2.5k-word paper
Running head: STRATEGY PROJECT REPORT 1
Woodlands Project
201913489 Kechenglou
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Executive Summary
Woodlands group is comprised of three constituent firms, namely Albion mill, Bettafinish and Surface Stockists all under different managements. It was an initial work by Albion mills that had been in existence for centuries dealing in wood products. They later realized the potential in combining forces with other players in the market, which led to the union of the three firms. The union was aimed at controlling the entire commerce process of the goods from production to the sale of the product to the final consumer. However with time, the group was faced with financial hiccups mainly due to its mode of operation as separate entities in a larger group. Tyzacks acquired the woodlands group and now being under new overall management, and necessity arises to create new strategies that aim to revive the growth of the woodlands group as one entity. The firm was found to have issues as each of the constituents was working independently and often were found to be sabotaging the primary goal of the large woodlands group. This calls for a recreation of the image of the woodlands group. It is difficult to make and implement policies if the firms are running autonomously. Therefore under the new management of Harry Hayes of Tyzacks, the firms should be able to embark on a mission of working together to dominate the entire wooden board product. This will create a platform to evaluate the growth of woodlands group as a whole and bring forth unified approaches to diversifying the product to fit the ever-changing markets and consumer preferences.
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Table of Contents
Introduction.......................................................................................................................................4
Situation Mapping..............................................................................................................................4
Review of the Business Environment................................................................................................... 6
Internal Review of the Business...........................................................................................................8
Assess Competitive Performance ...................................................................................................8
Project Outputs..................................................................................................................................8
Reference list ………………………………………………………………………………………………………………………… 10
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Introduction
This report encompasses an analysis of the Woodlands group of companies in their existing mode of operations and focuses on ways in which the group of companies can be improved under the new management of Harry Simons of Tyzacks. The Woodlands Group of Companies has existed as three autonomous companies operating together to produce, cover and sell the fully processed wooden boards. The three companies are Albion Mill under the management of John Albion, Bettafinish under the management of Tony Thompson and Surface Stockists under the management of Daisy Elworthy. Albion mill produces the wooden boards and sells them to Bettafinish who cover them to make them fully processed wooden boards while Surface stockists are tasked with the role of selling the fully functional product to the final consumer. The managers of these three independent firms are experts in their respective fields. This makes it hard for them to agree on a common ground to run the Woodlands Group due to their difference in approaches. The group has been faced with some financial hitches of late. This strategic report project aims to analyze the situation at Woodlands and recommend areas that require polishing as well as recommending the new strategies that can be used to make this firm profitable once again. In the report, there is a detailed methodology that shows how the analysis of the firm was done, as one entity and also focusing on the three mother entities. The report outlines also highlights the findings on each mother entity and their overall contribution to the larger Woodland Group. In addition, the report shows which practices are worth keeping and which are supposed to be changed. The report factors that the intention of the strategic analysis is to ensure the running of the Woodlands by Tyzacks by as a single entity. This means that the recommendations are aimed at cementing the association of the three mother firms to enable their unified functionality as one company.
Situational mapping
The woodland group stands at a point where it is being faced with financial crisis that has seen it being acquired by the Tyzack company. The firm is comprised of three constituent firms each run independently by the respective managers. The three are Albion mill headed by John Albion who has been the overall in-charge, Bettafinish led by Tony Thompson and Surface Stockists led by Daisy Elworthy. Albion mill was tasked with initial processing of raw wood to boards while Bettafinish would lay vinyl covers on the processed boards. Surface Stockists has been selling the final product to the consumers.
The group produces three weight gauge boards namely the light, medium and heavy gauge boards. According to Albion, the light gauge boards attract the highest profit margins and therefore believe that they should put more into their production. Additionally, Albion states that the heavy gauge boards are costly to process, and consequently, they have focused on thinning their supply due to nearly zero profit margins. Albion considers the purchase of a new machine to boost the production of the light gauge boards as a good strategy of ensuring the profitability of the firm.
