Strategic Management - Hartley and Sons - Case Study Example

Strategic management Introduction Neely (2007) defined strategic management as the steps that are taken to attain goals of the business in which themission and planned achievements of an organization are clearly set out and all management processes are designed and monitored towards reaching the organisation’s overall goals. Many businesses that were flourishing in the past like jam making businesses, wristwatches companies, and television industries are suffering in the current markets because the world has developed technology that has led to better products being introduced to the markets. In the past a normal breakfast meal would be composed of a cup of tea and a toast of bread whereby jam and butter would be used to make the breakfast tasty, today the cereals are preferred to bread because they have more nutrient content than bread. Many people in the society used wristwatches to check time and they were convenient since they were mobile and light enough to be tied on the wrist. The introduction of mobile phones in the market made majority of customers to stop using the wristwatches since mobile phones have applications that enable the owner to know the exact time and date, moreover, phones have other applications that are important and convenient for use, which have made certain gadgets like the pager redundant.. In the case study provided, Hartley and Sons business is going through several challenges because of improvements of technology. Hartley and Sons is family-owned jam maker business and have diversified into other markets provide products like peanut butter, spring water, and apple, tartare and mint sauces. Their business is having trouble because fewer people are buying jam and even the few customers they have, prefer supermarket brands, which means the company faces stiff competition from cereals and crisps companies. Hartley and Sons is facing the following challenges; they need to expand in a market that is shrinking, they need to diversify into new markets and to ensure that their management is of top quality. The report is going to talk about the various strategies that will help Hartley and Sons get more profits. The first part will discuss the key strategic issues, both internal and external issues affecting Hartley’s future growth and the second part will discuss the recommendations to Fred Hartley regarding future competitive and corporate strategies. Key strategic issues Neely (2007) defined key strategic issues as those problems that are affecting the operations of a business both internally and externally making the business perform poorly in the market. The key strategic issues affecting Hartley’s future growth can be seen from the fact they have trouble marketing their products. In the case study, there are various internal and external factors affecting Hartley and Sons. The internal factors include poor management, lack of human resources, financial resources, and technology. The external resources affecting Hartley include; political, economical, socio-cultural, technological, environmental and legal factors. Internal factors Poor management Hartley and Sons is managed as a family owned business and has employed majority of their family members to run the business. As other family members die others replace them on the structure and continue running the business. This means that even those that are not well conversant with the business are still made managers on the basis that they are family members. This may affect the future growth of Hartley because some family members may not have the interest and experience of running a business hence leading to failure. As much as business decisions are made quickly by family members lack of external output in the business is a weakness since everybody relies on the oldest member of the family to make difficult decisions. The business could be affected by family disputes that could lead to business failure especially when the oldest member dies and they fight against who will be the next person to make the difficult decisions. Lack of resources Hartley has the interest of making their business grow but they lack resources to fulfill their goals and objectives. According to the case study, Hartley being self-financed relies on its overdraft and existing reserves to finance its investments, which puts sizeable strategic investments out of its immediate reach. This shows that they lack financial resources to invest in different kinds of business activities like advertising and marketing, which would improve their operations. This influences their future growth since they cannot rely on their own financial resources to expand their business operations to other countries. Lack of human resources could also affect the future growth of Hartley since for its efficient operation it requires qualified employees who are willing to work for the betterment of the organization. Neely (2007) stated that lack of human resources makes it difficult to develop and maintain solid relationships with employees. Since majority of the owners are family members, it is not easy to correct one another when wrong decisions are made, the business therefore ends up failing. Lack of human resources makes it difficult for the employees who are not part of the family since they sometime get frustrated with their jobs and therefore become dissatisfied leading to a drop in production and hence the company revenue may plunge (Neely, 2007). Technology According to the writings of Neely (2007), technology provides the business with the competitive edge that can lead to greater profitability and growth. Hartley lacks improved technology and therefore they are having trouble expanding to the market that is shrinking and then diversifying into new markets. Without technology there is a lot of competition from other businesses that are using improved technology, and therefore those without are eventually wiped out in the future. External factors Political factors Political factors are the impacts that the government actions is having on businesses. Hartley is a family owned business but could also be affected by the government policies especially regarding their prices in the market. The business operations have to consider the impact of any forthcoming legislation on their operations to avoid getting on the wrong side of the law (Neely, 2007). Hartley does not take into account the political ambitions of the government that the private sectors should create new jobs in the economy since they only give chances to their family members to inherit the key positions in the company. Economical factors Neely( 2007) stated that demand and supply are principal factors that affect the working of any business model. The future growth of Hartley will be affected if the demand for their products continues to reduce. The demand for the jam products at Hartley reduced with the introduction of other supermarket brands and cereals. This shows that their supply also reduced since the customers were not demanding for more of their products. The amount of satisfaction derived from the use of jam reduced after the continuous and successive consumption of the same products and therefore with the introduction of cereals in the market, customers changed their preference. The change in customer preference led to a tremendous fall in the sales and revenues of Hartley. Socio-cultural factors As a society and culture changes, business operations should also find ways to adapt to the changes. For a business to be successful, they should be aware of the changes in the market. Socio-cultural factors are one of the key factors that will influence upon the growth of Hartley and Sons. This is because the taste of the people toward jams is changing and more people are taking cereals for breakfast and therefore Hartley’s jam products are presently experiencing decreased demand in the market. This problem will affect the growth of Hartley because new brands of cereals are introduced in the market regularly, which have chocolate chips, marshmallows and fake fruity-Os that children enjoy but sadly, some these products are not found in jam produced by Hartley. The cereals are also preferred for breakfast because they are easily prepared