Managing Organisational Strategy of Yorkshire Tea - Case Study Example

Table of Contents Introduction 2 Current Factors Identification 2 Stakeholders’ Expectations 3 Competition 3 Market Share 4 Market Growth Rate 4 Technology 4 Legal Issues 5 Health Awareness 5 Product Strategies 5 Boston Consulting Group Matrix 6 Dogs 6 Cash Cows 6 Stars 7 Question Marks 7 Market Strategy 7 Market Penetration 8 Market Development 8 Product Development 8 Diversification 9 Strategic Evaluation 9 Potential Options 9 Human Resource 10 Management Roles 10 Factors Affecting Strategy 11 Recommendations 11 Conclusion 13 References 15 17 17 Yorkshire Tea Introduction The company Bettys and Tailors of Harrogate Limited produce Yorkshire Tea. The strategic options available to the management of the company are elaborated in this report. The strategic importance for the company is highlighted so as to determine the evaluation of the options that are important for the company. The company’s position in the industry and its response towards various forces in the market is analyzed so as to determine the prospects for the success of the company. The developments of the options that are required by the company in consideration with the available options are elaborated. The company shall be evaluated upon the current situation and projections are made so as to determine the future philosophies and prospects of the company. The utilization of various frameworks and models are utilized so as to determine the strategic position of the company. Detailed evaluation of the strategic options of the company is done where the highlighting and identification is done using various models. The identification of the available options is followed by evaluation where different possibilities are identified as well along with the available opportunities, which can be utilized by the company. The recommendations about the prospective strategic options available to the company is suggested and reported. Current Factors Identification There are various factors that are currently faced by the company which are to be identified and evaluated so as to determine the evaluation of the strategic position of the company. The factors that are currently affecting the company are elaborated in detail. Yorkshire Tea is a company with strengthened competitive advantage, continued development, effective business model and maintains an intelligent and expanded distribution network. Its goal is to maximize growth and profitability to create value for its shareholders (Brendan, 2008). The strategies of the company are such designed to achieve its goals and missions. Yorkshire Tea is the ultimate fast follower of the change in the culture and demand of the products (Robert, 1998). It quickly corresponds to the change and delivers its best by alteration of its strategies. The company is seemed to use its cash efficiently by rotating and investing. It uses aggressive marketing for its products and has well managed to create the brand worth. The efficient and effective use of the resources has enabled the company to reduce the cost and compete in pricing with its competitors. Stakeholders’ Expectations The identification of the stakeholders along with their importance to the company the needs and expectations of the stakeholders are to be focused and planning should be done accordingly (Richard & Ana-Maria, 2006). As far as Yorkshire Tea is considered, each stakeholder of the company has concerns that it expectations to be met by the business. For example, the businesss owners expect it to be profitable and to distribute that profit to them while local and federal government agencies expect it to obey the law and pay its taxes on time. The planning of the company is determined according to the expectations and their importance towards the company. The company determines the expectations of the stakeholders so as to the level of their say in the company and their response towards the company (John, et al., 2004). The shareholders’ expectations is utmost importance to the company management and the decision making process is determined as per the response of the stakeholders. The management of Yorkshire Tea realizes the importance of the stakeholders and management assures that the strategic decision-making is in accordance with the expectations of the stakeholders and is determined to provide financial benefits to the existing shareholders and investors. The ability of the shareholders to effect the management and operations of the company shall be realized by Yorkshire Tea and thus plan accordingly (Eri, 2013). The company should concentrate upon its host communities because that improves its reputation and strengthens its market presence. On the other hand, with the ignorance of the respond towards the host communities shall result in a decrease in the reputation of the company (David, 1999). The shareholders with the minimum interest in the company along with the minimum influence in the operations of the company are the ones that the company can ignore. (Nakamura, 2013). Competition Yorkshire Tea faces a fierce competition with other companies and thus derives its strategies in accordance so as to get competitive advantage. Lipton, Bushels and Tetley are the main competitors of Yorkshire Tea and it has kept a strong eye upon the policies that its competitors derive and tackle these in order to gain competitive edge. Yorkshire Tea has until now managed to keep a considerable market share in different economies around the globe and has competed many of the companies and has still retained its position and brand worth in the market as the company has responded to the competition (Donald & Carol, 2003). Market Share One of the areas used to evaluate business portfolio is relative market share. Increased company’s market share results in higher cash