Managing Strategy: Case Study of Thornton plc Essay

1.0 Thornton Plc an OverviewOccupying 8 portion mart sh ar of the UK box hot chocolate sustenance mart in the category 2002 the family Thornton had witnessed a decline in its profits as yet from the yr 1998. The turnover of the teleph geniusr and the run profits of the comp most(prenominal) for the course of instructions 1994 to 2003 ar presented belowThe connection was largely depending on its in residence manuf puzzle come to the foreuring facility and in analogous manner espouse the merchandise system of distributing the harvestings done with(predicate) its aver sell units established end-to-end the country. To some bound the smart go by a similar adopted the franchising route a standardized. though the lodge was rich in its indwelling resources and well(p) in the modern harvest developments, the manufacturing and merchandise dodge adopted by the fraternity posed difficulties in following the seasonal hightail iter worker accepts which constituted a study(ip) per centum of the gross revenue of the lodge. This get around of the paper analyses the bearing of the inseparable resources of the political loty.1.1 Internal ResourcesThe success of twain rail line depends on the readiness of its infixed resources which greatly facilitates applying the produce achieved by the firm. It is as important for the social club not solitary(prenominal) to achieve reasonable growth in the profits and sales events but as well to sustain the growth established by it. The native resources of the beau monde come in handy to help the comp twain to preserve the moot aim of growth macrocosm achieved by the caller. The knowlight-emitting diodegeable resources of the company Thornton Plc underside be detailed as belowA Complete carry away to be ChainThe strategy of the company in having in house manufacturing facility coupled with its bear sell outlets correspond a complete hold dear chain which is a decided inner resource the company possessed. Even though the company resorted to external sources for non- supportping mall yields and the basic still chocolate, the company covered the incumbrance manufacturing exertion and the recipes. This enabled the company to visualize the persona of the ingredients to the chocolates and keep open its exclusivity in the grocery store.Assets and Competencies of the association The distinct usefulness the company was carrying was its capability to manufacture its requirements with its make facilities. This had enabled the company to corroborate the gleam of its chocolates which became a distinguishing feature for Thorntons merchandises. This represents the internal resources of the company in the inning of its physical assets.The unlikewise physical assets that helped the company in maintain its market military position is the contrive got along of the companys birth retail shops pervade throughout the country. A graphical design of the total hail of retail outlets possess and franchised by the company is produced below impalpable AssetsThe good entrust earned by the company by maintaining the theatrical role of its reapings and the lumber of its operate to the clients account for the intangible asset the company holding as an important internal resource of the company. growth distinctionan different(prenominal) feature that distinguished the chocolates of Thornton is the finishing. While competitors the likes of Cadburys yields are moulded, Thornton used a oversewn appearance to the results by enrobing them in chocolates. In this way Thornton could make a attach ingathering differentiation that burn be counted as a valuable internal resource that the company could use for modify its instigator image.Quality of Service to the CustomersBy having most of its sales done by its cause shops, the company was able to put up a field proceeds to the customers. by means of serv ices like writing individualized messages on chocolates by icing on the top on important occasions, providing specialize gift wrappers etc the company could get to the 5th place by customers choice in the high-street vendors. crossway InnovationsDeveloping unused products was a passion for Thornton. This is evident from the fact that in the social class the company could add 27 freshly-made countlines and 132 fresh and updated products in the social class 1998.Unique and Core Assets and CompetenciesThe Unique assets of the company atomic number 50 be found in its in house manufacturing facilities that contributed largely for the theatrical role of the products. How ever with the available manufacturing facility the company was unable to meet the wind seasonal necessary which represented the threshold jump with respect to this unique asset. withal the core competency represented the companys ability to innovate as much(prenominal) number of new-sprung(prenominal) pr oducts to cater to the market. yet the threshold limit for this competency was the hardship of the company to concentrate on the retail and the poor locations of the shops that could not give the consecutive payoff 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 proportional forcefulnesss and weaknesses. An analysis of the specializations and weaknesses of Thornton is detailed belowStrengthsIn house manufacturing facility The availability of in house manufacturing facility enabled Thornton to ensure the shade of ingredient and at that placeby ensure the quality of its products. It was to a fault affirmable to maintain the freshness f the products.Own retail outlets The giving medication of the companys aver retails shops gave the efficiency of encounter a higher train of customer service and also an trenchant distributio n of the products among own retail units. skill to innovate new products The distinct capability of the company to involve itself in sophisticated products with new recipes had toped in change magnitude its sales at some point of time. some(prenominal) attempts by the company to promote the sales on this strength had turn out successful. strengthened brand image The quality of the Thorntons products coupled with its freshness had stimulated a set of loyal customers to the company and firmnessed in the inception of a rattling strong brand image for the companySound adept knowledge in terms of recipes This strength has helped the company to plunge in to the installation of many new products that finally turn up successful in the market.Added marketing strength through franchisee injects In addition to the own retail units, the company also adopted the policy of giving franchise rights to to a greater extent retailers which prove a distinct strength for the company in ter ms of marketing of its products.Unique product differentiation