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Industry and Factors affecting Yorkshire Tea - Case Study Example

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The company produces and brews tea. The tactical and strategic importance that the company holds is of vital significance because it is of great use in order to determine the evaluation of the alternatives…
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Industry and Factors affecting Yorkshire Tea
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Table of Contents Introduction 3 Current Factors Identification 3 Porters’ Generic Strategies 4 Cost Leadership 4 Differentiation 4 Focus 5 StrategicClock 5 Ansoff Matrix 6 Market Penetration 6 Market Development 6 Product Development 6 Diversification 7 Industry and Factors affecting Yorkshire Tea 7 Competition 7 Market Share 7 Market Growth Rate 7 Technology 8 Legal Issues 8 Health Awareness 8 Product Strategies 9 Strategic Evaluation 9 Potential Options 9 Human Resource 10 Management Roles 10 Factors Affecting Strategy 11 Market Strategy 12 Market Penetration 12 Market Development 12 Product Development 12 Diversification 13 Recommendations 13 Conclusion 15 References 17 Introduction Yorkshire tea is produced by the Bettys and Tailors of Harrogate Limited. The company produces and brews tea. The tactical and strategic importance that the company holds is of vital significance because it is of great use in order to determine the evaluation of the alternatives that are considerable for the company. Such strategic options that are available to the company have been elaborated in this report. In order to establish the prospects for the success of the company, the position of the company in the industry as well as the responses the company has towards several forces within the market is analyzed and considered. In the report, the developments of the options that are mandatory by the company have been mentioned and elaborated. These developments are those that are in consideration with the available options. Evaluations of the company based on the recent projections and situations are done in the following report so that the future prospects along with the future philosophies of the company can be determined. The recommendations regarding the prospective strategic options that are available for the company are reported as well as suggested. Similarly, utilization of several different frameworks as well as models is utilized in order to figure out the strategic position the company holds. This detailed assessment of the strategic options of the company is performed in which the identification and highlighting is done by making use of certain models. Once the available options have been identified, the process of evaluation starts where several types of possibilities are discovered. Furthermore, the available opportunities that are vital for the company are also identified. Current Factors Identification For the determination of the strategic position of the company, there are several different types of factors that are, in the current times, faced by the Bettys and Tailors of Harrogate Limited. Those factors that are directly acting upon the company are explained in the detail. The main aim of the Yorkshire Tea is to amplify and maximize the profitability and growth so as to establish value for its shareholders (Brendan, 2008). The company not only maintains an expanded and intelligent distribution network and possesses strengthened competitive advantage but also has an effective business model as well as continued development. The strategies of the company are designed in order to achieve their goals and missions. The Yorkshire Tea company is the ultimate fast follower of the alteration in the culture along with the demand of the products (Robert, 1998). One of the distinguishing qualities of the company is that is quickly corresponds to the change and delivers its best by varying its strategies. The company has been able to reduce the cost and compete with its competitors in pricing because it uses its cash in an efficient manner by investing and rotating. By making use of the aggressive marketing techniques for its products, the company has managed well in order to create the worth of its brand. Porters’ Generic Strategies Michael Porter, a professor in Harvard Business School identified the generic strategies that are utilized by the companies so as to determine their strategic approach towards the advancements in operations. The strategies identified by Porter are explained as below: Cost Leadership The company tends to control the costs of its products so as to determine more profit margins in their products. Yorkshire Tea should consider the importance of cost effectiveness of the operations. The management of the company shall focus upon reducing the costs to the minimum level so that the company can cut down costs from every aspect. The reduction in the cost determines the increase in the profit margin of the company where the prices remain same. The company shall consider the cost leadership where it enhances the controls over the costs so as to minimize it and shall not change the prices and thus the profit margin of the company increases. Differentiation The products of the company when differentiated from the other similar products are termed as differentiation. Yorkshire tea shall consider the differentiation of its products where it shall provide the image of the product as different from other teas in the market. The product Luxury Blend Yorkshire Gold can be focused on conveying to the consumers as differentiated product. The differentiation of the product when successfully done shall enable the company to charge premium price and thus increase the profit margin of the company upon the product. Focus The generic strategy identified as focus determines the focus of the company upon a limited part of the market where the company is determined to capture the limited market share. Products of Yorkshire tea can utilize these strategies as where a specific part of the market is focused and the company is determined to capture that share of the market and successfully satisfying the needs of the consumers by focusing entirely on them. Strategic Clock A strategic clock is a strategy tools and is based on the principle that organizations achieve competitive advantage by providing their customers with what they want, or need, better or more effectively than their competitors. The tools identify the strategies