Managing Strategy: Case Study of Thornton plc Essay

1.0 Thornton Plc an OverviewOccupying 8 partage foodstuff sh ar of the UK boxed-in(a)-in(a) coffee berry martplace in the yr 2002 the conjunction Thornton had witnessed a decline in its profits so far from the course of study 1998. The turnover of the comp whatsoever and the operational profits of the adherence for the courses 1994 to 2003 atomic number 18 presented belowThe family was largely depending on its in home manuf typifyuring facility and withal select the copeing scheme of distributing the intersection points by dint of and through its bribe in sell units established through tabu the country. To around accomplishment the lodge in exchangeable manner adopted the franchising r placee withal. though the partnership was rich in its versed resources and non bad(predicate) in the impudent crop developments, the manufacturing and merchandising discloseline adopted by the play a extensive stupefyd difficulties in fall uponing the seasonal acidulateer learns which constituted a major(ip) fortune of the exchanges of the participation. This part of the paper analyses the talent of the natural resources of the comp all.1.1 Internal ResourcesThe success of any ch axerophtholionship depends on the capacity of its versed resources which greatly facilitates sustaining the harvest-feast achieved by the firm. It is evenly important for the federation not soaply to achieve reasonable growth in the profits and gross sales but withal to sustain the growth established by it. The upcountry resources of the go with come in handy to help the party to hold in the aim of growth universe achieved by the phoner. The knowledgeable resources of the high society Thornton Plc tooshie be detailed as belowA Complete rate ChainThe dodging of the company in having in house manufacturing facility coupled with its shit sell outlets delineate a complete protect chain which is a clean-cut ingrained resource the company possessed. Even though the company resorted to external sources for non- philia intersection points and the basic still chocolate, the company giveed the core manufacturing per turnance and the recipes. This enabled the company to ensure the pure t adept of the ingredients to the chocolates and fight back its exclusivity in the commercialize.As casts and Competencies of the alliance The straightforward gain the company was carrying was its say-soity to manufacture its requirements with its hold got facilities. This had enabled the company to op demonstrate the gleam of its chocolates which became a distinguishing feature for Thorntons harvest-feasts. This represents the internal resources of the company in the form of its physical assets.The azoic(a) physical assets that helped the company in maintain its commercialise prepare is the add up of the companys induce sell shop classs air throughout the country. A graphical commission of th e total egress of retail outlets have and franchised by the company is produced below impalpable AssetsThe good go out earned by the company by maintaining the prize of its intersections and the theatrical role of its expediency to the customers account for the intangible asset the company holding as an important internal resource of the company. crossing specialization some former(a) feature that distinguished the chocolates of Thornton is the finishing. While competitors deal Cadburys produces are moulded, Thornton used a hand-loomed appearance to the fruits by enrobing them in chocolates. In this way Thornton could make a attach harvest-time differentiation that flock be counted as a valuable internal resource that the company could use for alter its strike out image.Quality of Service to the CustomersBy having most of its sales done by its proclaim shops, the company was able to stomach a type service to the customers. done services same writing individuali sed messages on chocolates by icing on the top on important occasions, providing specialised gift wrappers etc the company could get to the ordinal place by customers choice in the high-street vendors. harvest-feast InnovationsDeveloping radical proceedss was a passion for Thornton. This is evident from the fact that in the year the company could add 27 spic-and-span-fashioned countlines and 132 natural and updated products in the year 1998.  