returns (Annika & Christian, 1996). This is because a company such as Yorkshire Tea that produces more, benefits from economies of scale and learning curve, which results in incremental profits (Michela & Stefano, 2005). Nonetheless, it is worth to note that some firms may experience the same benefits with lower production outputs and lower market share. The company holds a potential share in the market where the long existence of the company in the market enabled the company to realize its potential at maximum and generate profits. Market Growth Rate The increased market growth rate reflects higher earnings and ultimately high profits (Colm, 2001). The increasing growth rate determines high consumption of cash, which is used as investment to stimulate further growth. Yorkshire Tea is operating in beverage industry where the market is growing and with the capture of reasonable market share in the industry and the increasing growth rate of market share the company shall be able to ascertain high sales and thus increased profits. Technology The use of technology facilitates the organization to bring the level of organization to the more than the expected. Although the company is in tea business but the advancements in the production and operations of the business is of utmost importance as it lead to the marketing position of the company (Daniel & Amrik, 2013). The technological factors motivate the management to bring new technology instead of upgrading. Legal aspect focuses on the effect of the national and world legislation. Yorkshire Tea receives all the rights applicable in the nature of their business and every inventions and product developments are always going into the patented process. The management of the company tends to keep a close watch on demographic changes that occur. These demographic changes urges the management of the company to draw such strategies that targets different market segments and would enable the management of the company to monitor changes within these demographics and adjusting objectives and strategies to suit. Successfully employing new technology before competitors do may give the company a competitive advantage (Aristides, et al., 2009). Legal Issues Government plays a main role in manufacturing the product of the company in terms of regulation. Different regulations imposed by the government, urges the company to avoid breach of different laws. Political and economic factors cause pricing pressures and forces Yorkshire Tea to manipulate price of its different products (Jun Xu, 2005). In this way, this factor helps the organization to gain and maintains the shares in the global market as compare to its competitors. In addition, modern business development depends on the technology it uses (Jun Xu, 2005). Health Awareness The awareness in the health care of the people in this modernized world is becoming one of the factors that control the demand of the products in the society. Yorkshire Tea is providing the consumable product i.e. tea and thus is affected by the health awareness in the society (David, 2008). It needs to focus upon its strategies with regard to the health care of the society. Along with the development of the techniques in processing tea it need to make the strategies in order to make the production procedure eco-friendly and the products that it designs should not harm the society in any manner. Yorkshire Tea needs to focus upon the policies that it derives for its workers to be harmless and provide healthcare facilities in house. Product Strategies Yorkshire Tea provides its customers with different types of products, which are categorized as Decaf, Hard Water and Yorkshire Gold. The different methodologies used to make such tea is highly advance and the company tends to utilize the best facilities so as to determine that it provides its customers with the best brew. The different products of the company provide different qualities and characteristics. The company utilizes different ways to brew different teas, which are suitable for the people and fulfillment of their demand of tea. Boston Consulting Group Matrix The BCG matrix provides a medium of classification of products in different categories. The priorities are provided to the products so as to determine their positioning in the market. The classification of business portfolio into four categories is done in this matrix based on industry attractiveness and competitive position of the company in the industry. The classified two dimensions reflects likely profitability of the business portfolio in terms of cash needed to support that unit and cash generated by it (John, 1995). It determines the generation of cash flows by the products in these categories so as to determine the profitability of the products. The overall purpose of this tool is to assist in understanding and determining the investment and divestment of the company in its products. The utility of this tool shall be determined by categorizing the products of the company, which respect to market share and market growth rate so as to determine the expected cash flows from the products. Dogs Dog products are the products, which hold a low market share when compared with the competitors. The decision of investing in these products is not considered to be feasible for the company as it shall not be able to provide the return when compared with investment and thus the investment in such products shall be determined as wastage. The savings of the cash flow for not investing in these products provides the strength to the company to invest in other products. However, some of the dog products may be profitable for long period of time, they may provide synergies for other products of the company. In case of Yorkshire Tea the product Yorkshire Tea Seasonal can be determined as dog product only because of the stagnant market