Management of Change: All Seasons Food Ltd - Case Study Example

Management of Change Report Terms of Reference The report has been requested by the directors of the company All Season’s Food Ltd. With the introduction of modern methods of marketing and innovations in the management and HR processes there has been an increasing commodification of brands thereby making competition fiercer and tougher and thus harder to beat. The best and probably the safest manner of retaining and expanding customer relationships and customer loyalties depends on the ability of a venture to deliver a customer experience that is tailored to changing customer needs and values and consistent with the brand promise (Accenture, 2008). It is doubly important now more than ever, in a time of economic uncertainty—with customer trust eroding and purchase behaviors growing harder to predict— the ability of companies and brands to build and retain customers through adding customer value to products is of incredible importance. The following report seeks to outline a management and operations change plan to ensure that All Seasons Food can bring into place a strategy of marketing that is removed from traditional approaches bring this strategy in line with HR and operational changes within the company. This will ensure customer retention through the process of customer value creation. The idea is to bring about a process of significant change in order to build business resilience despite the current environmental and economic conditions thereby making the business come out stronger. The Company-Introduction All Season’s Food was set up about 15 years ago and pioneers food items such as ready to eat (RTEs) products, organic products and herbal products. The label All Seasons means that there is the launch of new products every month and the pricing of the products are in line with the quality of the products launched. The products are produced in a factory near Luton and sold through tow exclusive showrooms located in oxford Street and Kingston. The company is owned by James, the managing Director. The operations are run by Tomazo with Debbie and Uma being in-charge of the two shops. Drivers for Change The company is a local brand and therefore needs to cash in o the name that the brand has gathered for it self in the past 15 years, which would allow it to cut down on normal marketing spends. This would mean that there has to be the recognition of the source of the majority of the revenuer earners. It would be interesting in this context to first do a PEST analysis of the situation at hand. If we were to analyze the Political, Economic, Scientific and technological aspects in which the company has to function we would be able to arrive at the steps that can be taken further to deal with the problem that is at hand. PEST ANALYSIS-Table 1.1 Political situation The political situation is such that it requires the politicians na dthe local contractors to be on the defence while extending open support to local businesses are concerned. Economic situation Economic and Credit Crisis that requires banks to put restrictions on the credit facilities. This means that there has to be extreme caution with which the available resources need to be dealt with. It also has to be assured that there is the maximum utilization of every one of the available resources. Scientific Situation Analysis of the existing methodologies that are used for the research of new products that are launched. Technological Situation Technology would include the methods that are used in the marketing strategies, it would also include the processes that are included in the process of production. Environmental Analysis..Contd There is the need on part of the company to identify problems and then streamline changes in order to bring them up to the point where they can foresee future problems and develop strategies to deal with the same. The problems that have been defined here as simple: Overheads costs are huge thereby limiting the budget that is available for the marketing process there is thus a requirement to bring in innovative methods of operational change. The core strategy identified is customer creation and retention through the process of creation of customer value (Futoran, Rivera and Hunt, 1997). The idea is simple. Services have to tailored so that they in line with customer expectations and reflect customer value. For this to be functional at the level of implementation there is the requirement of the employment of differentiated service levels (Best Practices.com). The basic principle underlying the acceptance of the fact that the management principles be brought in line with the thinking the world over that recognizes the importance of the process of customer retention through the creation of value. If one is to go by this analysis itself it would mean that the allocation of the available budgeting in the company would be taken up for the majority part maintenance and technological innovations, running the two stores and the upkeep of the staff. The expenditure on maintenance should go up by about 5% over a period of the next five years. Profits should jump by about 6% in order to help the business stay afloat in a poitive manner. Drivers for Growth…Contd SWOT Analysis Table 1.2 Strengths A Strong Customer Base The products-innovative and in keeping with demand patterns Reputation in the market Weaknesses Poor Marketing Strategies Low Outreach Large Overheads Opportunities The Organic Food and health food and product market is all set to have a growth rate of about 8-10% over the next 5 years. Threats Inability to retain customers Improper marketing strategies that do not project the merit of the product An incorrect strategy that lays stress on customer creation rather than customer retention. Environmental Overview Analysis – Areas of Change expected There are five basic steps that can be identified in order to chalk out in more consolidate terms an essential plan of action (Anderson, 2007). The plan of action can be divided in to five basic quarters with each quarter having a timeline of six weeks for completion. It needs to be mentioned here that these stpes cannot be kept in water tight compartmentalization and as most of them are overlapping and have to be made to work simultaneously to yield the expected results. 