TK Klaveness - Coursework Example

?MBA4641 TK Klaveness Case QUESTION COMMENTS What are ic family business issues that all family firms must face? They family firms may have to face problems related with thinking and ideologies that may arise out of age difference, their personal choice, their education levels and they way they perceive their business to be. In the given case, the Torvald Klaveness or TK had many children from his two marriages. There were future grandchildren too which also increased the family number. So, in such a huge family matters related with share and dividends becomes obvious. 2. What insights can you gather on how family enterprises compete and think differently? (Compare the family business to the non?family owned business). There are certain inherent traits that rare seen in the business family enterprises compared with the non business enterprises. The business families will be found to be always engaging in increasing their interests’ specially the shares in the company. They will be found to be concerned about their family shares too. This may not be seen on non business families at the first sight. As in the case study, Tom Erik was seen to be concerned about the future of his two daughters. Same was seen in case of the two sons of Trond named Morten and Jan as they were quite young and he was anxious about their inheritance. Though the family was well related it seemed they were more eager in protecting the wealth of their individual shares. 3. What are the key issues that lie ahead for the Klaveness family and the Group? (think in terms of family, ownership and strategy) Firstly, there was the issue of choosing the right heir for the company. There were differences between tom Erik and Trond Klaveness. They had different business approaches and personalities. Their leadership styles would vary accordingly. The issue was if only one was chosen as the leader, according to the company guidelines what would happen to the rest of the family members. There were issues related with the off springs of the two sons of TK , about how they would contribute to the business affairs. Also the female members of the family were showing their interests in the family business. And Secondly, in terms of ownership, the family was at a fix of how much shares to be allotted. In terms of strategy there were differences between the two brothers about retaining the company legacy and passing it to the next generation intact. While Trond wanted to change the shareholders agreements. 4. What is your diagnosis or interpretation of the situation they face? The family was not able to form a single conclusion where they would arrive at a single consensus. There were many members like Trond who had different aspirations and did not wish to remain with the company for ever. The issues related with share allotments and succession complicated the matter more as there were differences in ideologies between the two main members of the family. 5. What should Trond propose at the August 2002 meeting? At the meeting of 2002, Trond should propose that a proper family meeting be announced that would be mediated by the third party council. This would help to bring uniformity in the discussed issues. 6. How should he and the family proceed? Trond will have to proceed in a way so as to retain his father’s legacy and also address his own personal goals. He has to maintain a share level in the company that would benefit his sons who were quite young for inheritance in the company. 7. From your cultural perspective and your family experience, what recommendations would you offer the Klaveness family? The Klaveness family was a huge and an extended one. They needed to spend more time with each so s to prevent the formation of any rivalry between them. Money is important for any family to run but it is the people who hold the family together that are essential to continue a huge business empire like the Klaveness’. Tetra Pak Converting Technologies Dr. Kristian J. Sund Read the case and consider the following questions: 1. What were the characteristics of project organisation in CT? In CT, project organization was very much oriented toward the fulfilment of the project. There were changes that were introduced in the prevailing working culture. The company was not decentralized in its previous form. In the new organizational set up there were the traditional line-of-command structures that were organized with the functional units, which were in turn subdivided into smaller, technical departments. Line managers focused more o their line goals. In the new system, the functional units were removed and each employee was placed under a mentor with different sets of assignments. These features led the company to develop a decentralized flat project organizational structure 2. What advantages and disadvantages might be associated with having such a strongly project-based organisation as CT? The advantages of having such project based approach would be that it would help the employees and the managers to focus completely in their ultimate objectives that would be the fulfilment of the project. There were no particular emphasis on the intermediary functions like reporting to a senior etc. this would save time and resources of the company. However the disadvantages can be that by overlooking the intermediary functions the company may be repeatedly doing the same mistake and thus may fail in its job. With less guidelines and instructions there can be chances of errors. 