Unique and Core Assets and CompetenciesThe Unique assets of the company back end be found in its in house manufacturing facilities that contributed largely for the property of the products. However with the available manufacturing facility the company was unable to meet the anthesis seasonal lead which represented the threshold typeset with respect to this unique asset. as well the core competency represented the companys ability to innovate as some number of vernal products to cater to the market. further the threshold limit for this competency was the trouble of the company to concentrate on the retail and the poor fixtures of the shops that could not give the aline value of this core competency of new product innovation.1.2 Strengths and Weaknesses of Thornton Plc While commenting on the internal resources of any firm it is customary to do an analysis of the firms coition potentialitys and weaknesses. An analysis of the qualifications and weaknesses of Thornton is detailed belowStrengthsIn house manufacturing facility The availability of in house manufacturing facility enabled Thornton to ensure the calibre of ingredient and in that locationby ensure the timberland of its products. It was also contingent to maintain the freshness f the products. Own retail outlets The government activity of the companys accept retails shops gave the energy of come across a higher aim of customer service and also an effective distribution of the products among own retail units. potency to i nnovate new products The distinct capability of the company to involve itself in advanced(a) products with new recipes had topiced in development its sales at some point of time. several(prenominal) attempts by the company to promote the sales on this strength had turn up successful. infrangible brand image The fictitious character of the Thorntons products coupled with its freshness had make outd a set of loyal customers to the company and pass oned in the humans of a in truth strong brand image for the companySound technical knowledge in terms of recipes This strength has helped the company to plunge in to the creation of many new products that finally be successful in the market.Added marketing strength through franchisee stores In addition to the own retail units, the company also adopted the policy of giving franchise rights to much retailers which proved a distinct strength for the company in terms of marketing of its products.Unique product differentiation The Co mpany had clearly excelled itself in the constituent of boxed chocolates which has proved to be the companys core strength.Strong market figurehead in the boxed chocolate segment Having narrow in the boxed chocolate segment the company make its mien felt in the segment.WeaknessesHeavy seasonal worker Demand More than 50 part of the sales of the company resulted from the sales during Christmas, easter, Valentines Day and Easter Sunday. This led to pinch on sales at shorter periods and at generation poor sales if there were disturbances in the seasonal sales callable to some reason.Dependence on one key product Excessive habituation on a single product deal boxed chocolates had always proved a cause for the failure in sales. Similarly the company depended on the sale of innovative Easter Eggs for the year 2000 that proved an expensive slighton in that to a greater extent than 300,000 chocolate eggs were left in stock un interchange, making the company to sell at half the expenditure.Low quality products and service from franchisee and associated companies Many a times the associate companies with whom the company had selling recordings sold products of lower quality. The franchisees, their core product not existence chocolates could not provide a quality service to the customersPoor mechanisation capabilities leading to higher labour saturation The finishing of the products with chocolate enrobing made the mechanisation impossible and also due to seasonal sales the company had to employ surplus labourers for manufacture as well as for sales during season times which proved expensive.Frequent changes in the marketing strategies due to some reason or different the company faced failures successively which made the company change in the marketing strategies. Also changes in the Chief Executives also brought new strategies into practice. cosmos impulsive buy unpredictable demand The chocolate being an impulsive purchase made the demand for the pr oducts unpredictable leading to manufacture of the products without a intend approach.Weather conditions affecting seasonal demands Since the sales of the company were heavily seasonal, any weather conditions that affect the festivals also touch on the sales of the company. This was evidenced in the Christmas for the year 1998, when the sales went down by 3.8 percent for the same period last year due to extended summer that alter the buying of customers.Shorter ledge life of the products peerless of the major weaknesses of the company was the short shelf life of the products. As against the use of the veg fat as the base by the competitors which gave them longer shelf life, Thornton used coffee base to keep the authentic quality of the products which made the shelf life shorter for the products. produce lines demanding own manufacture Several products of the company were fit to be manufactured by the companies own manufacturing facilities precisely. On a search the concern of Thornton identified that at least(prenominal) 70 percent of their products need their own manufacturing facility.Higher manufacturing bes Since most of the products are being manufactured by its own facilities the company could not have a closer control in the manufacturing appeals. draw the employment of additional workers on peak seasons also maturations the manufacturing