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The strategic position of Thorntons PLC in 2003 - Essay Example

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Question 1. Analyse the internal resources of Thorntons by identifying and classifying the activities and resources the company employs to produce and market its products. What are the firm's strengths and weaknesses
The operation of Thorntons Plc is directly affected by the different decision that managers establish and execute in response to the factors and variables in the external environment…
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The strategic position of Thorntons PLC in 2003
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Download file to see previous pages The internal performance of Thorntons Plc is multi-faceted, consisting of various aspects which are inherent in its operations. An internal analysis considers the company's culture, image, organizational culture, key staff, access to natural resources, position on the experience curve, operational efficiency, operational capacity, brand awareness, market share, financial resources, exclusive contracts, and patents and trade secrets. Simplifying all these generates three main considerations-resources, capabilities, and core competencies. Thus, for decision makers inside a firm, the main challenge is the identification, development, deployment, and protection of resources, capabilities, and core competencies (What Tools Are Useful in Assessing the Internal Environment n.d.).
In business terms, resources refers to the inputs that goes into the firms production process such as capital equipment, skill, individual employees, patents, finance and talented managers (Dess, Taylor & Lumpkin 2005). Resource can be classified as tangible, intangible, or organization capabilities. The resource-based view of a firm emphasizes that a "firm can earn sustainable supra-normal returns if and only if they have superior resources and those resources are protected by some form of isolating mechanisms preventing their diffusion in the whole industry" (Resource-Based View of a Firm 2007). Furthermore, these supra-normal returns are possible only if resources are valuable, rare, imperfectly imitable, and non-substitutable (Dess, Lumpkin, and Taylor 2005).
Tangible resources are relatively easy to identify. This category typically includes the physical and financial assets used to create value for the customer. In order to fully identify the tangible resources of Thorntons Plc, this report will divide them into financial, physical, technological, and organizational resources.
1. Physical
Maintaining its reputation as one of the classic makers of indulgent confectionery, Thorntons Plc continues to use a larger proportion of manual processes in its production system. In the industry where almost all the manufacturing processes are mechanized, Thorntons take charge of the quality of its products by being fully different from its competitors. In terms of physical resource, the company becomes remarkable because of its minimal automated processes (Jennings 2003).
Thorntons business is also highly dependent on its distribution channels specially its own stores. It should be noted that the company is recognized because of the number of its outlets in the whole United Kingdom (Jennings 2003). These stores have become instrumental in consistency of the services received by each customer.
2. Financial
During 2003, Thorntons Plc reports total assets of 114.108 million, 27% of which is in liquid assets. Cash comprises a meager 14% of the current assets or 4.5% of the total resources. In terms of capital structure, debt finances 62.30% of its total resources while equity financing accounts for the remaining 37.7% (Thorntons Plc Annual Report 2003). It should ...Download file to see next pagesRead More
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