from the respect of the product price and their perceived benefits. The identified strategies in the strategic clock is explained as below: No Frills, in this strategy the product is determined to be as simple as it could be. There are no frills added in the product and the product is completely basic. As with no frills the price is minimum. Low Price, in this strategy the company seeks low price for their product irrelevant of the descriptions of the product as with low prices the company shall be providing competition in the market and can be penetrating the market as well. Hybrid, this strategy seeks to concurrently achieve differentiation and a price lower that is lower than the of competitors. Differentiation, the products are differentiated through this strategy. The differentiation of the products of the company shall enable the company to charge more for its products. Focused Differentiation, in this strategy the company focuses upon the differentiation of a particular product more specifically and thus will be able to charge much more prices for the product. Increased Price/Standard Value, in this strategy the company increases the price of their products but quality and description of the products are not advanced. Increased Price/Low Value, in this strategy the company reduces the value of the product and charges high price for the product. Low Value/ Standard Price, in this strategy the company reduces the value of the product and the prices of the products remain same. Ansoff Matrix The marketing of the product is utmost importance for the success of Yorkshire Tea. The company needs to focus upon the marketing of its products so as to determine the viability and future prospects of the company. As per the classification of the product the marketing strategy of the products of Yorkshire Tea is determined using Ansoff matrix where the analysis of the market is reflected and strategies adopted. Market Penetration The market penetration strategy is adopted where the company needed to seek growth of its existing products in current market segment. The market penetration strategy is that where the company tends to penetrate its product in the market by reducing the price to the minimum and then raising the prices of its products. The market penetration prices are suitable for the Yorkshire Tea for Hard Water, as the product is needed to capture a market share. The reduced prices of the product shall tend to capture the market share and when it has succeeded in capturing a substantial market share the company can raise the price of the product. Thus the product shall be providing benefits to the company in the long run (Nicholas, 2002). Market Development The market development strategy is suitable where the market of the product is not much developed and the company is required to raise the demand of its product. The company shall be determining the market development strategy in case of the products that the company has extinct in. Expansion in the new market segment can be ascertained with the similar strategy. The company shall be providing information about their product in the market and thus raise the demand of the product (Lisa & Alan, 2010). The Decaffeinated Tea product that the company is offering shall adopt this strategy as to communicate the customer its importance and utility. The provision of information regarding the product shall determine the increase in the demand of the product and ultimately increase the market share of the product and thus provide increasing profits to the company. Product Development The product development strategy is applied to the products, which are currently in the current market segment, and development in the product is made so as to increase the market share of the product. The product development made by the company denotes the increase in the quality of the product or other enhancements to the product. The product Yorkshire Seasonal is the product that shall be adopted with the product development strategy as the company develops the product according to the season and thus alters the characteristics of the product. Diversification Diversification is a strategy that is best suited for the products that the company is planning to develop which are completely new. The strategy is most risky, as the company shall be developing a market share for the product. The diversification in the business operation is followed by this strategy and the company needs to focus upon the development of the product and upon the development of the market (Eric, 2012). Yorkshire Tea when planning to introduce new products and increase its product line then the diversification strategy shall be followed. Industry and Factors affecting Yorkshire Tea Competition The Yorkshire Tea is faced with a severe competition by the other companies. It is because of this that the company derives all its strategies in order to achieve the competitive advantage. The main competitors of the Yorkshire Tea are Lipton, Tetley and Bushels. These competitors have kept a strong eye on the policies so as to attain a competitive edge. Yorkshire Tea has always managed to maintain a considerable market share around the globe in different economies. The company has managed to retain its position and brand value in the market even though it had to compete with the other companies (Donald & Carol, 2003). Market Share Relative market share is one of the several areas that are considered to evaluate business portfolio. In order to attain higher cash return, it is important that the company’s market shares are increased (Annika & Christian, 1996). The Yorkshire tea produces more benefits from the economies of scale as well as the learning curves. This results in incremental profits (Michela & Stefano, 2005). However, it is of vital importance that certain firms might be faced with similar benefits with lesser production outputs as well as lower market shares. Market Growth Rate An indication of increased market shares include high profits coupled with higher earnings (Colm, 2001). The increasing growth rates tend to determine a greater consumption of cash. This is in turn is utilized as an investment that plays a role in stimulating further growth of the company. In the beverage industry, the market is growing rapidly on daily basis, the Yorkshire Tea shall be able to attain higher levels and increase their profits by the capturing of reasonable market share and increasing the growth rate of the market share. Technology In order