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Business Strategy Woodlands Group Strategy Report SN: 201602715 WC: 2706
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Business Strategy Woodlands Group Strategy Report SN: 201602715 WC: 2706
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Woodlands Group Strategy Report
Name: Rebecca Kershaw
Student ID: 201602715
Word Count: 2706
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Contents Page
Executive Summary………………………………………………………………………………….……..3 Introduction…………………………………………………………………………………………..………..4 Methodology…………………………………………………………………………………………………..4 Step 1: Situation Mapping……………………………………………………………….……………5-6 Rich Picture……………………………………………………………………………………………………..5 Key issues identified from the Rich Picture………………………………………………………6 Stakeholder analysis………………………………………………………………………………………..6 Step 2: Review the Environment of the Business……………………………………….…7-9 Opportunities and threats from rich picture…………………………………………………7-8 PEST Analysis…………………………………………………………………………………………………..8 Porter’s Five Forces…………………………………………………………………….…………………..9 Step 3: Internal Review of the Business………………………………………………………9-13 Strengths and Weaknesses………………………………………………………….……………..9-10 Business Model Analysis…………………………………………………………………………..11-13 Step 4: Assess Competitive Performance…………………………………………….……13-14 Review Competitive Performance…………………………………………...…………………...13 Strategy Canvas……………………………………………………………………………………………..14 Step 5: Produce Project Outputs……………………………………………………………...15-16 Recommendations………………………………………………………………….………………..15-16 Final Remarks………………………………………………………………………………………………..16 References………………………………………………………………………………..…………………..17 Appendices………………………………………………………………………………………….……18-21 Appendix 1…………………………………………………………………………………………….……...18 Appendix 2………………………………………………………………………………….………………...19 Appendix 3………………………………………………………………………………..…………………..20 Appendix 4…………………………………………………………………………………………………....21
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Executive Summary
This is a strategy report about ‘The Woodlands Group’. It has been made using an in depth analysis of the business’s internal, external and competitive situation, which were all based on the writer’s knowledge combined with the ‘summary reports’ each department manager provided. As the company is under new management, the task is to give the new Managing Director an overview of the group’s current position and what the strategy might be going forward to create an efficient, market leader that meets current customer trends.
The fundamental operational issues need to be reformed before Woodlands Group can flourish. For example, a lack of objectives and mission statement mean staff members (and even managers) are unable to grasp what is required of them on a daily basis, other than producing products. Interconnection of key players is crucial in ensuring the Group has a future. The time taken up by disagreements i.e. on stock cycles can instead be used to innovate.
By treating the group as three autonomous companies, it generates three sets of everything – accounts, profits, losses etc. Operating as one will cut costs. The ‘people’ side of the business needs to run smoothly, otherwise certain strategies may not be possible to implement regardless of their potential success.
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Introduction The Woodland’s Group is a collection of three semi-autonomous companies who operate together by providing different processes within the supply chain. The end product is to cover and sell processed wooden boards. The finished products are sold on to furniture manufacturers who build both household and business furniture – anything from a kitchen cabinet to a desk. This strategy project will assess the external environment the company is operating in, as well as look internally at departmental functions, their efficiency and any issues hindering their performance, including the importance of management cohesion. It will then go onto evaluate how they are performing in relation to competitors. The report will finish with recommendations that will enable the company to achieve their future objectives whilst respecting the company’s strong values.
Methodology As the company is now under new management this review will encompass:
• An overall analysis of the company.
• An overview of how operations are currently managed.
• Identification of current problems the company is facing.
• An indication of potential problems the company may encounter.
• Strategies that can be applied to business practices, to aid the company in reaching its overall goal (or vision statement).
Note: Recommendations are the result of extensive analysis and are optional.
The five-step process below has been used to complete this strategy project (Figure 1). It defined the report layout and distinguished how to classify the analysis into internal, external and competitor.
Figure 1 – Five Step Process
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Step 1 – Situation Mapping
Rich Picture
Figure 2 – Rich Picture (Monk et al., 2018)
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Key issues identified from the Rich Picture
• Running the companies as autonomous operations generates three sets of accounts, management tiers and accounting/admin departments.
• This separation means there is no common goal (product price, stock cycle length, board quality).
