and Sprungli businesses while there is a chocolate manufacturing plant in that particular country. In retrospect, it has become a challenge for Lindt and Sprungli to export their products to countries which it did export to in the past due to newer entrants. Lindt and Sprungli has also struggled to maintain its customer base and their loyalty in the recent years due to the changing cultures of consumption and eating of people. This has been occasioned by the fact that humans are embracing healthier eating habits and patterns which unfortunately do not include chocolate. Instead, it has become difficult for Lindt and Sprungli are faced with the challenge of cutting a niche in the business world by maintaining their relevance in the clamor for healthy foods. Similarly, it struggles to maintain identity and its unique image. This stems from the fact that as a public company, it has acquired other subsidiaries or businesses in the form of expansion and increasing their market power. However, some of those acquired businesses had their own unique brands with their loyal customer bases. Therefore, Lindt and Sprungli is faced with the challenge of changing the business brand of the acquired business so as to conform to their own brand or continue with the brand face of the subsidiaries and then maintain and realize profits (Coady, 2006). This situation has forced the Lindt and Sprungli to change its brand and business logo over time so as to conform to the brand images of the acquired subsidiaries. Similarly, Lindt and Sprungli also faces the challenge of branding its business so as to conform to the changing demand of the customers in the current and modern day. The current chocolate business environment has been graced by sweeteners, heavy cutting advertisements which target the youths and the young people who form the bulk consumers of chocolate. The dynamic change of brand image is not the initial brand image that was formed when the company began. As a result it has been forced to introduce additives, preservatives and sweeteners so as to attract the market share and presence of the youths. This presents a conflict of interest whereby the Lindt and Sprungli struggles to maintain its philosophy and initial line of business of using natural recipes which have no side effects to the current state and situation where it uses the sweeteners and additives to win market of youth. In retrospect, there a philosophical struggle between remaining original to the course of business origin and the endeavor to appeal to the huge proportion of the market which is formed by the young people. The human society has in the recent past made attempts and efforts to embark on healthier foods and deserts. This is necessitated by the fact that in the recent part there has been an upsurge in the call for people to embrace healthier foods, eating habits and lifestyles. Unfortunately, chocolates do not lay in the category of healthy foods (Kagermann, Osterle & Jordan, 2010). Thus, it would be proper to say that Lindt and Sprungli business is faced with challenge of convincing the consumers that it is healthy. It is a challenge to blend natural recipes with balanced additives such as sweeteners so as to appeal to the natural and healthy food pursuit. For instance products such as “conche” are used to bring the natural and healthy aspect to corresponding amount of preservatives and inorganic sweeteners. Recommendation for parallel planning process This is the technique and approach where the family needs and expectations are juxtaposed against the business opportunities and issues. The family needs and expectations are focused on conjoined actionable steps of strategy, vision, values, governance or management and investment. It goes without mentioning that the primary objective and aim of the business to expand, make profits and grow. The management team of the business seek for ways and means of attracting new consumers, producing more and ultimately making profits. However, there are family values and principles which ought to be maintained. Firstly is the name or identity and the legacy or history of the family. Thus, as a prospective consultant, I would advise that Lindt and Sprungli capitalizes on the good name and identity that family name has borne over the years. This could be done by selling more of the products or chocolate to the home town of Zurich the family has good reputation over there. Lindt and Sprungli would make more profit because they would ride on the good will, name, fame and legacy of the family thereby make more money in terms of sales. Subsequently, the cultural values of the family-Lindt and Sprungli could benefit the business. In most of their subsidiaries and outlets, Lindt and Sprungli could local workforce, giving employment opportunities to the communities around. In a way the business becomes owned by the community as a whole which the business could capitalize on the sense of ownership of the community albeit at a global stage. As a result, the locals would serve as marketers for the business since they have a direct stake; where their payment and bonus would be pegged on the success of the business. This would form cultural value based on the family practices where an increase in profit and revenue enables workers to earn bonus pay. This recommendation intricately links the business feel and practice to the family value of rewarding loyalty and excellence from the workforce. As an asset, family has the aspect of networks-political, business or marital networks. The Lindt and Sprungli ought to have established proper business relations with other ventures such as subsidiaries. Thus, the subsidiaries and the outlets would also act as a marketing agents for the company. The financial muscle and might of Lindt and Sprungli could influence political decisions and matter and influence business endeavors. Politics ensures who runs the country, tax issues and the business environment. Thus, establishing political networks in the name of family assets would ensure the business gets to operate in a friendly environment with the government. This could be done by financing and supporting political parties in the locality. Other potential interventions from a consultant’s standpoint or view . In all fairness and aspects, Lindt and Sprungli has a rich history of