and they represent a whole meal comprising of all the nutrients while jam comprises of vitamins only and has to be taken with bread. Technological factors Hartley lack improved technology to increase the production of goods. According to the writings by Neely (2007), the company needs to keep up to date with existing and new technology to continually improve and streamline the way they do business. Hartley should have improved production plants to ensure surplus production to their markets. Environmental factors Various internal and external environmental factors affect Hartley’s growth in the future. Neely( 2007) stated that internal environmental factors are the factors within and under the control of the company like leadership, organizational culture, and manufacturing. External environmental factors are not under the control of the company and include they competitors of the company, social environment, political conditions and government regulations and policies (Neely, 2007). Hartley’s future growth is in trouble since there is tough competition from cereal products and crisps. Most of the people who were buying their jam products now prefer supermarket brands and this makes them drop in their revenues. Hartley’s leadership is difficult to control since family members depend on their elders to make difficult decisions concerning the business. Recommendations In order to be successful Hartley has to struggle to provide unique products in the market that will make people be attracted to their products again. The recommendations that this study makes to Fred Hartley regarding future competitive and corporate strategies include the following, Diversification Hartley needs to be encouraged to continue with the diversification of their products even if the jam products are not profitable in the market, the other products like sauces and spring water still have a high demand in the market. Diversifying into sauces, peanut butter, spring water, will enable the Hartley to be renowned for other products other than jam that will enable the business to continue earning revenue from its traditional markets. The products made by Hartley should be unique to make them attractive to the customers. The managers of the business should research on what people want in the market and provide them with the kind of products they need. Hartley should find ways of expanding in the market that is shrinking by reducing the prices of their goods, to make more people afford to buy the products. Reducing the prices will make customers be interested in tasting the various brands of Hartley’s products and thereby expanding their business. The business can also be expanded in a market that is shrinking by advertising using media that majority of the people are conversant with. Attractive advertisements will make the people curious to taste the products from Hartley. They should also offer free samples to people so that those who have never tasted the products can have a chance to know how the products taste before going to buy more. Hartley should diversify into new markets by starting up businesses in other countries that do not have companies that manufacture jam, sauces, peanut butter, and spring water. These new markets will bring more revenues since the countries that they start their businesses will not have to import the same products. Hartley should also identify places to start new markets that are densely populated. In places that have many people, there is still market for jam products since not everybody likes cereals for breakfast. Financial recourses Hartley needs to consider getting financial aid from banks and other institutions in order to get enough funds to expand their business without worrying about external money jeopardizing the balance of the company and reducing the family’s control of the business. By borrowing money from governmental institutions and banks, Hartley will be able to open new markets in many places, which they will be able to pay back comfortably when their business flourishes. With increased financial resources, the employees of the organization will be able to be paid in time hence motivating the workers. Having adequate finances will enable the business to employ qualified people who will also provide good skills and knowledge in running the business. The costs incurred in advertising and marketing of the products is covered when the business has adequate finances for its operations. The company will be able to buy better equipments especially with improved technology. Apart from using their own investments, Hartley should consider borrowing financial aid from lenders to make it easier for them to implement their objectives. Management To ensure that the management is of top quality, Hartley needs to hire qualified people for the different positions in the business. Duties in the business should be allocated to individuals based on merit. Those that have the qualified credentials to be managers should be given the chance to be managers and those that have the knowledge of sales and marketing should have a chance to market the business. Allocation of duties according to the individual’s specialty will enable the business to be successful since the employees will understand their roles. To ensure top quality management, Hartley needs to add external input by employing people to join the senior management team who are not their family members, so that the business can stop being a family affair. This prevents family disputes from interfering with the business operations and difficult decisions can be discussed accordingly by qualified individuals who will come up with intelligent decisions that cannot lead to success of the business. Recycling Hartley should also consider recycling to show support for government initiatives and therefore preventing pollution in the environment. Neely( 2007) stated that through such action consumers will view Hartley as a company that takes measures to minimize its environmental impact thereby considering the common of humankind. Technology Hartley Company should take initiative to use modern technologies in their operations, which will make them become more responsive and would be able to adapt to changes in the shifting markets, competitor’s activity, and fluctuations in customer demand by communicating better in terms of retaining existing customers and making new ones (Neely, 2007). Improved technology saves speed and time in the business. People in the business are able to communicate effectively and business decisions are made faster. Social and economic factors To avoid competition in the market, Hartley needs to be sensitive to the changes in the market and know its customers well. As the society and culture changes, Hartley should be flexible enough to adapt to the changes and provide people with the products they desire. This will create customer loyalty and hence increase the demand of products even when other products are introduced in the market. Hartley should also make their products attractive by packaging them in ways that make people curious to taste their products and sell at affordable prices. Conclusion Hartley Company should consider the factors that would hinder its future growth and work toward eliminating them. The jam making business is bound to be less profitable at the present moment since there is increased uptake of cereals for breakfast but they can rely on their diversified product portfolio to make their business generate more income. The challenges that they are facing can be eliminated by being brave enough to change their management structure by employing other people who are professionals in the type of business they are doing other than relying on family members to run the company whilst the only qualification or strong credentials they have if their family tie or relations. Hartley should expand in the market that is shrinking by introducing other products in the market and ensuring that those products are of good quality to make more customers purchase them. Hartley should also work on improving their technology in order to wade off competition. Reference Neely, A. D. (2007). Business performance measurement: unifying theories and integrating practice. Cambridge, Cambridge University Press. Read More