share captured by the product. The product is still profitable and has been able to provide synergies to other products of the company. Cash Cows Cash cows are the most profitable products that should be benefited by the company so as to determine the continuity of the generation of cash in the company. The cash gained from such products should be invested into other products so as to support their further growth. The Original Yorkshire Tea is classified as cow product of the company where the company shall be able to generate cash as the product has captured a substantial market share and it continuously providing the company with cash generation. Stars Star products are the products that operate in high growth industries and maintain high market share. These products generate cash and consume cash as for their promotion. These products are the main focus of the company for the point of investment. The investment in the market awareness and product development so as to assure that these products remain stars requires investment (Alex & Gerard, 2009). Luxury Blend Yorkshire Gold is classified as star product of the company as it determines a potential market share and the company is required to invest in its promotion and up gradation of its quality. As the industry is not rapidly changing thus there is a much less chance that this product shall be converted into dog but there is a convincing chance that this product shall turn into cash cow. Question Marks The most of the attention of the management of the company shall be upon the question marks. The products classified as question marks determines a low market share and thus they tend to fall in different categories such as star or cash cows. Decaffeinated tea is classified as question mark product as the company has invested in the procedure and is hoping to get potential market share for the product. Careful attention to the performance of this product is required by Yorkshire Tea so as to apply appropriate strategy. Market development and penetration are the alternatives that can be useful in promotion of this product. Market Strategy The marketing of the product is utmost importance for the success of Yorkshire Tea. The company needs to focus upon the marketing of its products so as to determine the viability and future prospects of the company. As per the classification of the product according to the Boston Consulting Group Matrix the marketing strategy of the products of Yorkshire Tea is determined using Ansoff matrix where the analysis of the market is reflected and strategies adopted. Market Penetration The market penetration strategy is adopted where the company needed to seek growth of its existing products in current market segment. The market penetration strategy is that where the company tends to penetrate its product in the market by reducing the price to the minimum and then raising the prices of its products. The market penetration prices are suitable for the Yorkshire Tea for Hard Water, as the product is needed to capture a market share. The reduced prices of the product shall tend to capture the market share and when it has succeeded in capturing a substantial market share the company can raise the price of the product. Thus the product shall be providing benefits to the company in the long run (Nicholas, 2002). Market Development The market development strategy is suitable where the market of the product is not much developed and the company is required to raise the demand of its product. The company shall be determining the market development strategy in case of the products that the company has extinct in. Expansion in the new market segment can be ascertained with the similar strategy. The company shall be providing information about their product in the market and thus raise the demand of the product (Lisa & Alan, 2010). The Decaffeinated Tea product that the company is offering shall adopt this strategy as to communicate the customer its importance and utility. The provision of information regarding the product shall determine the increase in the demand of the product and ultimately increase the market share of the product and thus provide increasing profits to the company. Product Development The product development strategy is applied to the products, which are currently in the current market segment, and development in the product is made so as to increase the market share of the product. The product development made by the company denotes the increase in the quality of the product or other enhancements to the product. The product Yorkshire Seasonal is the product that shall be adopted with the product development strategy as the company develops the product according to the season and thus alters the characteristics of the product. Diversification Diversification is a strategy that is best suited for the products that the company is planning to develop which are completely new. The strategy is most risky, as the company shall be developing a market share for the product. The diversification in the business operation is followed by this strategy and the company needs to focus upon the development of the product and upon the development of the market (Eric, 2012). Yorkshire Tea when planning to introduce new products and increase its product line then the diversification strategy shall be followed. Strategic Evaluation The evaluation of the strategies is done by comparison with the alternate strategies so as to determine the effectiveness of the strategies. The availability of the resources and the ability to effectively utilize those resources are much required for the successful strategic implementation. The company shall be focusing upon various elements so as to determine the strategic evaluation of the company. Potential Options In order to plan for the strategies to be implemented in the