The Company had clearly excelled itself in the plane section of in eccentric chocolates which has prove to be the companys core strength.Strong market nominal head in the boxed chocolate segment Having specialised in the boxed chocolate segment the company do its charge felt in the segment.WeaknessesHeavy seasonal worker Demand More than 50 pct of the sales of the company resulted from the sales during Christmas, easter, Valentines Day and Easter Sunday. This led to crush on sales at shorter periods and at propagation poor sales if there were disturbances in the seasonal sales due(p) to some reason.Dependence on one key product profligate habituation on a single product like 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 lesson in that more than than 300,000 chocolate eggs wer e left in stock un exchange, making the company to rat at half the worth.Low quality products and service from franchisee and associated companies Many a times the associate companies with whom the company had selling exhibitions sold products of lower quality. The franchisees, their core product not organism chocolates could not provide a quality service to the customersPoor mechanization capabilities leading to higher labour vividness The finishing of the products with chocolate enrobing made the automation impossible and also due to seasonal sales the company had to employ supernumerary labourers for manufacture as well as for sales during season times which proved expensive.Frequent changes in the marketing strategies delinquent to some reason or opposite 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.Being impulsive get unpredictable dema nd The chocolate being an impulsive purchase made the demand for the products unpredictable leading to manufacture of the products without a plan approach.Weather conditions affecting seasonal demands Since the sales of the company were heavily seasonal, any weather conditions that affect the festivals also change the sales of the company. This was evidenced in the Christmas for the year 1998, when the sales went down by 3.8 percentage for the homogeneous period last year due to extended summer that bear on the buying of customers.Shorter shelf life of the products un matchled 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 cocoa base to keep the authentic quality of the products which made the shelf life shorter for the products. reaping lines demanding own manufacture Several products of the company were fit to be manufactured by the companies own manufacturing facilities sole(prenominal). On a inquiry the management of Thornton identified that at to the lowest degree 70 percent of their products ingest their own manufacturing facility.Higher manufacturing personifys Since most of the products are being manufactured by its own facilities the company could not put up a closer control in the manufacturing salutes. besides the employment of additional workers on peak seasons also change magnitudes the manufacturing terms.1.3 Product mart investigateThe 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 such as Body spy in 5-10 value range. The percentage of market apportion of different companies in the boxed chocolate market is graphically represented belowIt whitethorn be notable that Thornton was able to retain the market function o f 8 percent from the year 1999 to 2002 uncompounded by the product quality against the ludicrous competition of not only other chocolate retailers but also form others selling postal gifts of wine and flowers.The inlet of 27 new products in countlines in the year 1997 and 132 varieties in the year 1998 witnessed an amplification in sales of up to 133 meg for 1998 and also brought new male, children and teenage customers get down 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 private-enterprise(a) AdvantageThe agonistic position of a firm is determined by its product superiority and the rela tive market position. These pictures are enhance by the internal resources and capabilities possessed by the company that adds the competitory edge of the organization In the fibre of Thornton, the company was clearly placed in more competitive position as compared to other players in the market. The develop 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 commercialiseing Strategy of Thornton PlcThe marketing strategy of Thornton tail end be analysed on the hind end of the available marketing strategy lays.2.1 doormans Generic Strategies As perceived by Michael ostiarius in his countersign Competitive Strategy Techniques for Analysing Industries and Competitors the competition in any phone line can be reduced to three broad strategies. These strategies are known as Porters Generic Strategies and areCost leadershipProduct Differentiation andMarket classThe competitive strategy of Thornton can be identified with Product differentiation and market segmentation but not with the hail leadership as the company was never able to have a prosperous cost position because of its high backpacking costs and heavy seasonal demand for the products.2.2 archers ClockAs compared to the Porters Generic Strategies decrease Bowman had developed competitive advantages in relation to cost advantage or differentiation advantage. Bowman identified octette core strategies in any business based on the firms competitive advantages. They areLow legal injury/Low added Value signifying segment event strategyLow price being adopted by a cost leader as a result of price wars and low margin on the productsHybrid Option Represents low c ost base and reinvestment in low price and product differentiation.Product Differentiation This weft is being exercised with a price gift and without a price premium.Focused Differentiation Involving perceived added value to a particular segment that needs a premium. change magnitude Price/Standard higher margins if competitors do not value follow/ hazard of losing market share. Marketing Teacher change magnitude Price/Low Values This picking can be exercised only in a monopoly situationLow Value/Standard Price This strategy will result in a button of market share.Out of these eight strategic options developed by Bowman, Thornton had been following the Product differentiation Strategy originally and posterior on shifted to focused differentiation to capitalise on their product strength. In the case 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 marke ting to wit Products and markets to identify four generic growth strategies namely Market Penetration, Market nurture, 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 Example of Thornton The instance of Thornton matching the Ansoffs Matrix can be explained as belowMarket Penetration Increase in the share of chocolate business at the get down of Sainsbury and Asda.Market Development Movement into more distribution channels like conjugation venture shops with Birthdays Group a calciferol strong chain of greetings cards and novelties outlets sole(prenominal) supply arrangement with Tesco expansion in to France, Belgium and USAProduct De velopment Thornton try 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 compresss personate Thorntons position with respect to the constancy can be analysed on the fanny of Michael Porters Five Force analysis. Porter provided a framework that models an exertion as being influenced by tail fin forces. The strategic business manager seek to develop an edge over rival firms can use this model to better understand the persistence context in which the firm operates.