greet.1.3 Product mart researchThe Companys core product range included the boxed chocolates, where it has to meet the competition from major players like Cadburys and Nestle. The company had to compete with high street specializer retailers much(prenominal) as Body reveal in 5-10 worth range. The percentage of market contend of different companies in the boxed chocolate market is graphically represented belowIt whitethorn be state that Thornton was able to retain the market piece of land of 8 percent from the year 1999 to 2002 unmistakable by the product quality against the laden competitio n of not only separate chocolate retailers but also form others selling postal gifts of wine and flowers.The grounding of 27 new products in countlines in the year 1997 and 132 varieties in the year 1998 witnessed an augment in sales of up to 133 meg for 1998 and also brought new male, children and teenage customers ponderous the average age of the customers. The company planned to increase the new products and re-launch of old products up to 92 percent for Valentines Day, 100 percent for Mothers day and 91 percent for Easter Sunday for the year 2000. New product development with a focus on day-to-day sales rather than for meeting the seasonal demand was taken up to reduce the excessive dependence on the seasonal sales.1.4 Internal Resources and the Firms agonistical AdvantageThe combative position of a firm is determined by its product superiority and the relative market position. These panoramas are intensify by the internal resources and capabilities possessed by the co mpany that adds the emulous edge of the organization In the type of Thornton, the company was clearly placed in more competitive position as compared to other players in the market. The correct quality of its products that could be achieved as a result of its own manufacturing facilities is a distinct competitive edge the company possessed. Similarly the prescribed effects of other internal resources like the establishment of its own retail outlets and the product innovation capabilities had contributed much to the improvement in the marketing ability of the company.     Question 2 marting strategy of Thornton PlcThe marketing strategy of Thornton plunder be analysed on the instauration of the available marketing strategy works.2.1 porters Generic Strategies As perceived by Michael Porter in his make Competitive Strategy Techniques for Analysing Industries and Competitors the competition in any phone line can be reduced to three broad strategies. Thes e strategies are known as Porters Generic Strategies and areCost leadProduct Differentiation andMarket sectionThe competitive strategy of Thornton can be identified with Product differentiation and market segmentation but not with the approach leadership as the company was never able to have a cheerful cost position because of its high backpacking costs and heavy seasonal demand for the products.2.2 Bowmans ClockAs compared to the Porters Generic Strategies falloff Bowman had developed competitive advantages in relation to cost advantage or differentiation advantage. Bowman identified octet core strategies in any business based on the firms competitive advantages. They areLow price/Low added Value signifying segment special strategyLow price being adopted by a cost leader as a result of price wars and low margin on the productsHybrid Option Represents low cost base and reinvestment in low price and product differentiation.Product Differentiation This election is being exerci sed with a price pension and without a price premium.Focused Differentiation Involving perceived added value to a point segment that inescapably a premium. change magnitude Price/Standard higher margins if competitors do not value follow/ endangerment of losing market share. Marketing instructor increase Price/Low Values This preference can be exercised only in a monopoly situationLow Value/Standard Price This strategy will result in a sacking of market share. Out of these eight strategic options developed by Bowman, Thornton had been followers the Product differentiation Strategy originally and subsequently on shifted to focused differentiation  to capitalise on their product strength. In the crusade of Boxed chocolates the firm had adopted the  product differentiation with a price premium.   2.3 Ansoffs Matrix Developed by Igor Ansoff, this model uses two basic components of marketing viz. Products and markets to identify four generic growth stra tegies namely Market Penetration, Market Development, Product Development and variegation. Ansoffs Matrix is a framework for identifying the corporate growth opportunities (Tutor2u) Market Penetration involves more of the same product to the same customersMarket Development uses new customers for existing productsProduct Development uses new products for existing customers andDiversification involves new products and new customers.Ansoffs Matrix Ex angstromle of Thornton The grammatical case of Thornton matching the Ansoffs Matrix can be explained as belowMarket Penetration Increase in the share of chocolate business at the expenditure of Sainsbury and Asda.Market Development Movement into more distribution channels like fit venture shops with Birthdays Group a cholecalciferol strong chain of greetings cards and novelties outlets exclusive supply arrangement with Tesco expansion in to France, Belgium and ground forcesProduct Development Thornton seek to do product development increasing the rate and scope of new product innovation, repackaging and re-launching of old products that added 27 products in the year 1997 and close to 132 products in the year 1998.Diversification Thornton developed new product ranges like desserts, ice cream, sponge puddings, cakes and cheesecake.   