to maintain the marketing position of the company, along with certain other factors, the advancements in the operations and production of the company with regards to technology is of vital importance. The proper use of the latest technology within any company tends to facilitate the company by brining the level of the company to more than the expected level (Daniel & Amrik, 2013). Also, the modern business development depends entirely on the technology that the company uses (Jun Xu,2005). The management is motivated by the technological factors to bring in new technology instead of upgrading. According to the legal aspects, it mainly focuses on the national and world legislation. The Yorkshire Tea receives all the applicable rights in the nature of tier business and each and every product and invention developments are going into the untested process. Apart from this, the management of the company also keeps a strict eye on the demographic alterations that occur. It is these alterations that compel the management to propose strategies targeting different market segments. Also, this would enable the management to monitor the changes within the demographics. It is of utmost importance that the company employs new technology before the competitors since this would give them a competitive advantage (Aristides, et al., 2009). Legal Issues Taking about the legal issues, the government plays a significant role since the government is in charge of imposing different regulations. The manufacturing of the products of the company is in the hands of the government and thus urges the company to avoid contravening of different laws. The prices of its different products can be manipulated by the economic factors and political laws (Jun Xu, 2005). Therefore, this particular aspect aids the organization to maintain and gain its shares in the global market in comparison to its competitors. Health Awareness Yorkshire Tea is affected majorly by the health awareness of the society. This is mainly due to the consumable product (tea) that the company provides. In the current era, the awareness in the health care of the people is one of the factors controlling the demand of the products within the society (David, 2008). Keeping the health care of the society in mind, Yorkshire Tea needs to focus on its strategies. The company must channel its focus in not only making its production of the tea eco friendly but also to develop the techniques in processing the tea. It is important that the products the company designs should not harm the society. It is vital that Yorkshire Tea focuses upon the policies it derives to be harmless and provides health care facilities to its workers. Product Strategies The main production of the Yorkshire Tea involves Hard Water, Yorkshire Gold and Decaf. In order to maintain its high product demand within the market and to provide its customers with high quality brew, the company has to utilize the best of its facilities and use the different methodologies. Yorkshire Tea makes use of different ways to brew different teas that fulfill the demands of its customers. The many products the company offers, possess distinct qualities as well as characteristics. Strategic Evaluation The assessment of the methods is carried out by examination with the substitute techniques in order to focus the adequacy of the procedures. The accessibility of the assets and the capacity to adequately use those assets are tremendously needed for the fruitful vital usage and successful implementation. The company might be centering upon different components in order to focus the vital assessment of the company. Potential Options In request to anticipate the systems to be executed later on, Yorkshire Tea needs to review the potential choices that it has accessible for making strategies. Standard correspondence system concerning manageability deliberations of the company, both inside and remotely ought to be made. The company ought to assemble trust and ought to help in creating its notoriety (Donn, et al., 1999). Likewise, Yorkshire Tea should to see that it is so paramount to convey obviously and rightly to the outside world the courses in which the business influences public opinion. The company ought to diagram its new strategic heading, incorporating changes in initiative and operational structure to hasten the companys velocity of execution in a dynamic competitive environment and market. Risk assessment of Yorkshire Tea should be focused around perceivability of the key risks keeping it from arriving at its business goals. This might blanket all vital, operational, and budgetary and risk risks. Further, political, social, human rights and ecological risks should be acknowledged inside these classes of risk, as opposed to as a separate strand. The significant piece of the overall industry is of an incredible point of interest to Yorkshire Tea in this manner the administration of the company should take measures so as to get the piece of the overall industry. Viable showcasing and persistently passing on to the purchaser the utility that the items provide for the buyers can do this. The administration of the company should take in recognization the viability of the piece of the overall industry that Yorkshire Tea keeps up in making strategic planning. Human Resource The beginning choice might be with respect to the administration of the human resource of the company regarding how they might be overseen (Kimberly, et al., 2006). Administration might settle on the choice in regards to the usage and requisition of the corporate code of morals so as to keep the association from any further objections with respect to segregation. The enlisting and vocation advancement procedures might be rebuilt. It is critical for the company to end up all the more earth cordial and lessen the ecological foot shaped impression. The company might demonstrate the worry by stressing over the healthier tea and giving the data to their clients about the propelled methods that are used by the company to upgrade the taste and nature of their item. The discriminating point for the administration of the company might be to strategize its advertising all the above choices made might influence the operations of the association and rebuild it that might help the achievement and development of the association (Paul, 2004). It is paramount that the advertising highlights all these components of the association. Consequently promoting might not be concentrated on "Pay Less Expect More" it