Marketing Strategy and Management of Invercargill Licensing Trust - Case Study Example

Running Head: Invercargill Licensing Trust Invercargill Licensing Trust Name Course Lecturer Date Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 Success of ILT 4 ILT’s Mission 6 Competitiveness 7 Social responsibility 8 Sustainability 9 Growth of local economy 10 Replication of ILT model 10 Conclusion 11 References 12 Executive Summary Invercargill Licensing Trust (ILT) was established in 1944 to end the prohibition era in Invercargill which went on for 38 years and was considered the best method for reinstating alcohol licenses in the area. ILT has grown to be a famous organization in Southland and the rest of New Zealand. The organization is community-owned and focuses on giving financial support to initiatives and needy youths around its area of operation. The success of ILT has come as a result of good management, effective financial control and good tactical decisions. ILT aims at making profits in order to benefit the community but, its mission differs from that of an ordinary profit-oriented commercial organization. ILT has been criticized of being anti-competitive and thus this paper will seek to analyze the validity of that claim. It will also address the social responsibility of an organization to its customers and community as well as the contradictions in ILT’s mode of operation in providing public good. Moreover, it will analyze the sustainability likelihood between an organization with ILT model and a profit-centered commercial organization. The paper will also talk about having an organization similar to ILT or using a private profit-making organization to develop the local economy and the replication of ILT experiences in my locality. Invercargill Licensing Trust Introduction A prohibition era began in 1906 and hotels that were operating in Invercargill were closed down. After 38 years, the prohibition ended and a debate was raised regarding the best way of reinstating alcohol licenses. Invercargill Licensing Trust (ILT) got a directive to retail liquor and offer catering and accommodation facilities in 1944 with a requirement of distributing the earned revenue for charitable, recreational, philanthropic and cultural purposes in the community. ILT is now a renowned organization both in its area of operation in Southland as well as all over New Zealand. It is owned by the community and aims at providing an efficient and effective corporate structure, ensuring it provides quality products, facilities and services, and maintaining profitability so as to give continuous benefits back to the community (Walker, 2008). This paper will analyze ILT in terms of its success, mission, competition, social responsibility, sustainability and replication. Success of ILT ILT has been successful because of several reasons. The main reason behind its success is good management. The organization has operated under the drive of skilled executives as well as trustees. ILT’s management team provided it with the best management skills through the setting of achievable goals and applying the best strategies in achieving those goals. The organization was set up for the benefit of the community within which it operates and its objectives revolved around the community with members of the community being both the owners as well as managers of ILT. According to Zwikael & Smyrk (2011, p.340), corporate strategy level deals with how an organization is governed, business interrelationships and defines issues which are the responsibilities of the organization. It identifies the stakeholders that are important for smooth running of the activities of an organization as well as the best ways of interacting with them. Moreover, the definition of responsibilities provides a direction in which an organization operates towards, that is, the goals that it aims at achieving. From the case study, members of the community are the most important stakeholders of ILT and their support has contributed to the success of the organization. From the case study, the success of ILT can also be owed to prudent financial control. The organization’s balance sheet from 1994 to 2007 does not show any debt and has high equity-ownership proportion. Moreover, the company has had an outstanding return on capital of about 22 percent in the previous three years. A big percentage of the earnings of ILT have been spent on community initiatives through donations, sponsorships, promotion of special events and conferences as well as recreational and sport activities. All these have benefited ILT since it has marketed itself to the members of the public and has also received maximum support from the community. Furthermore, ILT has also succeeded due to good strategic corporate decisions in relation to the organization’s activities such as the kind of organizations to sponsor as well as the type of community members to target. Ferrell & Hartline (2011, p.96) maintain that, funding community events forms one of the best marketing strategies of an organization. This is because; the organization gets to interact with its current and potential customers which gives it a chance to identify customer needs. Mission statement gives a firm a focus on which to work towards and thus it should match the objectives of a firm. From the case study, ILT’s main purpose is to give back to the community and all its