In this assignment my role as a senior manager of had chosen organization. Where I choose innocent ltd, which is a UK based juice Drinks Company. In this report firstly have to find out innocent company's strategy with its external and internal environment then secondly have to develop a clear mission, objective and market characterize of innocent ltd and finally develop a corporate strategy for innocent ltd.
About innocent ltd:
Innocent Drinks is a UK based company founded in 1999 whose primary business is producing smoothies and flavored spring water, sold in supermarkets, coffee shops and various other outlets nationally as well as in Ireland, Amsterdam, Germany, France, Austria, Brussels and Copenhagen. Innocent has a 71% share of the £169m UK smoothie market and the company sells two million smoothies per week (BBC News, 2009).
Innocent Product features:
All our drinks are made from pure, fresh and naturally grown fruits and we don't use any artificial or genetically modified ingredients. Each of the bottles of our drinks provides the daily fruit requirements and provides the 25% vital vitamins required daily. Children drinks are specially made to provide all the essential vitamins to sustain their growth. Young drinks are highly refreshing and energy boosting. It is perfectly suitable with the fast life style of today's young generation. Adult drinks are designed considering the needs of working adults who just not only need a fruit juice, but also something extra to give them a refreshing, natural feeling and which is helpful to keep them fit. Our adult ranges drinks are completely capable of deliver these expectations. All our products are examined and certified by the standard quality assurance institute of United Kingdom.
There will be three kinds of bottle available- 250ml, 500ml and 1000ml bottle. Children drink will come with only 250 ml bottle. Young, adult and older- these drinks will come with 250 ml and 500 ml bottle. 1000ml bottle will be served for family.
Our products are tested by The British Soft Drink Association and Food Standard Agency. Our raw products and all the ingredients are rigorously checked at every level of manufacturing by our expert food quality specialist and all our raw materials come from the reliable suppliers who also strongly maintain the international food safety standard.
Time: Fruit juices are now available for whole year because of the technological advancement of storing product for longer time and its not a seasonal market. Demand for juice is existed all year round.
Growth: The growth of the market is in its infant level but expected to be competitive soon because of people's concern about health and diet. According to the government last two years data sale of chilled items, high class and natural juice have increased by a staggering 60 per cent to some £769 million (Mintel, 2009) .In 2009, fruit juice accounted for 70 per cent of the in general £2.72 billion market for fruit juice and juice drinks (those containing less than 100 per cent fruit juice with added ingredients).
Market size: Market size is increasing rapidly, mainly because of the high concern of health and fitness and people's declining interest on traditional soft-drinks which are high in calorie and one of the main reasons for obesity. According to BBC's report, in the U.K 2.2 billion litres of fruit juice are consumed, around 36 litres for every man, woman and child every year.
Consumer type: According to government statistics report population in U.K was 59.8 million in mid 2004 and for the first time the number of over 65 people are higher than that of children. Ageing population is increasing substantially and they are becoming significant market segmentation. With a strong income level consumers have strong spending power and they are interested in quality, healthy food and drinks.
Market size: As we have seen from previously stated data that market for fruit juice is expanding rapidly in the U.K, it's obvious that people concern about health and healthy diet would push the market size up in future.
Market segment: We have segmented our market into 4 category based on people's age and these are children, young people, adult and older people. All of these segments are equally important and there are huge opportunities behind these segments.
Market Location: There are huge opportunities to increase the market and go for international market as according to various report European people are getting more concerned about health and already the sale fruit juice has increased in many European countries.
Innocent ltd Situational analyses (PEST analysis)
Legislation: U.K government has currently recommended to specify about fruit juice products and it should be specified whether its concentrated fruit juice or 100% pure fruit juice.
Health and safety: Health and safety regulation is strict in the U.K and it's a major concern for the company whether its employee's health and safety or consumers health and safety.
Labour cost: Minimum wage has been increased by the government and it can directly affect company's cost.
European agricultural agreement: The business relation among the European countries is strong because of various agreement and treaty. It is helpful to get and use the raw material from European countries.
Inflation: Inflation rate in 2005 is still lower than that of January 2004, according to BBC's report. But increased wages and oil price could lead to higher inflation in near future.
Economic growth: According to government statistics economic growth is stable and rising; though at slower rate.
Price: As inflation rate is lower than expected, price of materials is reasonable at this point. But it's uncertain how long it will be like that as there is uncertainty about oil price, housing market situation and consumers spending.
Education: People are concerned more about health and fitness than before and in various educational institutions people are getting aware of healthy foods and drinks. It's a big advantage for our products to be popular among consumers.