might additionally guarantee that the message is passed on that the company is socially dependable company that points at lessening its natural foot shaped impression. The key advertising may include additional apparatuses to be utilized to communicate with the clients of the company and market. Management Roles According to the Mintzberg model the management of the company has specific parts that it performs as per the circumstances. The parts of the supervisor are isolated into distinctive classes and how it should be connected to Yorkshire Tea is talked about as: Interpersonal, where the supervisor part is to give data and thought and in doing so he assumes the part of nonentity, pioneer, and contact. The management of the company should have the capacity to pass on to its representatives and subordinates that the management can bail them out any circumstance and are ready to work alongside the workforce and the entire company fills in as a solitary workforce. The management should have the capacity to light the enthusiasm in the laborers to work for the company. Enlightening, where the chief part is to process data and in doing so he assumes the part of screen, disseminator and agent. The management of the company should take compelling steps for progressing the correspondence prepare in order to make the workers understand their imperativeness in the company and alongside it giving the data to the management to take viable movements. The management of Yorkshire Tea should painstakingly control the operations of the company by adequately preparing the data gave by the workers. Decisional, where the chief part is to utilize data adequately and within doing so he assumes the part of business person, unsettling influence handler, resource allocator and moderator. The management of the company should take measures in progressing and dealing with the data framework so that the data might be opportune taken and got to at whatever point required. The data framework is critical as it gives the data to the management keeping in mind the end goal to take out the decisional parts adequately as portrayed in Mintzberg Model. Factors Affecting Strategy A propelled advancement group inside Yorkshire Tea should look into and create new plans and ideas particularly focused around supportability. Its work should concentrate on modern plans and retyping new methodologies in materials, quality and moral methodologies. It should act with respectability and convey its each guarantee. To accomplish its business objective, the management of the company should be conferred distinctly to exceed expectations at all it does. It should search for contending to win as one group. It should need its representatives to achieve their true ability in the execution of errands allotted. It should goal to treat each worker, accomplice and client unabashedly, sincerely and with deference in order to focus the achievement of the company (Saurabh & Ashwani, 2010) Market Strategy The marketing of the item is of extreme importance for the success of Yorkshire Tea. The company needs to center upon the marketing of its items to focus the suitability and future prospects of the company. According to the order of the item as per the Boston Consulting Group Matrix the marketing strategy of the results of Yorkshire Tea is resolved utilizing Ansoffmatrix where the dissection of the market is reflected and techniques received. Market Penetration The market infiltration strategy is received where the company is required to look for development of its existing products in present market portion. The market penetration strategy is that where the company has a tendency to enter its product in the market by diminishing the cost to the base and afterward raising the costs of its products. The market entrance costs are suitable for the Yorkshire Tea for Hard Water, as the product is required to catch a market offer. The lessened costs of the product should have a tendency to catch the market offer and when it has succeeded in catching a considerable market impart the company can raise the cost of the product. Accordingly the product should be giving profits to the company in the long run (Nicholas, 2002). Market Development The market improvement strategy is suitable where the market of the product is very little created and the company is obliged to raise the interest of its product. The company might be deciding the market improvement strategy if an occurrence of the products that the company has wiped out arises. Development in the new market fragment could be found out with the comparable strategy. The company might be giving data about their product in the market and consequently raise the interest of the product (Lisa & Alan, 2010). The Decaffeinated Tea product that the company is putting forth might receive this strategy as to impart the client its importance and utility. The procurement of data in regards to the product should focus the expansion in the interest of the product and eventually expand the market offer of the product and in this manner give expanding benefits to the company. Product Development The product improvement strategy is connected to the products, which are presently in the current market section, and advancement in the product is made in order to build the market offer of the product. The product advancement made by the company indicates the expansion in the nature of the product or different improvements to the product. The product Yorkshire Seasonal is the product that should be embraced with the product improvement strategy as the company creates the product as per the season and accordingly changes the qualities of the product. Diversification Diversification is a strategy that is best suited for the products that the company wants to create which are totally new. The strategy is most risky, as the company might be creating a market offer for the product. The expansion in the business operation is trailed by this strategy and the company needs to center upon the advancement of the product and upon the improvement of the market (Eric, 2012). Yorkshire Tea when wanting to present new products and increment its product line then the enhancement strategy might be emulated. Recommendations For the success of the products sold in the market by the Yorkshire Tea, several different strategies have been identified and evaluated. These evaluations have led to various options that must be focused by the company such as upon the integrated strategies where the