3. In CT vital knowledge and competences are highly distributed. How is coordination achieved in the firm? Though vital knowledge and competences are highly distributed in the company, co ordination was maintained between them by forming the project leadership network. The competence networks covered the key technologies that were involved in the complete converting process like the process of lamination, in printing, in automation etc. In these networks most of the people were connected with one another. This helped the people to know the competencies and skills of the other person before stating any new phase in the project programme. There were facilities for cross talks where in the projects were discussed and more competencies that were needed evaluated. The network leader worked more like a mentor. This helped the people to develop a strong sense for technical knowledge and gaining competencies in the area. 4. In CT a cooperative attitude appears to prevail. How can this be explained? Identify contributing factors or circumstances. A cooperative attitude was introduced in the company to help recover its depleting market condition. Firstly, the functional units were removed because of which the people were placed under temporary projects under different sets of technical mentors. However these technical mentors maintained a free, open form of relationship with the people. The people were given the freedom to choose their own mentor so as to improve their competency levels. The mentor often spoke with the project leaders about their employees, not only inquiring about the specialist competences, but also regarding their capacity to use these knowledge as well as their social competences. 5. What are the roles and responsibilities of managers in CT? How do they differ from what is usually the case in other more traditional forms of organisation? In CT there were mangers and leaders but they did not consider themselves to be the bosses. In other traditional form of organizations were the information use to be passed on from the levels of the hierarchy, in ct every employee was free to access the sources to get his relevant information. Very little opportunistic feeling was seen in the company as people generally shared their knowledge and their information. This is different from the more traditional forms of organization as constant clashes and in fights is seen there. Thornton’s Dr. Kristian J. Sund Read the case, and consider the following questions: 1. When considering the over?all market for boxed chocolates, what would you say was the business?level strategic position of Thorntons, in terms of the "strategy clock"? Justify your answer. The strategic position adopted by the company with respect to the strategic clock model is fully justified by the fact that the company had adopted several features to enable it to maintain an edge over its competitors. Firstly, it maintained its hold on offering fresh products to its consumers. Secondly, it introduced the system of sending messages written on icing on its gifts and products. The recipes and its manufacturing processes were not disclosed to the outside worlds which helped t he company to maintain its originality. It catered to the people’s likeness for sweet products in UK. It had included the best of the recipes in the world by hiring some well known people from the cooking world. The company was also involved in mergers with us and French companies to boost its supple chains. It also diversified its product range by including deserts and ice creams that were marketed under the Thorntons brand. These features helped the company to maintain the competitive edge and also recover its declining revenues. 2. Describe, in your own words, Thorntons’ pattern of strategic development: a. From the company’s origin to 2000, b. From 2000 to 2003, the turnaround phase. a. The company began in the year 1911 by a person named Joseph Thornton who was later joined by his two sons. The family started their business of manufacturing confectionaries in UK. The company received a boost when it introduced its product named Special Toffee in the UK market. Later to know the position of their recipes and confectionary designs, his sons visited Basle School for Swiss Chocolatiers in Switzerland and hired its student Walter Willen. He made the original recipes for the Continental chocolates of Thorntons that became the highest selling specialist assortment for chocolates in the UK. Seeing this boost the company began to expand their business outside UK and opened their stores in Europe and Australia in 1982. The company received good response there which initiated them to explore the large markets in USA. But the market response there was not very encouraging. Later the company spread their acquisition in Europe by acquiring Gartner which was based in Antwerp and was a specialist of high-quality chocolate along with its fresh cream products. The company used to make a sale of ?1.7m mainly by its patisseries. After this acquisition, Thornton began distributing its (Gartner’s) products using its own retain chains as well as s shipping its products to Belgium. Following this, Thorntons merged with two confectionery retailers of French origin, Candice-Martial SA and Societe Nouvelle de Confiserie (SNC) for ?8.65m. The French units and UK factories contributed with each other for supplying to each other’s markets. Despite of all these, Thorntons were unable to capture the European markets and in 1993 the company incurred a huge loss of ?1.8m for its French initiative. The market share of Thorntons as a leader for boxed chocolate remained constant at 8% during 