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Table: Production details
Bettafinish is headed by Tony Thompson, and they specialize in putting vinyl covers on the processed boards. They feel that the prices being asked by Albion for the boards are high and require adjustments. This has forced them out of their way to outsource the processed boards from Laver which is the competition to Albion. However, the move is to blackmail Albion to lower the prices because the only better deal they get from Laver is that of the heavy gauge boards. That is Tony Thompsons’s secret which he does not want to be known by others. Bettafinish supplies the boards to Surface Stockists and states that they are faced with a problem of meeting the demand from Surface Stockists. Tony believes that if they acquire a new machine they will be able to meet the demand of the finished goods.
Surface Stockists is headed by Daisy Elworthy and stocks the finished boards from Bettafinish and some untreated boards from Albion mill. They supply directly to customers, and they have managed to secure four major customers to whom they provide the boards consistently. They are concerned with the flow of the products originating from Albion mill, and they propose putting up a new warehouse to be able to cater to the growing demand of the product. Surface Stockists have further concerns regarding the depreciation in the quality of the light gauge boards from the mill over time. However, dismisses the fears saying that the customers are still purchasing the product in good numbers. Surface Stockists is also concerned with the fact that the other two companies are lagging behind in terms of adoption of new technology in the processes of manufacturing. Daisy feels that there is a lot of technology that can be put into ensuring a better production of the boards and also improved quality. She suggests the use of alternative but cheaper raw materials other than wood whose supply is diminishing due to the stringent measures against logging.
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Review of The Business Environment
Opportunities
The company is set in a very productive layout by having three expert companies each tasked with the commerce process they have specialized in. Each of the three forming companies has the expertise on the processes that they manage. The firms also have prior experience running into centuries in dealing with their areas of expertise. This translates to a trustworthy brand that has been in existence for long and so they do not need to do a lot of convincing to their customers. The new management has come in handy when there have been disagreements from the three bosses on how to run the company going forward. The woodlands group could surely use some new managerial tactics to put the three expert companies and resume their profitable culture of production.
(£ per board) Heavy (9g) medium (8g) light (6g)
Income: sales 79.64 66.56 53.95
Costs: board 55.84* 42.24 29.12
Glue + surface 10.56 10.56 10.56
Total costs 66.40 52.80 39.68
Profit 13.24 13.76 14.28
Table. Profit details (*Lavers, price).
Threats
When Tyzack acquired the possession of the company, it changed the system to allow the constituent companies to operate autonomously. This means that the Albion mill had to sell their halfway processed wooden boards to Bettafinish who in turn used to sell the coated boards to Surface Stockists. This was intended to make the groups competitive according to what they indicated during the interviews. When Albion mills acquired Bettafinish and Surface stockists, their aim was to control the entire process of the wooden boards, that is, control production process all the way to the selling of the finished product. This means that the aim of forming Woodlands was to operate as a single entity. Allowing the firms to work independently has led to the erosion of the initial mission of the woodlands groups. The individual firms are now opting to other external sources for their product, yet their customer base remains the same. For instance, Bettafinish has been outsourcing wooden boards of different gauges from a
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competing firm, and this has reduced the margins of Albion mill and the woodlands group as a whole.
Bettafinish has been managing to secure a better deal on the heavy gauge boards only and used this to push Albion mills to produce additional heavy gauge boards with the claim of higher demand. Albion mill, on the other hand, feels that making more heavy gauge boards would reduce their profitability and that most customers were not even aware of the different types of gauges, they simply just used the commodity. Surface Stockists also claim that the heavy gauge boards are more profitable to sell than the lighter gauges. This means that Albion mills are on the receiving end of the tug of war about the heavy gauge boards.
The information from the clients shows that there have been recent concerns on the quality of the lightweight gauge boards. As much as they have been purchasing the product, it is based on their loyalty to the group and the fact that the woodlands group had the best deal in the market on the lightweight boards. This means that the assumption by Albion mill about the customers being aware of the variations in weight was misguided. It is based on the fact that they feel like they possess all the knowhow on making boards because of being in practice for over two centuries. They are still holding to their traditional ways of making the boards. Albion mill was not aware of the technological advancements over time as they were in a quest to maintain the originality of their product. It is not a bad thing to keep one’s brand, but the brand should be able to factor in the ever-changing customer preferences, which are influenced by changes over time.