• New environmental regulations have not been researched sufficiently.
• Bettafinish are ordering supplies from competitors and Surface Stockist’s looking for new suppliers due to compensation paid out as a result of weak boards supplied by Albion Mill.
• Departments use different metrics to measure e.g. weight/number of boards.
• Limited research on environmental regulations has been invested in.
• Albion’s traditional views could damage company’s future.
• Working on a two-week cycle of stock between Bettafinish and Surface Stockist’s has been tested but failed – will other strategies fail?
• No strategy for results from BREXIT.
Stakeholder analysis Acknowledge the stakeholders’ points of view when thinking about the next steps of this report. Whatever their role is in the business, they all have a vested interest in it succeeding. See Appendix 2 for justification. (Varvasovszky et al., 2000). The primary and secondary stakeholders were identified and grouped into four categories depending on their level of interest and power. See Appendix 1. Key Players: high power/high interest. High priority. Examples: Managing Director, department managers and end consumers. Keep Involved: low power/high interest. Communicate regularly to ensure buy-in and to iron out any problems occurring as a result of change. Examples: factory workers and suppliers. Keep Satisfied: high power/low interest. High influence with a need to be satisfied, do not need to be kept up to date. Examples: The Government and Lavers. Keep Informed: low power/low interest. Important they are kept informed with overall strategy but not the finer detail. Examples: John Albion’s Family.
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Step 2 – Review the Environment of the Business
Opportunities and threats from rich picture
Figure 3 – Opportunities and Threats (Pickton et al., 1998)
No company producing processed wooden boards has devised an environmental alternative. Either they haven’t yet launched their ideas or they have not yet thought of them. The company has some highly experienced, expert staff who are not being used to their full potential. New technology could improve speed of production and save on employment costs. Some positions would be made redundant whilst others could utilize their skills to experiment with and develop new sustainable options, making it an opportunity and a threat. The trend towards greener, environmental consumerism is a threat to the Woodlands Group’s production and processes. Sustainable wood supplies to reduce the detrimental effect on forests is both a threat (if not researched) and an opportunity to meet market trends. Finally, not preparing for Brexit in the short term could hinder customer relationships, put the stakeholders under stress and lose the company money. Costs will be increased if the correct export procedures are not understood or adhered to. Business will be lost if delivery deadlines are not met due to paperwork delays.
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PEST Analysis
Figure 4 – PEST Analysis (Gupta, 2013), (Hill, 2016), (Littleboy, 2016)
It became clear BREXIT is going to affect UK businesses in both a political and economic manner. It is a process which cannot be ignored and where existing relationships with EU suppliers cannot be relied upon. Also, the social factors indicate research into customer preferences on any topic is essential, particularly those which are also requirements enforced by the government (environmental regulations). Technology is advancing annually, particularly within the manufacturing industry in the form of robotics, computerization, augmented reality and 3D printing. To not fall behind, the company must take action and not get stuck in traditions.
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Porter’s Five Forces Referring to Appendix 3 (Dobbs, M, E., 2014), rivalry is ‘high’ amongst existing competitors due to there being little difference in the products they can offer, unless a new sustainable product is developed. Lavers is tough competition as they have supposedly made a new plastic alternative to light gauge boards. Steps towards creating more of a competitive advantage need to occur. Regarding bargaining power of suppliers, the risk is ‘high’ seeing as there only a small number of raw timber suppliers in the industry. It also cannot be replaced unless the type of wood is changed, which changing the look, feel and value of the product. Relationships should therefore be maintained with suppliers. The threat of new entrants is ‘moderate’ seeing as there are minimal barriers to entry. However, people may be demotivated to start a new business due to Brexit restrictions. Threat of substitutes is also ‘moderate’ as it is possible to create a ‘wood-like’ effect using synthetic materials but customers may not want to use a fake wood replica as it decreases product value. Bargaining power of buyers is ‘low’ risk due to there not being many companies offering similar products.
Step 3 – Internal Review of the Business
Strengths and Weaknesses The company’s key internal strengths and weaknesses were recognised in regards to the following factors and labelled with corresponding number:
1- Powerful Actors – players which aid or hinder company growth. 2- Mission/Goals – nature of business/what it’s trying to achieve. 3- Culture/Values – the way the company runs/what company believes in. 4- Resources/Capabilities – features of the organisation which allow it to do carry out
duties better than competitors. 5- Structure/Systems – basic internal systems which restrict or enable what strategies
will be possible.