success and continuous growth since they have been in the market since the eighteenth century. It becomes critical to consider the history, the positives and the negatives with a view of considering necessary improvements. Firstly, as a way out or a remedial move and measure, it would be proper to go back to traditional and natural recipe such as “conche.” This is so because the Lindt and Sprungli rose to near monopoly status due to their exquisite recipe. Subsequently, it is critical to do an assessment of the Lindt and Sprungli businesses mission and objective so as to plan a remedial measure and move accordingly. The primary aim of the merge between the Rodolphe Lindt and Sprungli business was to increase their market share, reduce their internal competition, increase their profit share and expand to global status and stature. From the outset it is important to mention that the two business already merged but they could do better by merging with other firms which are big in terms of market position. As a recommendation and a remedial measure or move, it would be critical to expand more by doing lateral diversification and mergers (Caputo & Mininno, 1998). This is where they would diversify the line of production to other related products such as butter, margarine, cheese amongst others. Confiserie Sprungli Brief history, key players and background In 1845, the company started to sell chocolate under a name known as the David Sprungli and Fils, which had been formed by father and the inventive son. In the family business model this is the first stage where the captain of the small and medium enterprise was managed by the founder David Sprungli-Schwarz. It is the initial stage where the founder and owner manages the business since it is relatively small in capital base or number of customers. In the year 1859, one of its subsidiaries in Paradeplatz grew in stature and might to become one of the famous, renowned and loved pastries and chocolate meeting points. This was the stance where the business was united by the emperor or the executive figure so as to guide it to higher heights. This was also the time and period where and when the family as a team joined hands and efforts to work on the business (Huynh, 2008). In 1892, the Rudolf Sprungli shared out his company to the two sons he had at the time. It is important to note and mention that the chocolate factory had already merged with the Lindt venture and had a subsequent break out. David Robert become the owner and manager of the Confiserie Sprungli. This was a professional family situation where few family members specialized their abilities and strengths towards the management of the business. For instance, David Roberts specialized in the family run confectionary. In the successive years, it has continued to focus on the family traditions or the confectioners craft in the clinical sense. In 1924, Herman Sprungli who was member of the fourth generation successors of the Sprungli family took the reins and business control. He also passed the business command to the fifth generation member called Richard Sprungli. In 1968, the Prenosil family which was fairly influential joined the Sprungli family in Zurich and even had an intermarriage. This was a situation and instance of cooperation where the two families conjoined together to run the business. Katja who was an aunt of Tomas and Milan Prenosil married Richard Sprungli who was the fifth generation owner (Ingenhoff & Fuhrer, 2010, p. 85). Richard and Katja did not bear any children or descendant of their own, however, their nephews Milan and Tomas grew up around the business which qualified them as automatic heir apparent. In 1994, Richard did appoint Milan to the position of director of marketing for the company and replaced the non-family staff who retired. Tomas also followed suit and joined as the director operations in the same year. Tomas and Milan head the current business enterprise and venture of the Confiserie Sprungli as a Family investment group. In principle and retrospect, this is a situation where a family which have different abilities, strengths and complexities invest together with a common purpose and goal of continuing the business lineage as well as make profits. Analysis of the current challenges for Confiserie Sprungli Sprungli confectionary on its part has also faced a wide range of challenges and difficulties due to the limitation in their financial muscle to put a global enterprise. This was occasioned by the split which arose after the conflict where the family decided to maintain its line of chocolate production. In so doing, it has aimed and struggled to maintain natural recipes with the aim of maintaining originality and uniqueness. They have also strived to maintain their customer base by using exquisite, traditional and natural recipe (Huynh, 2008). It is important to note and stress the fact that Sprungli confectionary has done well to maintain the customer base. However, it is the aim of each and every business in the world to expand and reach global scales and markets. Currently the Sprungli confectionary has failed to expand beyond the native hometowns because of the limited financial resources. It is a family run private business with full ownership reserved to the family members. There are no shares listed which may help it to raise capital to expand. It is a challenge for the business to expand and remain relevant in the business cycles. It goes without saying that in future, the Sprungli Confectionary may be extinct because there are other bigger companies which have bigger financial capabilities and may push them out of business by reducing their price and enjoying the economies of scale. It is also important to mention that the Sprungli confectionary is faced with the issue of rebranding the products so that they conform to the realities of the current day and age. It does not help to rely on strong and rich history and recipes which were loved in the eighteenth century. Times change, tastes and preferences change and so the Sprungli confectionary faces the challenges of conforming to the realities and changes of the day. It is a challenges and a business hustle or difficulty for the Sprungli confectionary to use old or traditional methods, recipes and process of manufacturing to try to win more customers and