Environment: As there is growing tension about environment its necessary to operate all the activities obliged by the guidelines of the government. Recyclable packaging, less waste-making machinery and environment friendly system should be used to operate manufacturing.
Population: Population is increasing and surprisingly ageing population as well. Therefore that segment of ageing population should be noticed.
Change in lifestyle: The most important advantage for our products is the people's attitude towards healthy lifestyle. As our products are made of natural food and helpful for healthy lifestyle, current population would welcome it hugely if strong strategies be utilized.
Improvement has been done in the industrial machinery and new technology should be used by the company to get the advantages. It can reduce cost and increase revenue.
Innocent Competitor's analysis:
Main competitors: Innocent smoothie drink is now in command position in the market with a 30% slice of a market with a retail value of about £50m, according to market researchers AC Nielsen. The market has a number of strong brands including names such as Del Monte, Robinsons, Tropicana, Lucozade, Ribena, Sunny Delight and Shloer. New product launches in 2000 included Fruit Shoot and Juice Up from Britvic Soft Drinks Ltd, Fruit Burst and Smoothies from Del Monte Foods (UK) Ltd, and Light Sunny Delight and bottles for immediate consumption from Tropicana United Kingdom Ltd.
Competitors strength: Compare to our company, competitors are much ahead than us regarding brand reputation, market share, loyal customers and market location. Innocent smoothie drink has been popular among U.K customers as at the moment its only serving 100% fruit juice. PepsiCo is a global company and their operation is much larger than any other company. Tropicana fruit juice has also substantial market share with large amount of customers. All of these companies are relatively more experienced than us and their promotional activities are also large.
Weaknesses of competitors: Though our competitors are well ahead of us in some respects but they have some weaknesses as well. Most of the company who are selling fruit juices are actually not selling 100% pure fruit juice. Consumers are now getting more concerned about that. Their product range is also lower than us. In price and product features case, they are not fully prepared to serve the customers expectation. None of them has yet targeted the older people segment so significantly where we see more opportunities.
Innocent company SWOT Analysis:
Strength of the company
Products: Our products are highly competitive and have the potential to fulfil the current demand of the consumers.
Price: High quality food but low price- is a strong strategy of the company. Keeping the price down could give high market advantages.
Financial position: The Company is fully solvent and has the fluent capital for the investment. It will prevent the company to fall into any unexpected debt or burden.
Distribution channel: The Company has a range of strong distributor which are largely visited by people and situated in the main city area.
Efficient workforce: The Company has a group of efficient, motivated and skilled workforce who are dedicated for company success.
Market knowledge: Though the company is new in this market but it has highly experienced management staffs that have previous market knowledge.
Community relation: Company has various plans to work with the different communities around the country and it would help to improve public relation.
Weakness of the company
Weak brand reputation: We have relatively less brand reputation comparing to our competitors.
Smaller distribution channel: The distribution channel is smaller than that of our competitors.
Customer relation: We are still unknown by the consumers and virtually we don't have loyal group of customers.
Pricing policy: A lower price strategy would generate lower profit margin.
Marketing location: As the company mainly concentrated on the urban areas, customers from rural area would be out of using company products thus the company would loss huge number of customer.
Product feature: The Company is only concentrating on natural, fruit smoothie and it would prevent them to gain advantages from selling other various kinds of juice such as chilled fruit juice, concentrated fruit juice etc.
Growing market: As we have seen from the previous data that fruit juice market is growing rapidly, there are many opportunities laying in this market Varying the products features and benefits, market can be extended a lot.
Emerging sectors: Along with fruit juice, chilled drinks, healthy drinks and nutritional drinks market are also growing and the popularity of these products are helping to open new sectors.
Changing social attitude: People now don't just see fruit drink as children drink but they have realized that its good source of healthy diet. With the hectic and busy lifestyle, people are now more interested to be physically fit and healthy.
Market competition: A big player in this market. PepsiCo, are often accused of their products being too sweet added and high calorie. It's a good opportunity to turning these unsatisfied customers into our products.
Technological advantage: Technology is helping significantly to ensure stable level of agricultural products growth and maintaining operation smooth. With the new technology it could be easier to manufacture, distribute and operate our products.
Government co-operation: Government is trying hard to make people educated about healthy diet and drink. It's a good opportunity to work with the government in the same strategy and gain our own objectives.