(QuickMBA)Barriers to Entry Though technologically there is no barrier for the new entrants to the market, the accesses to the distribution channels pose a great barrier to entry. Establishment of a new brand also would take considerab le time and money in the form of advertising and promotional expenses. This acts as a barrier to the new entrant to the sedulousness. The strength of this force is negligible.Threat of musical accompanimentThere are a number of reliever 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 very much pose a problem of supplant products available in the market. Switching to diversify products for the customers is inexpensive and unprovoked as all brand is available in locoweed in the various outlets like gasoline bunks, novelty stores, greetings cards stores, super markets and specialized shops. The strength of this force is to be reckoned with. emptor PowerThe ultimate consumer being the buyer the force exerted by them on the industry is sizeable. any small change in the quality of the products or in the aim of service will make the buyers shimmy the ir loyalty to other brands. Moreover, being an proneness 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.provider PowerThe seasonable 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 trend in the market share of Thornton will be taken advantage of by the major players acting in the industry. Moreover yet the f orce of barriers to entrants and suppliers power to some extent other forces are acting very strongly on the industry. Hence it can be said that the competitive rivalry is very high for Thornton Plc.Question 3 Relationship between Thornton and mark & SpencerThe case study of label & Spencer also indicates the different strategies adopted by the firm to sustain its growth attained 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 increase the cost of the products for the company and affected the favorablenessExpansion of business within europium and in the USA that finally proved unworthy or not reparable due to various reasonsExpansion and redevelopment of own retail units in the UK which increase the capital cost of the firmDevelopment of new product lines like food when there was so much to be done in the existing dress business.Thus the learns of both Thornton Plc and mark & Spencer can be identified as more or less same with the only difference is that Thornton depended heavily on the seasonal business.Marks & Spencer followed a Hybrid strategy under Bowmans clock.With the experience of both the firms in the same thrill 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 eyepatch combing the businesses by selling the chocolates through Marks & Spence r the following points need to be taken into account.3.1 Overlap of intercommunicateThough Thornton had a long stand up supply arrangement with Marks & Spencer with a renewal of such supply arrangement may pose the problem of the imbrication 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 leaveed by Marks & Spencer may differ by sort and rec ipe 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 realised in the perspective of the customers. This is one aspect that needs considerateness when a stopping point to renew the contacts with Marks & Spencer is to be ever thought of by Thornton. some other unveil that Thornton needs to consider is the quality of service to the customers. Marks & Spencer having it thrust on its core products of clothing, food and beauty products it may be difficult for the company to attach the same importance that Thornton gives its products. The personalized approach that is being attributed to every customer at the Thornton store may not be expect out of Marks & Spencer.The availability of substitute products by the side of the products of Thornton may also pose a problem for an in effect(p) increase in the sales of Thorntons produc ts. 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 entered only to deal with Thorntons products.The ostentation and product promotion of Thornton by Marks & Spencer is another area that needs to be addressed. The floor space and the variant of visibleness to the products Marks & Spencer may offer to Thorntons products will greatly depend upon the pecuniary gain that M&S get out of the deal with Thornton. Hence a careful discussion and finalization of the squinch is a pre requisite for Thornton to expect the kind of treatment 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 another(prenominal) Working ArrangementsThornton may look into the chess opening of ente ring into other arrangements like contract a small shop floor area with M&S in the location where they dont have their own retail units. Thornton may load its own staff to look later the sales and thereby can ensure the quality of service to its customer. The company may enter into a profit overlap 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 peremptory 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 tangled in terms of fixing the take in to M&S. There will be no commitment on the part of M&S to assure any minimum sales also.3.3 MergerAnother distinct possibility that can be worke d out to the benefit of both the companies is a jointure of both the companies for an agree 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 talk of a bid for Thornton disappeared in early 2004. Unlike this a practicable merger 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 merger 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 integrated 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 at a time Thronton.References1.Marketing Teacher The Strategy Clock Bowmans Competitive Strategy Optionshttp//marketingteacher.com/Lessons/lesson_bowman.htmTutor2u bank line Strategy Ansoffs Matrixhttp//www.tutor2u.net/business/presentations/strategy/ansoff/default.htmlQuickMBA Strategic Management Porters Five Force,A work For Industry Analysis http//www.quickmba.com/strategy/porter.shtml