Albion has been stuck in making more lightweight gauges than the heavy ones for profitability purposes. According to the questionnaires given to customers, nearly half of them were aware of the benefit of having to use the heavy gauge boards and often used them. They acquired them from woodlands through Surface Stockists. Surface Stockists got the heavy gauge boards from Bettafinish, but the later outsourced them from another source and not the Albion mills. The fact that Tyzacks allowed the three firms to run independently means that each would only look out for their own interests and not the interests of the woodlands groups.
Analysis
The company has already a steady customer base whose bargaining power is not extreme given that apart from the heavy gauge boards, woodland offers the best deals on all other boards in terms of prices and quality. They are a leading wood processing company, and their success can be attributed by the fact that they control their entire production process from the first stage until the product reaches the market. The process has been divided into three phases which each of the three companies in the group assuming the roles for which they are highly skilled. The access to highly skilled knowledge and skill coupled with prior experience on their respective skills gives them a competitive edge of the market. The company is faced with limited competition as it produces high-quality products and their union has created the economies of scale that no other company can achieve quickly. This has given them a market dominance, and high chances of success.
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Internal Review of The Business
Strengths
The company has vast resources at its disposal by the combination of the forces of each of the three firms. This has created a steady production process culminating into a constant supply of the product to the consumers. The consumers have confidence in the product as the firms boast of experience in the venture which assures them of the quality of the produced goods.
Weaknesses
The woodlands group was not keen on opting for different ways of production, such as using different raw materials and incorporating new technology in their processes. Only Surface Stockists was open to such changes since they interacted with the clients more often and would factor in their changes in preference over time. It is difficult to calculate the profitability of the group as each of the three companies was calculating profits independently. This means that profit is calculated at each step of the entire process rather than being a cumulative profit for the whole of the process. This comes about due to the autonomous operation of the three constituent companies. This makes it hard to evaluate the growth prospects of the woodland group.
Assess Competitive Performance
Woodland group has a competitive edge in the market based on its layout. The firm boasts of experience in the venture and therefore can be able to attend satisfactorily to the needs of their customers. Their customers do not have to worry about the quality of the product. The combination of three firms, each catering for a given process in the production chain makes it able to produce substantial amounts of the products that otherwise are impossible to meet by a single company. The group has an existing customer base courtesy of Surface Stockists, and therefore they can maintain a steady supply due to steady demand. The company has also been able to profitably offer the light and medium gauge boards at a lower price compared to the other companies.
Project Outputs
First, Tyzacks should consider changing the way the constituent companies operate. They should operate as one entity such that the process is governed by similar production policies. They should consider drafting a legally binding agreement that holds each firm accountable to the woodlands group. This means that no entity is allowed to engage in any activity that undermines or contradicts the works of the large woodlands group. This will aid in valuation of the entire production process as one entity hence easier to calculate the profits of the whole process beginning from production to sale of the finished product to the customers.
Secondly, the group should consider looking for alternative raw materials for their product. There is a recent rise in a ban on logging which means that wood is expensive and therefore the reserved trees for the woodlands group will not be able to handle the demand for the product. Alternative sources which are cheaper should be looked at. There are options such
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as recycled plastics, which is a move that environmentalists would advocate for. However, this has to be done in a particular way. The group should create collection points for the waste plastics and use them to produce the boards. The customers should be notified that any possible wastes or cuttings from the boards should also be returned to collection points for recycling. This would help save the environment and at the same time, cut on the production costs.
The company should put in place a management system with a representative from the three firms to oversee the implementation of policies. The management should be headed by the Tyzacks management. The other three managers should be left to handle their respective dockets and be answerable to the central management system.
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References
I：HUBS. Strategy Project: Woodlands Group. Retrieved
from:file:///C:/Users/HP/Downloads/BSAssignment1Case%20(1).pdf