Competitors: Competitors are always a threat for company operation. Innocent smoothie drink is planning to extend their market and go for international market. PepsiCo's buying of U.K famous brand PJ Smoothie would give it a larger operation and advantages in the U.K market. Tropicana's sale has increased over the year and it could extend it business more.
Weather: Rapid environment change and several weather disasters which have happened throughout the year have affected the growth and supply of fruit. America's Katrina tornado had done substantial damage to the fruit production which can affect the U.K fruit supply.
Political situation: Current political situation and increasing oil price can significantly affect the whole economic structure at any point.
Innocent Ltd is a U.K based, privately owned company offering a range of high quality and diet friendly smoothie fruit juice to the market. Our mission is to serve the customers high quality natural, fruit ‘smoothie' drink prepared with the best quality raw materials within an affordable price and gradually increase our market share every year. Our products are consisting of different kinds of natural, fruit drink targeting the huge market of different segments of the population. Our target market is fragmented into four main categories - 1. Children 2. Young people 3.Adult and 4. Older people and we have in total 24 different products. All products will be available in the superstores, retail shops and corner shops.
Serving the customers 100% natural and pure fruit juice with the highest quality with low price. Gaining strong market share within 5 year and keep the growth steady and stable.
For the first year our objective is to sell 70 million liters of juice where market demand at this moment is 1200 million. We are going to sell our products from February 2006 in the U.K market and it will be served in all the branch of Tesco, Sainsbury's, Waitrose and Mark and Spenser, along with superstores and we want to sell around 5 million liters of fruit drink in our first month.
From December 2005 we are going to advertise our products in the national newspaper, radio and billboard. We are also going to sponsor a range of sports events starting from January 2006. Our public relation team is going to participate with various community works from January 2006. All these activities have been designed to effectively promote our products and make people aware of us.
Innocent's primary and mainly significant step in makeing a sustainable business is to simply use 100% natural, healthy renewable ingredients for our drinks - quite simply, we will put nothing into an innocent smoothie bottle unless it is made by nature.
Innocent SMART objective
Specific - Objective is to go out on a high level of sales.
Measurable - ‘To Fill the Plant' this not only optimizes Innocent but ensures long term viability
Agreed - Approved to the customer for their quality.
Realistic - When are we going to achieve it and when will we start?
Timetabled- In their first three-year innocent ltd plan is to get closer to the fruit.
Organizations are as individual as nations and societies. They have widely differing cultures, and these are reflected in their values, ideals and beliefs. The organization's culture is what gives meaning and purpose to the work lives of its members. An organization culture influences its strategy, its ways of doing business and they it responds to change. A strong culture will be beneficial if it focuses on need to change proactively.The culture of an organisation influence the way in which it operates, so it is necessary to understand the culture before deciding how people might contribute to the success or failure of the organisation.
Put in simple terms, the culture of an organisation can be defined as: ‘The Way We Do Things Here!'
Organisational cultures determine the way in which things get done, for example:
* The way newcomers are welcomed to the organisation
* Approaches to new technology
* Approaches to work
* Attention to detail
Types of organisational culture
* Power culture: Based on personalities, Small size, good personal relations.
* Role culture: Roles, not personalities, no entrepreneurial, stability, slow to change.
* Task culture: team based, Results-orientated, Costly (because of variety), Job satisfaction.
* Personal culture: Individual based, Rare, existential culture.
Culture of the Innocent organization:
Innocent organisation has a task culture. Task culture-‘It is very much a small team approach - the network organisation - small organisations co-operating together to deliver a project. The emphasis is on results and getting things done. Individuals empowered with discretion and control over their work is flexible and adaptable.'(Charles Handy, 1985).
In our organisation, Innocent, we have team-based approach to perform any job. Team work plays the major role to achieve organizational objectives. The culture of our organization is working as a team, co-operating each other to achieve our goals and objectives. In the team all the staffs are empowered, so they feel motivated and important at work. All the staff are empowered to make decisions to some extent and they are given responsibilities within the team. So the staffs feel valued and responsible for their jobs. In my work place has nearly 20 Staff. This staffs are from different ethical background and different countries. So various behaviours of team members' mesh together in order to achieve objectives. We all work hard successfully in our team. Our manager guides us to do our work properly. He motivates us to achieve our objectives. Our team consists of different skills, knowledge and experience. We exchange those things, when it need. Team members are confident each other ability. Bring together a number of individuals who can perform any of the group's tasks. These tasks can be shared out in a more flexible way between group members, according to who available and best placed to do a given job at the time is required. We practise an open honest communication at work; we trust eachother, respect each other and enjoy our work. This culture of our organization encourages success and drives us towards achieving our objectives.
