Cloverleaf PLC Case Analysis - Essay Example

? Cloverleaf PLC Case Analysis of the Introduction The selling and purchasing process followed by a company plays imperative role in their success in the long run. Nowadays, companies around the world are trying to implement different types of strategies and techniques by which they can increase the overall sales and at the same time can streamline their purchasing process (Onkvisit & Shaw, 2004). This study deals with the sales and purchase techniques pursued by Cloverleaf PLC and its client. It would also try to underpin the reason behind failure the company. Cloverleaf PLC is a UK based supplier of the bottling machinery that is used in the manufacturing line to fill and transport bottles. The company is best known for its use of high-end technology. As a result of the use of high end technologies, the company is able to fill the bottles at a rate which is 10% faster than the competitors and that too with equal accuracy. Therefore, the technology used by the company provides opportunities for the customers to save time and cost. Furthermore, it has been also found that the products of the company are more reliable and consistent than the competitors. All these factors provide Cloverleaf with a competitive advantage over the rivals. On the basis of the findings, the study will recommend certain strategies and techniques by which the company can boost up their sales and as a result can earn more revenue. While recommending the strategy, the study will consider both domestic and international perspectives. Discussion The company observed that it has great opportunities in the European market as there are more than 1000 organizations that are active in Europe. The company mainly targeted countries such as France, Germany and Benelux countries. Despite, competitive edge over the rivals in terms of technological expertise and better quality, the company failed to get the order of Commercial SA. The next section of the study will throw light on the reasons behind the failure of the company. Analysis of Cloverleaf PLC’s decision to make Global Expansion The company recently opened sales offices in countries such as France, Germany and the Benelux countries (Belgium, Netherlands and Luxemburg). The principal intention of the company behind opening new branches in other parts of Europe was to capitalize on the market opportunities and along with that, driving sales was another motive. The company has not been performing to the desired standard since the last few months. The sales figures of the company also represent the same as the company has only been able to sell three units, which is far below the expectations. Hence, to get rid of the financial debacle and strengthen its financial position, the company has decided to make its presence felt in other parts of the world. According to eminent scholars such as Adler (2010) a company with international business holds the opportunity to increase the overall sales and profitability of the firm. The author also emphasized on the fact that the chances of sales go up because of the greater marketplace. Echoing the same, authors such as Pride & Ferrell (2004) stated that the dependence of a business on the domestic market reduces greatly. Kapil (2011) mentioned that it allows companies to learn new methods and makes them more competent in the global marketplace. Hence, from this discussion and statements of the eminent scholars, it is evident that given the company's superiority in product quality and technology, the decision of the company to expand in other parts of Europe was fully justified (Fournier, 1998). Sales Strategy of Cloverleaf PLC According to Solomon (2008) a company must formulate and implement the most appropriate strategy of marketing and selling. This is because, even if a company manufactures superior products, the same will remain unknown to the customers if not promoted properly. Thus, it is obvious that a company should put in equal efforts in developing a product as well as promoting it. In the context of Cloverleaf PLC, the marketing strategy of the company was based on high price, high quality and competitive positioning. The company has intentionally kept a high price for the purpose of justifying their superiority in terms of quality. The sales personnel were also asked to emphasize on the enhanced reliability and higher speed of the machineries when calling a prospective customer. In order to oversee the marketing and sales function of the company in the overseas market, it had appointed three different sales executives and one sales manager to administer their activities. In addition, the company has also appointed a technical specialist who often accompanies the sales executive when the client asks for detailed technical specification of the product. One of the sales people was John Goodman, who was supposed to oversee the sales prospect of France. Hence, the sales strategy of the company was simple i.e. to make prospective calls and turn those cold calls into sales closure. John Goodman however ignored the other vital factors of the sales strategy that led to the failure of the contract. Mr. Goodman failed to identify the decision making unit of the client organization, their purchasing process as well as their purchasing power. Eminent scholars such as Bizer & Petty (2002) has stated that the success of a company is greatly dependent upon its ability to exactly identify the need of the customers and design products that suits them and at an affordable price. Purchasing Processes or Behaviour of Client Organization The purchasing process used by an organization is dependent upon the nature and type of business. The purchasing process also dubbed as the buying process is the set of steps that companies go through with the intention of acquiring a product (DeMozota, 2003). Echoing the same, authors such as Glynn (2009) articulated that the buying decision of a consumer is strictly based on the buying behaviour. However, there are vast differences between the purchase behaviour of consumers and companies. The purchase behaviour of the companies