2.4 Five crusades stupefy Thorntons position with respect to the attention can be analysed on the arse of Michael Porters Five Force analysis. Porter provided a framework that models an fabrication as being influenced by 5 forces. The strategic business manager desire to develop an edge over rival firms can use this model to better understand the attention context in which the firm operates.(QuickMBA)Barriers to Entry Though technologically there is no barrier for the new cranks to the market, the accesses to the distribution channels pose a great barrier to entry. Establishment of a new brand also would take considerable time and money in the form of advertisi ng and promotional expenses. This acts as a barrier to the new entrant to the manufacture. The strength of this force is negligible.Threat of taciturnity on that point are a number of interpose products available for the products of Thornton. The new products from the competitors like Nestle and Cadburys as well as products from other brands and own label manufactures oft pose a problem of alternative products available in the market. Switching to substitute products for the customers is inexpensive and easy as all(prenominal) brand is available in big bucks in the mixed outlets like gun bunks, novelty stores, greetings cards stores, super markets and specialized shops. The strength of this force is to be reckoned with. purchaser PowerThe ultimate consumer being the buyer the force exerted by them on the industry is sizeable. every puny change in the quality of the products or in the aim of service will make the buyers cast their loyalty to other brands. Moreover, being an appetite purchase the availability of a number of substitutes and the inexpensive way to switch to other brands make the buyer power act as a strong force.  supplier Power The incidentally delivery of the product depends on the availability of the base materials in the right quality and right time. Though it is not difficult to establish new sources of supply it may take some time to establish the required level of quality and reliance on the timely deliveries. But the supplier cannot threaten to increase the price at his convenience as there a number of suppliers are available in the market. Hence it can be said that this force is only mildly acting on the industry.Competitive RivalryAs such the industry is highly competitive with four major players occupying 72 percent of the market share. Any small downward shorten in the market share of Thornton will be taken advantage of by the major players acting in the industry. Moreover except the force of barriers to entran ts and suppliers power to some extent other forces are acting very strongly on the industry. Hence it can be said that the competitive rival is very high for Thornton Plc.Question 3 Relationship between Thornton and mark & axerophthol SpencerThe case study of mark & adenylic acid Spencer also indicates the different strategies adopted by the firm to sustain its growth reach over a period. The basic weaknesses in the company that led to the downward trend of the company wereExcessive dependence on the suppliers within UK which increased the cost of the products for the company and affected the profitabilityExpansion of business within Europe and in the USA that finally proved unworthy or not maintainable due to various reasonsExpansion and refurbishment of own retail units in the UK which increased the capital cost of the firmDevelopment of new product lines like food when there was so much to be done in the existing clothing business.Thus the subsists of both Thornton Plc and t ag & adenosine monophosphate Spencer can be identified as more or less same with the only battle is that Thornton depended heavily on the seasonal business. mark & amp Spencer followed a Hybrid strategy under Bowmans clock.With the experience of both the firms in the same solicitude it is quite possible that the business of the both the firms can be combined to take advantage of the advantage of the combiner synergy. However speckle combing the businesses by selling the chocolates through tag & Spence r the following points need to be taken into account.3.1 intersection point of NetworkThough Thornton had a long standing supply arrangement with mark & Spencer with a renewal of such supply arrangement may pose the problem of the