Innocent Culture in four layers:
Values, on innocent website the company claim to have the following values a care of the environment, safety initiatives, diversity and a care for the community
Beliefs, innocent beliefs have changed somewhat in the last 10 years, for example a commitment to the health issue t is now centered in innocent core beliefs as this will directly affect market share and future sales
Behaviors, is a core issue for innocent the company is using labored and inefficient production techniques, innocent must now embrace just-in-time management techniques which means continuous improvement that delivers organizational benefits and increased customer value.
Paradigm, this is where innocent has scored a own goal, in believing in the wrong set of beliefs the company ignored outside consumer trends and as a result is facing ever challenging market condition.
Implementation of the strategy:
When formulating a strategic plan, some essential factors must be incorporated. These factors outline the whole process of planning and evaluating strategic objectives.
A typical planning process cycle will have the following structure:
3.1 Internal Environment 3.2 External Environment
4. Corporate Analysis
5. Strategic Choice
6. Strategic Implantation
7. Review and Control
Mission: The purpose of the organisation will be defined in its mission statement. All other activities will relate and contribute to this ultimate goal.
Objectives: The objectives define how the mission will be completed. These objectives will be short-term versions of the mission.
Internal environment: This factor evaluates the working power of the organisation, mainly in terms of resources, skill and capabilities.
External environment: External influences such as the government, society and competition will be evaluated at this stage.
Corporate analysis: The strengths, weaknesses, opportunities and threats are evaluated in order to structure the decisions made by the organisation in terms of growth and other achievement goals.
Strategic choice: Long term development plans will be considered and decided upon. The most suitable options will be implemented following this.
Strategic implementation: Strategic planning for various business counterparts such as marketing and production will be decided.
Review and control: The final assessment of the strategic plan will be evaluated; measured mainly by sales and growth.
Innocent Implementation of Change:
Suitability, due to market conditions/demand Innocent has to implement change and exploit opportunities and play to its strengths this can be achieved through producing more healthy drinks using all the brand names at Innocent exposal
Acceptability, this aspect covers decisions made on financial assumptions, in the case of Innocent the business simply must be proactive and take calculated risk to improve the performance which currently is very poor
Feasibility, Innocent certainly has both the resources and competences in place to move ahead with cultural and management changes, the company can use financial capital from other profit making areas of the business
Innocent performance analysis in terms of taken action:
Strategically innocent have achieved both some success and failure in its operations to improve the situation in market, for example the reduction of employees and closures of unproductive plants are fully justified as the business can't continue to record huge losses year on year. Innocent's poor management structure was unable to make quick decisions in an ever changing market. However there are also strategic failures innocent implemented for example a strategic alliance with an UK market would have been more beneficial then with Fiat as this alliance could have given innocent access to superior management and technology resources, in return innocent could have offered some concessions to the UK market
Innocent Change Kaleidoscope strategy:
Here below are innocent influence strategic change programmes:
(Balogun &Hope Hailey, 1999)
Innocent should focus the following things:
* Management embrace culture changes
* Less layers of management make decision making faster
Force Field Analysis:
This is a specialized tool used of weighing up the pros and cons of decision making; given innocent current financial situation it would be advisable to use this tool. Force Field Analysis allows management to see the full impact of proposed decision making; Innocent needs to undertake radical change to meet new consumer and competitor trends.
Competition can be very dynamic and fast moving. Despite of these barriers, innocent has been maintaining a strong position in the market; in some countries being the market leader. One very important factor that contributes to the success of innocent in the competitive market is due to their unique hybrid energy technology. The company is able to differentiate itself from competition as superior in the technological field. Porter (1996) suggests that an organization should have a strategy that will give an advantage to a company by means of cost leadership, differentiation or focus. Innocent has adopted a differentiation leadership. The superior technology has allowed the organization to excel in its market against competition by providing ‘better' technology in its vehicles. Differentiation has several benefits; such as high market share, low competition, high value products and higher profit margins. It can be argued that it may accommodate an initial chance for a monopoly. On the other hand, ‘me-too' companies can copy directly or indirectly the essence that differentiates innocent from other firms; although there is a barrier of expensive research and development and marketing. As long as innocent can remain stable as a differentiated organization, it may prosper as long as possible. In order for innocent to continue with its success, strategic planning must be done very carefully and efficiently. This means time management, frequent evaluation and flexibility to the changing environment. From what is understood of the strategic planning process, it is a very expensive and time consuming process. However, it is an investment which will surely be worthwhile.
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