1999-2002. To recover from this loss, the company targeted its distribution channels to increase the number of outlets to 507 by 2001. In 1998, 132 new products were introduced and the company earned revenue of over ?5.5m. It formed alliance with Marks and Spencer and introduced new products in the country. b. In 2002, the company was in a deplorable condition to recover even the pre-tax profit level of ?10.5m. So, the new CEO of the company Peter Burdon declared that the company would be talking new strategies. They would now focus more on marketing and advertising and rebuild its brand image. The three phase turnaround plan for 2000 to 2003was formulated to improve the performance level. Still the results were poor during Easter 2000. Changes were then made in its positioning strategies. This showed an increased in the stock levels in 2001. The trend continued in 2002. The early results of 2003 showed improved performance levels but the sales were affected by the hot temperature of the season at that time. This once again led the company sales level to decline. Thus it can be said that the company which had become the pioneer of boxed chocolate all over UK and majority of Europe with its recipes and strategies was not able to retain its position because of poor marketing tactics. The company as was observed by the new chairman focused more on diversifying its product line without much emphasis to market the product. Many of its products had become duplicate products that were also reducing its popularity in the industry. 3. Perform a 5 Forces analysis of the boxed chocolate market from Thorntons' perspective, illustrating and emphasizing how Thorntons' strategy influenced the 5 forces of competition.? Potential entrants Thorntons was a market leader in UK for its boxed chocolates and other chocolate products. Special emphasis was laid on manufacturing its boxed chocolates. It entered into competition with rivals such as Cadburys and Nestle which also manufactured the boxed chocolates. The company was expanding its base in foreign locations outside UK. So there was a high chance of potential new entrants to come up there. Product substitutes To some extent Thorntons was a victim of its own product differentiation policy. The company was losing sales and in order to boost its sales, it began introducing newer products in its product line which created a clutter in the market. Similar products were being offered by the competitors such as Cadburys, Nestle etc. Also Thorntons was losing its sales in USA and France. So these factors can influence the substitute products to dominate the chocolate market over the company. Power of buyers Thorntons was basically a UK company. Also the nation celeb rated festivals like Easter and Christmas during which there was a huge consumption of sugar and chocolates. The primarily sales for the company was made during these celebration times. Besides, the UK per capita consumption for confectioneries is well known in the world. In the UK market the chocolate confectionery is seen as a comfortable affordable treat which also formed a part of their snacking or as a gift. So we can say that the buyers have considerable influence in UK in the Porters 5 forces model. Power of suppliers Suppliers also enjoy a strong position in the company performance. The suppliers provided the non – core ingredients like the solid chocolate bars and basic liquid chocolate products to the company. The distribution chain was targeted to help in its expansion strategy. Competitive rivalry Thorntons face competitive rivalry from confectionary companies such as Cadbury’s, Nestle etc. The company faced success in UK but was not very successful in countries outside UK such as in USA and France. It had formed mergers with some companies but it was not very profitable. Besides poor marketing tactics and major influence to increase its product line led many of its products to be withdrawn from the market. This poor performance of the company can encourage the competitors to become potential threats for the company. 4. In 2000 a turnaround was initiated by the CEO. How successful was this turnaround? What were the successes and failures of the turnaround? In order to bring the company back on its tracks, the next CEO of the company had initiated some moves. The new CEO said the in its past the company had focused more on diversifying its products with less emphasis on its marketing strategies. He said that it is essential to build the Thorntons brand once again. So, the three phase turnaround plan (2000–2003) strategies were devised. There were both success and failure that were seen after this implementation. The first phase of the plan was business stabilization that was achieved in 2001 when company experienced improved stock levels as well as reductions in its selling and distribution levels. Thorntons developed different types of branded desserts, sponge puddings, cakes etc under its ‘Thorntons Pure Indulgence’ brand for selling by the supermarkets. They also targeted pubs and restaurants. Similar increase in sales was observed in 2002 and 2003. Before two weeks of Valentine’s Day in 2003 the company had sold 350,000 boxes of chocolates that included 70,000 boxes of Eden that was directed towards the younger women with exotically named flavors such as the Forbidden Fruit, the Grand Passion and All About Eve that came with chic packaging. The Gross profit margin had increased as its new products were priced in order to encourage its customers and the poor selling products were withdrawn. Burt this trend was disrupted by the hot summers in June 2003. The CEO was of the opinion that the long term success would be achieved by selling its goods from multiple retailers as branded products. 