1. Examination of current customer Base. The first step that has to be taken as part of the necessary aspect of the initial stages of plan implementation would be an examination and identification of the existing customer base. This would help in providing a better understanding of the nature and the scope of present realities of customer base retention. There could also be a process of customer segmentation that can be put in place. 2. Understand the timeline to customer profitability. There is an acquisition cost that every customer has for the business. This needs to be identified and examined. What this means is that the company has to aware of the timeline that it would take to ensure that a customer becomes profitable entity for the company. This can be done by subtracting the price or the input that is required in order to get hold of and serve the customer from average customer returns over time. It is companies that are good at this calculation that can use individual customer revenue and get into cost minutia to attribute costs at an individual level and even include costs like physical plant and electricity. Since in our case we are just getting started it would be easier to keep this particular part of the research to averages. Since the size of operations is also small the process of calculating average timeline customer profitability will serve the purpose as well. 3. Set a target retention rate. The setting of the retention target rate is like setting the target of profit because by following a customer retention strategy to boost profits we are linking the KPI directly to the profit manifestions in the accounting sheets. The idea therefore is that there has to be a setting of clear targets and a clear timeline in which the target has to be achieved.. 4. Defining marketing tactics. This is important is this would probably form the very basis of the success and failure of the plan. It has been dealt with in better detail in the next section. 5. Measure results consistently. Finally its has to be ensured that results are compared and evaluated at well defined and periodic intervals to assess the success and the failure of the strategies adopted. There is also the need to ‘tweak programs’ at intervals to ensure that they do not become stale and keep with the evolving requirements of the customer base. This means that the strategies adopted should not become redundant. Short Term Front End Change These changes need to be made at the front end of the business operations. This means that these need to be executed while dealing with customers. This has to be ensured because the business is ultimately a retail oriented venture that is dependent direct patronage by customers. 1. The creation of membership cards and membership programs which would give the customer a feeling of family and belonging beside enhancing an opinion of getting value for money and added services 2. Simple Welcome and Thank You services in terms of actual hosting and gift vouchers. 3. Satisfaction surveys, followed up by phone calls and letters 4. Beefed up customer service, empowered to solve problems 5. Enhanced technical support with follow up satisfaction calls 6. Frequent buyer programs which permit customers to build up equity 7. Event driven communications that are meaningful to the customers’ lives 8. Databases that keep track of customer’s purchases, preferences, complements and complaints, which are used to carry out loyalty building services and dialogs. 9. Integrated marketing programs where the advertising, direct communications, customer service, database marketing and sales programs are all orchestrated together and designed to build loyalty. 10. Segmentation of the customer base by lifetime value groups, and different marketing programs designed for each segment. Internal changes that need to take place would include: 1. Creation of a strong base centered around training and product familiarization and sensitization that would ensure a strong functional and product expertise which in turn would be aligned to customer segment 2. There has to be the creation of flexibility without the added burden of costs in the management of the team 3. The face of the product that is the front of the office is a manifestation of the back or the manufacturing units. What this means is that there has to be a greater integration of the two leading to better product merit highlighting. 4. better methods of benefit extraction from the centralized infrastructure and decentralized decision making process. Rationale for the requirement of change process For the implementation of this part of the strategy there will have to be in place a marked and conscious move from the goal of customer acquisition to customer retention. The derivative of this particular element of the strategy would be the good old corner grocer’s store which was the norm around the world in the period prior to 1950 where the proprietor would build his business around the concept of recognizing his customers and doing favors for them. Customers were loyal to these stores because of the recognition and personal attention they received. The ideas that have been enumerated in this particular part of the strategy plan will work only if the customer is actually benefiting from the retention strategies which would bring us to the merit of the product. Assuming that the product has quality and strength to attract and hold the attention of the customer and keeping this variable as a stable for now there can be the enumeration of organization changes that would help in customer retention through the creation of customer value (Hughes, 2006). Rationale for the requirement of change process…Contd The company today is essential that the company should take a fresh look at the strategies and methods that it has undertaken till date in order to ensure the retention of customers. There is also the need to examine the areas where the depth of commitment has been lacking and ensure the change and revision of the strategies that are flawed and have not yielded the requisite