future Yorkshire Tea needs to overview the potential options that it has available for making strategies. Regular communication network with respect to sustainability efforts of the company, both internally and externally should be established. The company should build trust and should help in developing its reputation (Donn, et al., 1999). In addition, Yorkshire Tea should understand how important it is to communicate clearly and correctly to the outside world the ways in which the business affects society. The company should outline its new strategic direction, including changes in leadership and operational structure to hasten the companys speed of execution in a dynamic competitive market and environment. Risk assessment of Yorkshire Tea should be based on visibility of the key risks preventing it from reaching its business objectives. This would cover all strategic, operational, and financial and hazard risks. Further, political, social, human rights and environmental risks should be considered within these categories of risk, rather than as a separate strand. The substantial market share is of a great advantage to Yorkshire Tea thus the management of the company should take measures in order to obtain the market share. Effective marketing and continuously conveying to the consumer the utility that the products give to the consumers can do this. The management of the company should take in notice the effectiveness of the market share that Yorkshire Tea maintains in making strategically planning. Human Resource The initial decision would be regarding the management of the human resource of the company as to how they would be managed (Kimberly, et al., 2006). Management would make the decision regarding the implementation and application of the corporate code of ethics in order to prevent the organization from any further complaints regarding discrimination. The hiring and career development strategies would be restructured. It is important for the company to become more environmentally friendly and reduce the environmental footprint. The company would show the concern by emphasizing over the healthier tea and providing the information to their customers about the advanced techniques that are utilized by the company to enhance the taste and quality of their product. The critical point for the management of the company would be to strategize its marketing all the above decisions made would affect the operations of the organization and restructure it that would contribute to the success and growth of the organization (Paul, 2004). It is important that the marketing highlights all these factors of the organization. Therefore marketing would not be focused on “Pay Less Expect More” it would also ensure that the message is conveyed that the company is socially responsible company that aims at reducing its environmental footprint. The strategic marketing might involve extra tools to be used to communicate with the customers of the company and market. Management Roles According to the Mintzberg model the management of the company has certain roles that it performs in accordance with the situation. The roles of the manager is divided into different categories and how it should be applied to Yorkshire Tea is discussed as: Interpersonal, where the manager role is to provide information and idea and in doing so he plays the role of figurehead, leader, and liaison. The management of the company should be able to convey to its employees and subordinates that the management is able to help them out any situation and are willing to work along with the workforce and the whole company works as a single workforce. The management should be able to ignite the passion in the workers to work for the company. Informational, where the manager role is to process information and in doing so he plays the role of monitor, disseminator and spokesperson. The management of the company should take effective steps for advancing the communication process so as to make the employees realize their importance in the company and along with it providing the information to the management to take effective actions. The management of Yorkshire Tea should carefully control the operations of the company by effectively processing the information provided by the employees. Decisional, where the manager role is to use information effectively and in doing so he plays the role of entrepreneur, disturbance handler, resource allocator and negotiator. The management of the company should take measures in advancing and managing the information system so that the information can be timely taken and accessed whenever needed. The information system is crucial as it provides the information to the management in order to take out the decisional roles effectively as described in Mintzberg Model. Factors Affecting Strategy An advanced development team within Yorkshire Tea should research and develop new ideas and concepts specifically based on sustainability. Its work should focus on futuristic ideas and retyping new approaches in materials, quality and ethical approaches. It should act with integrity and deliver its every promise. To achieve its business objective, the management of the company should be committed keenly to excel at all it does. It should look for competing to win as one team. It should want its employees to reach their full potential in the performance of tasks assigned. It should intent to treat every employee, partner and customer openly, honestly and with respect so as to determine the success of the company (Saurabh & Ashwani, 2010). Recommendations The strategies identified and evaluated leads to various options that the company shall focus so as to determine and effective strategy for the success of its products. The company shall focus upon integrated strategy where the combination of various strategies accumulates