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Figure 5 – Strengths and Weaknesses (Pickton, et al., 1998)
Strengths: severely lacking in ‘Mission/Goals’ and ‘Structure/Systems’ – may be due to a lack of staff direction brought on by an absence of SMART objectives and mission/vision statements to give guidance. ‘Culture/Values’ are completely absent due to rivalry between companies and their lack of effort towards environmentally friendly methods are hindering progress. Weaknesses: the more ‘numbers’, the worse the company is doing in that sector. For example, number 1 (‘Powerful Actors’) is plentiful, meaning the company’s success is being hindered by key players i.e. differing management styles and lack of compromise. ‘Mission/Goals’ (also plentiful) – a mission statement/SMART objectives are not being used. May be because they are not accessible to staff or the company has not thought about this in detail.
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Business Model Analysis The Business Model Canvas (BMC) requires a holistic view to see the ‘Big Picture’. It can find which resources and competences Woodlands has and identify which are not being utilized fully. Current BMC (Figure 6). Future BMC (Figure 7). New additions are highlighted in yellow.
Figure 6- BMC (Joyce, et al., 2016)
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Figure 7 –Future BMC (Joyce, et al., 2016)
Currently, only key players, customers and the timber supplier leverage the business model. In the future, Woodlands should rely more on staff for input into ways to differentiate. Also, the government should be impacting the business model in terms of environmental impact, but currently they have no effect.
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In Figure 6, only Physical and Intellectual resources are being utilized. Partnerships and the development of the Woodlands brand (supported by online presence) is not a current focus. The main values being provided to customers are high quality products and reliable delivery. However, there isn’t a system in place where customers can provide feedback should they fail. Additionally, the only value for managers is profits, however for Woodland’s to develop their brand, higher productivity is needed, achieved by higher motivation/morale from staff. Currently, Woodlands only uses the ‘traditional’ channels to deliver value to customers i.e. conversation and emails etc. A more modern approach is currently being ignored. For example, using social media and events may entice smaller customers and keep company modern.
Step 4 – Assess competitive Performance
Review competitive performance Analysis gathered from steps 1 to 3 has led to conclusions regarding competitive performance. Woodlands should focus on the strategy, ‘Differentiation’. This entails focussing resources towards bettering things like branding, advertising, design, service, quality and product innovation. The payoff for products and services quality is worth the high costs needed. Woodland’s should adopt a more ‘Blue Ocean’ approach (Kim, et. al, 2005) which encourages managers to be different from competitors rather than just copying their actions. A way Woodland’s could do this is to develop an environmentally friendly product to put on the market, something that no competitor is currently doing. The Porter’s 5 forces Analysis (Appendix 3) found that rivalry amongst existing competitors is high due to all similar companies selling similar (or even the same) products. Woodlands can easily stand apart and create a competitive advantage through sustainable products or even lowering their price. Laver’s, however, are thriving in terms of innovation with their new plastic alternative to light gauge boards. Woodlands have the highly skilled staff required to implement a strategy such as this, the only factor preventing this are current operational issues.
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Strategy Canvas The strategy canvas in Figure 8 outlines the factors that customers value in choosing wooden boards (x axis), scoring them out of 100 (y axis) for Woodlands Group, Lavers and the Industry Average. (Full score chart in Appendix 4).
Figure 8 – Strategy Canvas Analysis
(Kim, et al., 2005) Both Lavers and Woodlands are lacking compared to industry average in ‘Price’, meaning products are too expensive. Woodlands are cheaper than Lavers but ways to lower prices should still be explored. Their ‘Marketing’ score is low. Even though Woodland’s are above the industry average (40/100), they are still not on par with Lavers. Woodland’s do not have an online presence – this may be something to look into to raise the ‘Marketing’ score. Woodlands Group are far exceeding Lavers in ‘Delivery Performance’, ‘Customer Service’ and ‘Product Availability’ which is mainly down to the work of Daisy Elworthy. Their lowest score, but one which Lavers are thriving is ‘Product Innovation’, this may be because they allegedly have thought of a more modern way of using plastic to replace light gauge boards. The truth to this should be looked into. It is uncommon for new products to be ‘invented’ that are not environmentally friendly because it is such a focus for consumers currently, so the success this product will have is questionable – but their level of innovation cannot be doubted.