5. How appropriate was it for this company to adopt a planned approach to its strategic development during 2000–03, as opposed to a more emergent approach? The company was falling in its market shares after it had ventured in countries outside UK. It failed miserably in France. The company mostly benefited from the seasonal sales like during Easters and Christmas. But in the other parts of the year it had to increase its revenue by selling other relevant products like ice creams. There were problems regarding product quantity, advertising strategies, product launches etc. still the revenue did not show the upward trends which led the new CEO to introduce the three phase turnaround plan in 2000-2003. The emergent approaches in the company might not have benefitted the company as the new strategy had done when it boosted sales in 2001 and 2002. So it was a safe approach for the company to adopt a planned approach instead of a market guided one. 6. Identify and briefly discuss Thorntons core capabilities. Thorntons were able to dominate the chocolate market in UK because of its core specialities. There were several manufacturing and selling techniques that were developed by the company which helped it to establish its brand in the market. The specialities are listed below. 1. The company laid special emphasis on its boxed chocolates by using only fresh quality ingredients. These were done in –house to protect the company recipes and techniques. The core products such as solid chocolate bars and liquid chocolate that required a capital intensive process were supplied by outside suppliers. The company outsourced its packaging responsibility to outside suppliers. 2. The company laid special importance on the freshness of their products. The chocolates manufactured by the company did not use animal fat in their products to increase the shelf life. The company believed that its consumer should continue to experience their fresh products. The company did not compromise with the quality of their distribution areas either. A huge proportion of the products for Christmas are manufactured several months prior to the celebration for maintaining the freshness of the products by using chilled storage. Thorntons chocolates are always coated in chocolate and are not moulded. Their hand-made look makes the packaging process of the boxed chocolates less open for automation which is more as seen in the case for moulded chocolates that are more uniform in their shape and size are produced by rival companies like Cadburys. 3. The products offered by the company had strategically included the facility where in its customers could avail of having personalized messages written over the chocolate by icing on gifts such as Valentine’s Day chocolate hearts and the Easter eggs. The customers could also avail to get their gifts gift wrapped by paying an extra amount. This helped the company shops to become a part of high street fashion in the UK. The layout the designs of the company shops is altered frequently after the modifications have been developed and evaluated at the mock shops of the company at Derbyshire and the south of England before it is introduced to the high street people. The company also uses several franchisee outlets to increase its sales. There were reports were these outlets had occasionally prompted the company expressing their concern over the quality of some outlets or when the company occupied a major location or a location which they thought to be an inappropriate. 4. The boxed chocolate of Thorntons followed a seasonal trend with 35 per cent of its sales made during the seven-week period prior to Christmas, a further increase of 10 per cent during Easter that included a huge bulk of three million Easter eggs. The seasonal demand in packaging staff required an increased number of casual workers that increased their efficiency consequent. Seasonal demand also required the hiring of temporary staffs in their retail outlets in order to achieve a sales pattern which within a couple of days could increase tenfold. Ideally, the company had sales of ?10m chocolate within the last 72 hours for Christmas trading. Sometimes, the company had also sold ice cream that were either self-manufactured or were bought in which was seen as an attempt in order to offset the impact of low or off-season chocolate sales. 7. Recommend a long term strategy for Thorntons, in terms of strategic direction and product portfolio. The company needs to focus on its marketing strategies such as advertising campaigns. The product portfolio can be extended to non sweetened products in the consumer markets by including wide ranges of ingredients all over the worlds. Before venturing in to a new country the company should explore the food habits and tastes of its people. This would help the company to stop financial disasters as it happened in France. The company should maintain its innovation strategies and rather focus on the existing products. It needs to make the consumers more aware about its new product launches. Tie up’s and mergers can disrupt its originality in the long run so the company should try to remain an autonomy. It should also devise strategies to enter the daily house hold instead of being a seasoned brand that would encourage its products and increase its customer base too. It should increase its franchisee base and distribution networks in its operating regions. Read More