for different products of the company as per their requirement and demand. The management of Yorkshire Tea should consider improving its operational efficiency, enhancing its competitive position in the marketplace, and increasing cash flow. The target should be to put its business in a good position to capture the attractive future growth opportunities that market offers. Across a large part of our territory, particularly in a number of its developing and emerging markets, the management of Yorkshire Tea should also consider to manage its operations so as to determine the market share of its products. Further, the management of Yorkshire Tea should also look for increasing trends in the adoption of tea around the globe. The increasing health awareness and the health improvement characteristics of tea the demand of the products of Yorkshire Tea shall be increasing. Furthermore, the management of Yorkshire Tea should try to be well positioned to meet consumers’ growing demand for choice across all of the markets. The strength and broad customer attraction of Yorkshire Tea should remain a core focus in future for realizing the untapped growth potential of its markets. It should focus on building a customer centric organization and further enhancing organizational capabilities is also expected to yield further benefits. Strategic initiative should be the main point of consideration for the management of the company that would enhance commercial capabilities, resulting in better sales, operational planning and facilitating the sharing of best practices across the organization. Such measures should be developed that help the management to generate cash for the organization instead of absorb it. These measures should have the capability to get a high share of a slow growth market for the organizational product. The products of Yorkshire Tea should generate more than is invested in them. Measures should be incorporated that enable the products of the company to compete in the high growth markets with a relatively high share of that market. These products should generate high amount of income for Yorkshire Tea. Further, measures should be developed that enable the management of the company to get larger contribution from the successful products to compensate for the failures. Moreover, such measures should be identified that help the management of the company to develop its products rapidly and thus urge the consumers to spend cash for the products of the company. For the proper monitoring of the strategic planning the management of Yorkshire Tea should take effective steps. There should be continuous monitoring and regular feedbacks from the employees regarding the daily routines. Monthly meetings should be held in each department and feedback from the supervisors should be taken in order to ensure the effective and proper utilization of the resources. The performance of each quarter should be measured and compared with budget so as to keep the operations of the company on the track and at the required pace. After every quarter the targets should be analyzed so as to make them more challenging and achievable. An annual review should be done in order to compare the performance of the company with the preceding year and with the strategic planning as to what extent the company has been able to achieve that was desired from it. The strategic plan should be evaluated in accordance with the performance of the company on annual basis and relative measures should be taken in order to effectively implement the strategic planning. The combination of various strategies for each of the product of the company shall be determined. The company shall be combining various strategies such as market penetration for Yorkshire Tea for Hard Water, market development for Decaffeinated and product development for Yorkshire Tea Seasonal. The integrated strategy which is the combination of various strategies of the company shall be determining the best alternative strategy for the company where each product of the company shall be focused and the overall aim and objective of the company to make profits and provide quality products to its consumers is determined. The integrated strategy that is to be followed by the company shall be providing benefits to the company in the long run and as well as in the short run. Conclusion The strategic option available to the company in the future is identified and evaluated. The products of the company are identified and thus the strategies are evaluated for the company. The identification of various factors affecting the strategies of the company is evaluated. The product strategy defined enabled the company to classify its products in different classifications and thus making it convenient for the company to make strategic decisions regarding the products. The evaluation of the market and the pricing strategies identified reflects the opportunities that the company can avail in the market. The management of the company is required to be focused upon the strategic advancements and should monitor the effective implementation of the strategies. The roles of management are elaborated so as to brief the roles that they shall be determining in implementing the strategic decisions of the company. The identification of various strategies available for the company along with their evaluation the recommended strategy is the integrated strategy that shall be followed which cumulate different strategies. The strategies are evaluated as per the products of the company and the management of the company is ought to account for the successful implementation of the strategy. The management of the company shall be determined and motivated towards the success and achieving the goal of the company which is possible through goal congruence. 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