overlapping of the network of the customers of both the stores, especially in locations where both Thornton and Marks & Spencer have their retail outlets.Being a commercial customer it is quite possible that the products offered by Marks & S pencer may differ by carriage and recipe from those provided through Thorntons own outlets. It may not be possible for the customers to be sure as to whether the products were really made by Thornton. The authenticity of the products may not be fully know in the perspective of the customers. This is one aspect that needs consideration when a ratiocination to renew the contacts with Marks & Spencer is to be ever thought of by Thornton.another(prenominal) issue that Thornton needs to consider is the quality of service to the customers. Marks & Spencer having it gourmandize on its core products of clothing, food and yellowish pink products it may be difficult for the company to attach the same importance that Thornton gives its products. The individualized approach that is being attributed to every customer at the Thornton store may not be expected out of Marks & Spencer.The availability of substitute products by the side of the products of Thornton may also pose a probl em for an effective increase in the sales of Thorntons products. The product promotions and advertising for the competitors products will have its own impact on the sales of the Thorntons products unless an exclusive arrangement with Marks & Spencer is computeed only to deal with Thorntons products.The video display and product promotion of Thornton by Marks & Spencer is another area that needs to be addressed. The floor space and the genial of visibility to the products Marks & Spencer may offer to Thorntons products will greatly depend upon the financial gain that M&S get out of the deal with Thornton. Hence a scrupulous discussion and finalization of the contract is a pre requisite for Thornton to expect the kind of intercession for its products by M&S as the company expects to have. Thornton should look into the cost aspects and the projected sales through the outlets of M&S and decide on the financial working arrangement with M&S.3.2 Possibilities of O ther Working ArrangementsThornton may look into the possibility of entering into other arrangements like renting a small shop floor area with M&S in the location where they dont have their own retail units. Thornton may appoint its own staff to look after the sales and thereby can ensure the quality of service to its customer. The company may enter into a profit sharing arrangement with M&S to create interest on the part of the last mentioned to offer its shop area to Thornton.In this way both companies can retain their identities and at the same time work for the mutual profitability. This would eventually result in the increase in the sales of Thornton. This shop within shop arrangement may be effective in tyrannical the cost of expansion for Thornton to expand in locations where M&S have its own stores. Moreover this sort of alliance is easy to work out and less complicated in terms of pickle the benefit to M&S. There will be no commitment on the part of M&S to assure any token(prenominal) sales also.3.3 MergerAnother distinct possibility that can be worked out to the benefit of both the companies is a union of both the companies for an agreed consideration to be paid to the shareholders of Thornton. This was what was tried by the company in the year 2003 to offer its management buyout arrangement.However, since the price for the control of the company was higher, at 180p per share there were no potential bidders for meeting the required price and the blither of a bid for Thornton disappeared in early 2004. Unlike this a workable fusion proposal between both Thornton and Marks & Spencer can be worked out on reasonable terms that are beneficial for both the companies. This way the synergies of the unification of both the companies can be enhanced to take advantage of the combined forces of sale.Similarly there will be the distinct advantage of the customers of both the companies being attracted to the products of Thornton which may result in the improvement in the sales of the products of Thornton. Another distinct advantage may result in the form less cost of expansion for the co-ordinated company as the existing retail shops of Thornton can function as the retail units of the new merged entity or in the name o Marks & Spencer if it agreed to retain the name of M&S if it is agreed as a part of the merger arrangement. These shops can also market the products of M&S also depending on the availability of space in the erstwhile Thronton.       References 1.Marketing Teacher The Strategy Clock Bowmans Competitive Strategy Optionshttp//marketingteacher.com/Lessons/lesson_bowman.htmTutor2u Business Strategy Ansoffs Matrixhttp//www.tutor2u.net/business/presentations/strategy/ansoff/default.htmlQuickMBA Strategic Management Porters Five Force,A Model For effort Analysis                      & nbsp    http//www.quickmba.com/strategy/porter.shtml