is based on needs whereas for consumers it is the sheer impulse. Even differences can be identified within the purchase behaviour of the companies. For example, the purchasing process used by a company involved in FMCG (Fast Moving Consumer Goods) business will surely differ from a company involved in industrial products. In the context of Commercial SA, there were 4 different groups involved in the overall purchase process of the company. The list included the production manager, production engineer, purchasing officer and the technical director. The production manager of the firm was mainly enthusiastic in maintaining a smooth flow of the production process and cost savings. The production engineer was mainly interested in drawing up specifications for the new equipments. The purchasing officers on the other hand are mainly interested in the financial aspect of the purchase. Lastly, the technical director of the company also plays a vital role in the purchasing process if it involves a large transaction. Thus the purchasing process of the company is streamlined (Kautish, 2011). In a small company, the purchase process is very short. In these types of companies, the purchase manager is the only individual who looks after the entire purchase process of the organization. On the contrary, for a large organization the purchase process encompasses a number of steps. The process primarily initiates with the demand or requirement. Once the requirement is identified, a requisition is generated that is responsible for detailing the requirements. The next step followed is to raise the request for quotation (RFQ) or request for proposal (RFP). The suppliers then send their quotation and on the basis of the most feasible quotation the order is finalised. Hence, there are clear differences in the purchase process of the companies (Cherunilam, 2010). The next section of the study will enlighten about the major causes of failure for the company as well as failure of John Goodman as the sales executive, which ultimately resulted in the company’s loss of orders and reputation to a certain extent. Causes of Failure According to the scenario of the study, it has been identified that the causes of failure is the poor sales strategy as well as the high pricing. In addition, the inability of sales person was also another factor that led to the failure of the company. One of the obvious causes is the high price of the products and services. The purchase manager along with the production engineer and technical director have continuously stressed on the high price of the products. They have also mentioned that the price is 10% higher than that of the competitors and is one of the obstacles towards closing the sales call. However, one thing is also evident that despite having room for justifying the reason of high price, the sales executive, John Goodman failed to convince the client. This shows the lack of sales skills and knowledge. In this respect, the company should also be blamed as they have always emphasized on pitching about the superior quality and technological competence of the firm, but they have never trained the employees about defending the price of the company in respect to the competitors. Thus, lack of proper training is also a cause of concern for the company. Lastly, the inability of the company to identify the purchase behaviour of the firm has also been one of the reasons for the company’s failure to convert the prospect. However, despite negotiations and reduction of the prices, the client at last refused to work with Cloverleaf PLC. Therefore, from these facts it is evident that all these factors together are the reason behind the failure of the Mr. Goodman to close the sales deal. Recommendations to the Company This section of the study will present certain recommendations to the company by which they can overcome this problem or by this the company can minimize the chances of failure in the future. The following are the strategies recommended to the firm: - Value-adding product strategy: - The Company is strongly recommended to modify its product strategy and valued added services along with the core product. In this context, the company can offer long duration free after sales service to the client. As a result of that, the client will be able to save huge sums of money which are required for maintenance. Moreover, in the manner, the company will get an additional option as a tool for justifying the high price of the company. Relationship Strategy: - Relationship between two companies is extremely useful in promoting the business (Ahearne, Bhattacharya & Gruen, 2005). The significance of relationship strategy increases to quite a large extent when the business is involved in B2B (Business to Business) venture (Arnett, German & Hunt, 2003). Good relationship with the client greatly helps in receiving new orders (Carlson, Donavan & Cumiskey, 2009). Therefore, in this context, Cloverleaf PLC is strongly recommended to appoint a relationship manager in the overseas market, who will be responsible for managing and strengthening the relationship with the client organizations. This will also provide company with the opportunity to increase sales and revenue. Identification of needs: - identification of the needs is a vital task of the companies in order to develop products that suit the need of the consumers (Edwards & Peccei, 2007). In this context, the company can initiate market research activities. Conclusion The study was meant for analysing the causes that led to the failure of Cloverleaf PLC and Mr. Goodman, the sales executive of the company. The study made it evident that the company did not fail for one particular reason. It has been found that the high price of the product is one of the major obstacles that led to failure. Along with that the sales capability of Mr. Goodman is also a major reason as he failed to justify the reason of high price and convince the client. The sales executive also failed to underpin the purchase process of the client company which is a major factor in B2B sales. 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