objectives matches with the mission which can also be considered to contribute to the success of the organization. ILT’s Mission The mission of ILT has the elements of both profit-oriented and non profit-oriented organizations which make it different from the mission of an ordinary profit-oriented business organization. The first difference relates to its reason for existence. ILT exists because of community ownership and all its activities revolve around the community. Normally, a profit-oriented business organization is owned either by private investors or a mixture of both private investors and members of the public but its activities are mainly controlled by the organization’s management and board of directors with minimal participation of community members (Cochran & Gibson, 2008, p.27). Another difference is found in ILT’s purpose which is to have an efficient and effective business structure and provide high quality facilities, products and services in order to make continuous profits for constant benefit of the community. Drawing from Cochran & Gibson (2008, p.29), a normal profit-making business organization strives to have effective management and to provide quality services and products, to achieve high profitability which is either ploughed back to the business or given to shareholders as dividends. Additionally, the objectives of ILT relate to community initiatives like sponsorship, sporting activities for the youth and donations. On the other hand, ordinary corporate objectives are geared towards increasing organizational efficiency for profit maximization and how the generated profit can be used to further benefit the organization. According to Morris (2005), the main goal of most business organizations is to make profit out of their business operations. Therefore, the mission, corporate objectives and resources of a profit-oriented business organization should define the best ways through which the organization can use its resources to earn maximum profits. A mission statement gives a company a focus and defines its goals which need to be achieved for its success. Competitiveness Competitive advantages are the benefits enjoyed by a given organization over its rivals and which can be gained by presenting consumers with a greater value by either charging lower prices or giving consumers bigger benefits as well as services which substantiate higher prices. Different businesses use different competitive strategies in order for them to endure stiff competition from rivals. There are two main competitive strategies that are applied by most organizations which are cost leadership and product differentiation. Under cost leadership, a company aims at charging the lowest price in a given market in order to attract more customers and make the highest sales for higher profits. Cost leadership is mainly used by large business organizations. Product differentiation involves introducing unique product features which distinguish a company’s products from those of other companies. The features may take the form of design, quality, packaging, size and shape (Barney, 2010). From the above competitive advantage perspective, the criticism of ILT’s anti-competitiveness is invalid. In the organization’s purpose, it aims at providing facilities, services and products of high standard in order to make profit. In this regard, ILT’s competitive strategy is product differentiation. It ensures that its products, facilities and services are of high quality which gives it a competitive advantage over other licensing trusts and accommodator facilitators in the region. Social responsibility Pranee (2010, p.7) asserts that, all commercial organizations have different social responsibilities to both their customers and the community at large. Serving consumers should be an organization’s prime concern. An organization should guard the interests of consumers and satisfy their needs. Goods should be of correct quality and standard and should be accessible in enough quantities at affordable prices. Moreover, an organization is expected to avoid hoarding or creation of artificial shortage of goods along with misleading and false advertisements. It should also not offer products which have adverse effects on the health of consumers and in case of harmful products; a warning should always be included on the casing of a product. According to Pranee (2010, p.10), the socially dependable role of an organization with regard to the community is anticipated to be shown through its business policies such as offering job opportunities to handicapped people and those from the weaker parts of the society. An organization’s social responsibility is also expected to be seen in activities like pollution control, environmental protection, setting up companies in under-developed areas, and giving aid to the sufferers of natural catastrophes. As ILT aim at functioning for public good, there are contradictions in the manner in which it is currently operating. In the first place, it operates as a monopoly a case which results in higher prices due to lack of free market conditions especially in the off-sale regions where supermarkets do not retail liquor. Thus, as much as ILT gives back to the community by supporting small organizations and offering sponsorships within the community, paying high prices somehow deprives off the public any benefits from ILT. Another contradiction