0
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Price Delivery Performance
Board Quality Marketing Reputation Customer Service
Product Availability
Product Innovation
Strategy Canvas Analysis Woodlands Group Lavers Industry Average
Factors which Customers Value
S co
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1 -1
0 0
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Step 5 – Produce Project Outputs
Recommendations Recommendations were created from steps 1 to 4 of this report using the ‘Three Horizons’ framework. Note: all three horizons must be heavily invested in to experience the most success. Horizon 1 – (an extension of the current core activities).
• Operate as one single company, sharing profits etc.
• Organise a monthly meeting where the managers meet to discuss company progress and potential improvements.
• Albion Mill go back to their stronger (although more expensive) combination to minimize complaints.
• Accept all managers have different management styles, just as long as their outcome is on par with company objectives.
• Introduce an annual staff activity/trip so they are no longer in competition with each other.
• Introduce the same metric for measuring boards i.e. weight/number of boards.
• Present mission and vision statement to staff so they know company purpose and where it is trying to get – could increase motivation.
• SMART objectives should be posted around the office/warehouses as a constant reminder.
• Come up with an alternative to combat the dispute on delivery times i.e. to place a ‘minimum order’ restriction on heavy gauge boards, meaning customers will expect delay and will not think the company is unreliable.
• Follow up with customers after delivery.
• Further research is needed on new plastic board from Lavers – contests idea to buy machine dedicated to light gauge boards.
Horizon 2 – (build emerging activities to provide a new source of profit).
• Research new ways boards can be made recyclable and sustainable.
• Assemble a research team whose role is to educate the company on how new environmental regulations will affect the business.
• Invest in emerging technologies i.e. a robot which can move boards between departments seamlessly. Requires a large upfront cost but the PEST analysis uncovered manufacturing is heading towards robotics.
• Move companies together onto one larger premises – it will relieve delivery time, cost and communication between departments.
• Create a website/online presence, creating space for reviews on the company and may entice new customers to join and order.
• Look into ways prices can be lowered (lagging behind industry average in Strategy Canvas).
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Horizon 3 – (risky research and development).
• Look into the possibility of acquiring the raw timber supplier. It would give Woodland’s total control over supply chain and its price.
• In response to a threat which was raised in analysis, introducing a scheme which plants a tree for every tree chopped down will benefit brand image immensely and will aid deforestation.
Final Remarks To summarise, core operational issues need to be altered before it can thrive. For example, management disagreements, lack of compromise and working autonomously are all disrupting the company from reaching its objectives. Managers are more preoccupied with the small issues in the company i.e. whether the companies should work autonomously or not, rather than focussing on actions which will make the company succeed in the long run (increasing product innovation). All of these minute operational decisions should be made by the managing director and willingly followed by managers. Different products will be more profitable for different departments to sell. However, working as one company will eliminate issues such as pricing, because all profits (and losses) will be shared. The only department who would order from external sources are Albion Mill seeing as the raw timber cannot be supplied by any existing department, unless acquiring the raw timber supplier ensues. It is essential the ‘people’ side of the business is running smoothly, otherwise strategies which are best for the company’s future may be impossible to implement.