results. The threat of declining customer revenues and defection is real and must be addressed. At the same time it is also essential that there be in place a realistic understanding of the economic climate that creates new opportunities if the company has to try and improve market position and its chances of development through a process of construction of customer trust, creation of a meaningful brand differentiation, remodeling and customizing offers in the context of customer needs that are evolving and, if necessary, the negotiation of new terms. The thrust area therefore now shifts from the acquisition of new customers to the retention of the existing ones creating a stronger business base from the resources that they are able to provide the company. This would mean changes at both the internal and external organization strategies of the company (Alexander, 2000). The internal strategies would include a reorganization of the existing staff and a redefinition of their duties leading to an improvement in performance as manifested in customer satisfaction and the external changes would include those changes that can be made in relation to the dealings with the customer directly increasing the value of his experience and ensuring his loyalty to the company and its products. Organizational Readiness Technological and Financial Resources All Season Foods utilizes the services of the better technological resources that are available in the arena of health food products. There is in place the institutionalization of the scheduled process of food manufacture and labeling that in line with the safety and regulatory requirements. The factory at Luton, is equipped with the requisite machinery like the pH meter, the Steam kettle and the thermometer. There is also a lab where the testing and the tasting of the new products at hand are conducted. In order to meet the current and future economic environmental demands the technology need to be updated to match the market requirements. The technical resources would also include the logistics and the aspects of the supply chain management. These have to be managed better because over 10% of the input costs in the organization come from this part of the input requirement. The suggestion is that the process be outsourced so as to cut costs on the maintenance of the logistics heads. This would also mean that the added pressure of paying huge rents to storage facilities would be dealt with because most logistics outsourcing deals are inclusive of the entire process at better asking rates. The finances that the company has right now are not really at the best of their abilities. The overdraft has reached its limit and the working capital has shrunken leaving the flow of credit in the organization at a bare minimum. This would mean that changes would have to work within the constraints of a severe financial crunch and thus need to be cost effective to the nth degree. Human Resources: The company employs over fifty people including the Directors which makes it a small enterprise by all accounts. The majority of the technical Staff have been in the industry for the whole of their working career this has left them well equipped to deal with the planned changes due to the constant state of the food processing industry as a whole. It is here that the importance of dealing with better apprenticeship programs and the removal employee dissatisfaction assumes importance. It is important for the organization to be acquainted with the fact that there can be no sole reliance on the ‘Brand Image’. In the current economic turmoil customers are becoming more demanding and loyalty to the brand is likely to be overtaken by short term cash savings.  Conclusion In Conclusion therefore it may be reiterated that the strategy is sound but requires incisive research along with a process of efficient implementation if it has to work. There is also the need to outline targets in terms of numbers and individual customer retention if the plan has to work as an effective substitute to an active marketing strategy. It can be stated with a degree of conviction also that the creation of value and the process of growth as hinged on its successful development is dependent upon interaction and dialogue between the company and its customers. It is in fact through the process that the producer can estimate the factors that hold value for the customers and can tailor products accordingly. If the company has to deliver this objective and hope to gain some sort of leverage from its deliverance it would be essential that all of the key success factors of the value chain are kept in mind given equal attention. These factors can be technology-related, operations-related, distribution related, marketing related, skills related, and capability and competency related among other things. Finally the report can be concluded with a statement that was made by K B Dadiseth, “The biggest mistake anyone can make is to focus on the competitor. You focus on the consumer and you will get it right.” Reference: Accenture Publication, 2007, Creating Loyalty, A Customer Centric Approach, p2-5, accessed May 22, 2009, < http://www.accenture.com/NR/rdonlyres/672904CE-5407-4A5C-AE92-7606F6A0FB2C/0/CustomerAcqusitionandRetentionCreatingCustomerLoyalty_ACustomer_CentricApproach.pdf> Futoran G C, Rivera J B, Hunt J G, 1997, The temporal impact of management faculty style and course characteristics: some theoretical and development Implications Group & Organization Management (USA), Emerald Management Review Database, Vol. 20; Issue: 3; p310-337 Best Practcises, accessed May 22, 2009, < http://www3.best-in-class.com/bestp/domrep.nsf/Content/A863FCC049F6F8E685256DDA0056B45A!OpenDocument> Anderson E, 2007, Five Steps to understanding Customer Retention, Unica Corporation, Customer Think, accessed May 22, 2009, < http://www.customerthink.com/blog/five_steps_understanding_customer_retention> Barney J and Clark D N, 2007 Resource-based theory: creating and sustaining competitive advantage, Edition: illustrated, Published by Oxford University Press p132-136 Kates and Downy, 1996, (Re)designing the HR organization, Pub. 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