relates to the retail of liquor which has health effects to the members of the community. Sustainability According to Dunphy & Griffiths (2003, p.34), this is the ability of an organization to develop a practical mission, follow appropriate management practices and set up varied income sources in order to ensure lasting stability of quality, community-centered services. Long-term sustainability is crucial for an organization to be able to get to its targeted customers and meet its operating expenses. Accordingly, a profit-centered business organization has a likelihood of being more sustainable in the long run as compared to an organization with the ILT model. Organizational sustainability is determined by so many factors such as financial stability, human capacity, service quality, and infrastructure and management systems. Despite ILT being a profit-making organization, it focuses mainly on community activities with a bigger amount of its earnings going to social responsibility. Although it gets to market itself through such initiatives, it does not enjoy any financial gain from the initiatives and thus it faces a risk of draining its financial resources which may result into its collapse. According to Murray, Poole, & Jones (2006, p.77), a profit-oriented organization will be able to invest the generated income on profitable activities like expansion, acquisitions or buying securities. Therefore, it will be able to have different sources of income to cater for other organization needs such as adoption of new technology, employee training and development and replacement of worn-out equipment. All these needs contribute to a long-term sustainability of an organization. Growth of local economy Though public organizations are more vulnerable to mismanagement, it is more strategically sensible to set up an organization that is similar to ILT than to encourage private profit-making organizations in efforts to promote local economic growth. A private organization will only be concerned with making profits with little concern if any, about other people in the society. Private organizations rarely participate in funding of community initiatives which are normally considered as the backbone of local development. Moreover, the earnings generated by a private organization will only benefit few people probably the owners and shareholders and thus it may have little contribution to the growth of the local economy (Noya, Clarence, & Craig, 2009). On the other hand, an organization like ILT is able to contribute a lot to the local economy since it funds a wide range of community projects. First, through its sponsorship, young people are able to go to school and gain knowledge and skills. More so, by funding other small organizations, local economy is developed through the aggregate contribution. Replication of ILT model It may be hard to replicate the experiences of ILT in my locality because being a community-owned and controlled organization; it may face some management issues. A big percentage of local authorities and public institutions in my locality have been victims of poor management practices, corruption and embezzlement of funds. As a result, they have resulted in provision of poor services while others have collapsed due to lack of funds to support its operations. Conclusion The success of ILT can be owed to good management, prudent financial control and good strategic corporate decisions. The mission of ILT differs from that of an ordinary profit-oriented business organization because of community ownership and the organization’s purpose and objectives which focus on community initiatives. ILT’s anti-competitiveness criticism is invalid because it uses product differentiation. Commercial organizations have social responsibilities to both their customers and to the community. A profit-centered business organization has a likelihood of being more sustainable in the long run as compared to an organization with the ILT model. It is more sensible to set up an organization like ILT than a private organization to boost local economic growth. The experiences of ILT cannot be replicated in my locality due to poor management possibilities. References Barney, J. B. (2010). Gaining and Sustaining Competitive Advantage. New Jersey: Prentice Hall. Cochran, D. S., & Gibson, C. K. (2008). A Framework for Developing an Effective Mission Statement. Journal of Business Strategies, 25 (2), 27-39. Dunphy, D. C., & Griffiths, A. (2003). Organizational Change for Corporate Sustainability: A Guide for Leaders and Change Agents of the Future. Victoria: Routledge. Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia: South-Western Cengage Learning. Morris, S. (2005). Business Finance Professional Manager. Welwyn Garden : Select Knowledge Limited. Murray, P., Poole, D., & Jones, G. (2006). Contemporary issues in management and organisational behaviour. South Melbourne: Thomson Learning. Noya, A., Clarence, E., & Craig, G. (2009). Community capacity building : creating a better future together. Paris : OECD. Pranee, C. (2010). Marketing Ethical Implication & Social Responsibility. International Journal of Organizational Innovation, 2 (3), 6-21. Walker. (2008). Marketing Strategy: A Decision-Focused Approach. Hawthorn: McGraw-Hill. Zwikael, O., & Smyrk, J. R. (2011). Project management for the creation of organisational value. London: Springer. Read More