maintain their current customer base (Parker, 2005). In short, the Sprungli confectionary is faced with the challenge of modernizing their products so that they meet the expectations and the dynamic demands of the current society. This would be a move from the traditional procedures where natural recipes, no additives and handmade chocolates. Recommendation for parallel planning process The management team of the business seek for ways and means of attracting new consumers, producing more and ultimately making profits while maintaining family values. Intuitively, conflict is likely to occur in areas of family culture, connectivity, control or power struggle and maintaining career or professionalism. However, there are family values and principles which ought to be maintained (Parker, 2005). Firstly is the name or identity and the legacy or history of the Sprungli family especially in Zurich the home town. As a prospective consultant, I would advise Sprungli confectionary to capitalize on the good name the family has borne over the years. This could be done by selling more of the products or chocolate to the home town of Zurich the family has good reputation over there. It goes without saying that good business or profits are made when sales are high. Sprungli confectionary would make high profits from the existing family name. Subsequently, the cultural values of the Sprungli family would prove beneficial since the workers come from the local community. In a way the business becomes owned by the community as a whole which the business could capitalize on the sense of ownership of the community. As a result, the workers would market the business to earn extra pay or bonus. It is in the family interest to maintain the good relationship which it has built over the years thus employing the locals would go a long way to establish the same. Other potential interventions from a consultant’s standpoint or view Firstly, it is critical to maintain the unique methods and procedures of preparation by being different. The traditional and unique methods are embraced then customers would be attracted since it would be a move from the routine taste of chocolates. Secondly, the traditional or natural recipes do not have many side effects which the modern sweetened and preserved chocolates have (Ingenhoff & Fuhrer, 2010, p. 89). Therefore it would be a good move since Sprungli confectionary would be selling natural aromatic chocolates which are unique with less side effects. In brief, it would akin to killing two birds with one stone where taste is unique and the health side is also covered. Other firms which produce and sell “sweeter” chocolate, which change and vary their textures and modes of preparations. This is to say that it is no longer possible to sell the same type and kind of chocolate for a long period of time and record homogenous returns. Thus, it would be proper and important for Sprungli confectionary to embrace changes in the business world and environment. This is not to say that they completely abandon their traditional recipe and production processes, rather they should conform to the dynamic changes in the market sphere and place. This could be done by branding and packaging the chocolate and products in a way that is appealing to the young who are the bulk and majority of buyers. Secondly, it could also package the products so as to appeal to the changing lifestyle where the buyers seeks to eat healthy with a reduction in junk. The traditional and natural recipe such as “conche” would go a long way to appeal to people who eat natural and healthier meals. The primary objective is to ensure that both the Sprungli confectionary business expand their lines of operations and productions thereby increasing their market share and control accordingly (Caputo & Mininno, 1998, p. 351). In principle, other than just producing and selling chocolates both the Sprungli confectionary business could expand and diversify into other closely related products and thereby increase their control of market by targeting the consumers with other products other than chocolate. Prospective line of succession for Sprungli confectionary This would be largely informed by the institutional, family and market conditions. Specifically, the issue of dependence on some individuals to run and grow the business. Currently, it is the Presonil brothers Tomas and Milan, who are in charge, having been proposed to lead because they were around the business for a long time. In future, family individuals who are in management of the business would be considered for senior positions in the succession plans. Institutionally, it would depend on the ease of claiming property rights of the heir apparent personalities. How closely related to the Sprungli is such a person, since a weak family tie and relationship could be a hindrance. For instance the current CEO and Operations director Tomas and Milan are first filial relatives of the Sprunglis’ being nephews. Similarly, there is the issue and aspect of competition and growth as a market condition. How qualified would one be to compete with the market environment and grow the business accordingly. In rhetoric form, it would be proper to ask how qualified is it for the prospective heir to compete in the market and grow the business. References Coady, C. (2006). The chocolate companion. Running Press. Caputo, M., & Mininno, V. (1998). Configurations for logistics co-ordination: a survey of Italian grocery firms. International Journal of Physical Distribution & Logistics Management, 28(5), 349-376. Cidell, J. L. & Heike C. Alberts and. GEOGRAPHY, 91(3), 218-226. Ingenhoff, D., & Fuhrer, T. (2010). Positioning and differentiation by using brand personality attributes: Do mission and vision statements contribute to building a unique corporate identity? Corporate Communications: An International Journal, 15(1), 83-101. Huynh, T. (2008) Archive for the ‘Chocolate’Category. Kagermann, H., Osterle, H., & Jordan, J. M. (2010). IT-driven business models: Global case studies in transformation. John Wiley & Sons. Sprüngli, R. R. (1995). 150 Years of Delight: Chocoladefabriken Lindt & Sprüngli AG, 1845-1995. Chocoladefabriken Lindt & Sprüngli (Schweiz). Parker, B. (2005). Introduction to globalization and business: relationships and responsibilities. Sage. Read More