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References Dobbs, M, E. (2014) Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24 (1), 32-45. Gupta, A. (2013) Environment & PEST Analysis: An approach to External Business Environment. International Journal of Modern Social Science, 2 (1), 34-43, Available online: https://pdfs.semanticscholar.org/d9d2/86c5a903a91d4e5e6cff565f186f91383a02.pdf [Accessed: 7/11/19]. Hill, C. (2016) Technological advancements in the manufacturing sector, Hawsons Chartered Accountants, Available online: https://www.hawsons.co.uk/technological-advancements- manufacturing/ [Accessed: 5/11/19]. Joyce, A. & Paquin, R, L. (2016) The triple layered business model canvas: A tool to design more sustainable business models, Journal of Cleaner Production, 135, 1474-1486. Kim, W, C. & Mauborgne, R. (2005) Blue Ocean Strategy: From theory to Practice, California Management review, 47(3), 105-113. Available online: https://journals.sagepub.com/doi/pdf/10.1177/000812560504700301?casa_token=VT0tTEt ZpqMAAAAA:kpgVYoRLK5ayfv- GBzPKu1_va5vgda4tYDWfCOoyy60f3i7NcEza4vtjVt21IKrQX4BaBG9U_50 [Accessed: 7/11/19]. Littleboy, K. (2018) Births in England and Wales: Live births, stillbirths and the intensity of childbearing measured by the total fertility rate, Office for National Statistics, Available online: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebi rths/bulletins/birthsummarytablesenglandandwales/2018 [Accessed: 5/11/19]. Monk, A. & Howard, S., (1998) The Rich Picture: A tool for Reasoning About Work Context: Elements of an Effective Rich Picture, methods & tools, page 24, Available online: http://www.moodle2.tfe.umu.se/pluginfile.php/32063/mod_resource/content/1/Rich pictures -monk.pdf [Accessed: 7/11/19]. Pickton, D, W. & Wright, S. (1998) What’s SWOT in strategic analysis?, Strategic Change, 7(2). Varvasovszky, Z. & Brugha, R. (2000) A Stakeholder Analysis, Health Policy and Planning, 15(3), 338-345.
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Appendices
Appendix 1 Stakeholder Analysis
(Varvasovszky et al., 2000)
Keep Satisfied Lavers The Government
Key Players Managing Director Managers End Customers i.e. Elizabethan
Keep Informed John Albion’s family
Keep Involved Factory workers/employees Suppliers i.e. of raw timber and resin etc.
Level of Interest
Le v
e l
o f
P o
w e
r
HIGH
HIGH
LOW
LOW
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Appendix 2 A description of why each stakeholder was placed in each category and their role within the business (Varvasovszky et al., 2000) Key Players
1. Managing director (Harry Symons) – the main role is to direct and control all of the business operations – therefore you are the stakeholder with the highest level of power and interest in the company; vital in the company’s success.
2. Managers (John Albion, Tony Thompson and Daisy Elworthy) – they are all required to plan, direct and oversee their department’s operations – the companies should also work hard to aid each other and compromise where necessary, otherwise the company’s day-to-day operations will become impossible, giving them high power. They also have a level of interest regarding the company’s success (or lack of).
3. Customers – (end customer) i.e. Elizabethan. They were placed in key players as they are essentially who the business is created for. Without them, the business would be pointless –giving them a lot of power about what is provided and the way actions occur. Customers complaining about the strength of a board or moving to a competitor if prices are too high, the company has no choice but to oblige. With regard to their level of interest – they care about how much the products cost, the ability the company has to deliver them products and if the company fails, so, interest is high.
Keep Involved 4. Employees/factory workers – workers are highly skilled in their specific fields; some
having decades of experience, without which the company would not produce products to a high quality. For them to work as hard as they do, they must have a high interest in the company, however, do not have a say in business decisions (low power).
5. Suppliers (i.e. wood producers in Sweden) – whether or not the company succeeds is of concern for them, because without the Woodlands group, they would lose a major regular customer (interest is high). However, the level of power they have in everyday practices of the company is non-existent.
Keep Satisfied 6. Lavers (competitors) They are extremely powerful in terms of determining the price
of the boards as well as determining how much business (and profit) Albion Mill receive. However, they have little-to-no interest in the company and whether it succeeds or fails.
7. The Government - affecting the future of business practices i.e. the quality of your product as well as how much it will cost to produce the new products under regulations, so they have a lot of power. Yet they have little interest into how their new regulations are affecting every company that has to accommodate, therefore they are stakeholders which must be ‘kept satisfied’.
Keep Informed 8. John Albion’s family – although the family do not have a current role in the business
and do not have interest in it in terms of whether it succeeds or not, it is important to keep them up-to-date from time to time seeing as they founded the company and have followed the journey from the beginning.
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Appendix 3 Porter’s 5 Forces
(Dobbs, 2014)
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Appendix 4 A chart to show the full of results from the Strategy Canvas Analysis.