combination of various strategies accumulates for different products of the company according to their requirement. The main consideration that the management of the Yorkshire Tea should focus on is to enhance its competitive position in the marketplace along with amplifying its cash flow and to improve its operational efficiency. The main aim of the management is to put its business in a position that is capable of capturing the attractive future growth opportunities that the market has to offer. For the determination of the market shares of its products, the management of the company is to manage its operations in a proper manner. Apart from this, the management of the Yorkshire must also consider the increase in trends in the adoption of tea around the world. The increasing health awareness and health improvement traits of tea the demand of the products of Yorkshire Tea shall be increasing. It is of vital importance that the management of the Yorkshire Tea, focuses on enhancing organizational capabilities and building a customer centric organization so as to yield beneficial results. The management has to focus on trying to be well positioned so as to fully meet the demands of its customers across all markets. Strategic initiative ought to be the most purpose of thought for the management of the corporate that will enhance business capabilities, , operational coming up with, facilitating the sharing of best practices across the organization and leading to higher sales. A certain type of measures are to be developed that facilitate the management to get money for the organization rather than absorb it. These measures ought to have the potential to urge a high share of a slow growth marketplace for the structure product. The product of geographic area Tea ought to generate over is invested with in them. Measures ought to be incorporated that change the products of the corporate to contend within the high growth markets with a comparatively high share of that market. This product ought to generate high quantity of financial gain for geographic area Tea. Furthermore, measures ought to be developed that alter the management of the corporate to urge larger contribution from the triple-crown products to catch up on the failures. Moreover, such measures ought to be known that facilitate the management of the corporate to develop its products quickly and so urge the shoppers to pay money for the products of the corporate. Yorkshire tea shall consider mergers with the other companies so as to enhance its value chain and expand accordingly. The mergers will result in beneficial for the company. Followings are the benefits that Yorkshire Tea shall be enjoying through mergers: The greatest benefit that the company’s target is the increase in their market share as they acquire their competition and along with it its share in market. Merger allows Yorkshire Tea to attain the economies of scale (if there is scope for tat) like discount on bulk purchases Rather than two head offices (or more if there more than two companies are merging) there is one that makes the management more efficient. Financial resources can be expected to increase More resources could be spent over research and development Greater ideas and innovation with higher technical expertise can be expected Merger can allow the company to diversify its business operations The combination of assorted ways for each of the products of the corporate shall be determined. The corporate shall be combining numerous ways like penetration for geographical region Tea for H2O, market development for Decaffeinated and product development for geographical region Tea seasonal. The integrated strategy that is that the combination of assorted ways of the corporate shall be determinative the simplest various strategies for the corporate wherever every product of the corporate shall be centered and therefore the overall aim and objective of the corporate to create profits and supply quality product to its shoppers is set. The integrated strategy thats to be followed by the corporate shall be providing edges to the corporate within the long-term and likewise as within the short run. For the correct watching of the strategic designing the management of geographical area Tea ought to take effective steps. There ought to be continuous watching and regular feedbacks from the workers concerning the daily routines. Monthly conferences ought to be control in every department and feedback from the supervisors ought to be taken so as to confirm the effective and correct utilization of the resources. The performance of every quarter ought to be measured and compared with budget thus on keep the operations of the corporate on the track and at the specified pace. Once quarterly the targets are to be analyzed thus on build them tougher and accomplishable. An annual review must be done in order to match the performance of the corporate with the preceding year and with the strategic designing on what extent the corporate has been ready to come through that was desired from it. The strategic arrange ought to be evaluated in accordance with the performance of the corporate on annual basis and relative measures to be taken so as to effectively implement the strategic designing. Conclusion Not only is the strategic option available to the company identified but is also evaluated. This evaluation of the strategic options is done primarily by identifying the products of the company. Furthermore, the various factors that directly affect the company’s strategic thinking are evaluated. The company has been made able to make strategic decisions regarding the product by defining the product strategy which also enabled it to classify its products in different classifications. The management of the Yorkshire Tea is required not only to be completely focused on the strategic advancement but also to monitor the effective implementations of these strategies. In order to brief the roles that they shall be determining in implementing the strategic decisions of the company, the roles of the management are elaborated. The opportunities that the Yorkshire Tea can avail in the market are reflected by the evaluation of the market and the pricing strategies. The identification of several different strategies that are available for the company coupled with their evaluation the recommended strategy is the integrated strategy that shall be followed and which cumulate different strategies. 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