SynopsisThe case focuses on the innovative and dynamic business of Martin Case Study Solution who has finally settled in Singapore after 20 years of working across Asia Pacific and Australia. Case Study Solution Gourmet, his diversified company focusing on the smoked marlin market has survived economic downturns and financial setbacks before emerging as a dynamic and flexible business venture. With exceptionally loyal customers and a loyal employee base, Case Study Solution Gourmet is ready to take on future challenges in the smoked market via its strategy of risk aversion. However, with Case Study Solution considering an early retirement, the company is at a critical point in its life cycle where it could risk losing its competitive edge if Case Study Solution does not decide on an appropriate succession. The following analysis explores the internal and external environment of Case Study Help Gourmet before evaluating alternatives which could work in terms of an effective succession alternative.
The external environment for Case Study Analysis Gourmet has been assessed on the basis of the ‘political’, ‘economic’, ‘social’ and ‘technological factors that have played a major role in creating a general business environment for Case Study Solution Gourmet.
PEST Framework for Assessing FG’s External Environment:
The following analysis looks upon the external environment of Singapore in particular as that is the region of price concern for Case Study Help Gourmet. The external environment and its impact on the food catering business in particular are discussed below.
Political Factors: Political factors have played a significant role in supporting the food catering businesses in Singapore as obvious by the support given by the Singapore Government during downturns through cutting the cost of doing businesses. The fact that many Singapore Government ministers studied in Harvard had made them into skilled thinkers and so this made it easier for them to provide a well-cushioned environment for dealing with business downturns. Fiscal policies in the form of lower costs and taxes were introduced by the government to deal with downturns while at the same time the public has faith in the fact that the government would provide means of dealing with downturns in the future too.
Economic Factors: The fact that the political environemnt is s supportive indicates that economic downturns do not bring about major setbacks for businesses in Singapore in particular. In Case Study Solution Gourmet’s case the company was catering to the airline industry initially so an economic downtrun had brought about a major financial crisis. However, it could be seen how purchasing power throughout the economy had not diminished despite economic downturn in the airline industry and so economic factors such as cost reduction, generation of additional revenue streams and importing from other regions were not seen an major economic concerns.A financial crisis may mean that people stop spending in one particular segment but it encourages sales of another segment therefore, diversified businesses are in a better-off situation during economic downturns.
Social Factors: Social Factors can play a major role in triggering demand in the food business. For instance, family outings can trigger increased demand while word of mouth can play a significant role in promoting new ideas and products. Discounts are able to attract value customers while shopping in groups has been a common practice followed by the people of this region.
Technological Factors: The smoked fish products business could make use if a lot of automation for effectively reducing staff especially as factories in Norway were already opting for the latest technology for salmon slicing. However, investment in automation meant redundancy for workers and businesses in low-tech areas offered more protection for employee jobs. Automation also required availability of finances and economic downturns had proved that flexibility was a better option as opposed to getting finances stuck in heavy capital investment.
The internal analysis for FG has been done via three frameworks. A SWOT analysis identifies the strengths, weaknesses, opportunities and threats in the environment while a VIRO analysis evaluates the company’s resources and core capabilities. A third section looks upon Case Study Solution’s innovative capabilities by evaluating his approach towards resolution of critical issues over the years using Yesersky’s ‘General Theory of Innovation’.
As per the SWOT analysis in appendix 2, it can be seen that one of the most significant strengths of the business is the dynamic and innovative skills of Case Study Analysis. Interestingly this can also be considered a weakness for the business since Case Study Solution’s planned departure from the business could result in a chaotic situation unless the succession is handled strategically. The business’s diversification in terms of catering to various market segments has increased risk aversion while at the same time a presence in Asia across different regions has allowed FG to avail supply chain benefits via relationships with suppliers and retailers. The fact that FG’s food products are high in quality and low quality ingredients are not used to cut costs has resulted in customer loyalty. Loyalty has been nourished further by a market-orientated approached where a close relationship with customers has resulted in the ability to cater to their dynamic demands.
While the working environment and employee loyalty can be seen as a strength for FG, major weaknesses have also sprung from this setup. Employee retention has resulted in an aging workforce in the company which can be problematic since Case Study Solution is looking towards taking an early retirement from his management role. With 20% of his workforce nearing the age of retirement, he may not get a potential candidate who can fill up his place while younger employees may need to be trained further before they can take up senior positions in the management.
Looking at the opportunities available in the market it can be seen that the large order potential of the airline business should be taken as one major segment that could be explored globally. FG’s high quality in food products makes it a potential candidate for merging with a large multinational as it could add to the latter’s product line. A demanding customer base can also be looked upon as an opportunity to explore new avenues in terms of innovation. The fact that the business had to encounter economic instability during recessions suggests that that increased demand for packed food during recession could also be a potential option that could be explored further.
While these opportunities may seem attractive for FG at this point, there are threats in the environment which should not be ignored. Threats are there from various avenues such as competition from frozen packed foods catering to airlines during times of recession. In addition to this, competition from sandwich chains in shopping malls can also be a potential threat for FG’s food business in this area. The fluctuation prices of food items in the hotel catering business could be a threat to FG’s cash flow while a greater threat to the cash flow could come from small businesses that can result in bad debts especially as these businesses have a great tendency of becoming insolvent.
Critical Analysis of Case Study Solution’s Innovative approach
Case Study Help’s innovative processes would be evaluated using Greg Yezersky’s ‘General Theory of Innovative’, a framework outlined in appendix 4 which highlights a generic process listing stages of innovation. This framework will be used to assess how effective Case Study Solution’s approach has been in dealing with underlying problems (Greg, 2007).
Identification of Environmental needs: As per the first step of the theory of innovation, the needs of the environment are to be identified before an innovative idea can be taken forward. The SWOT analysis has looked upon certain threats and weaknesses in the internal and external environment of Case Study Solution Gourmet. The PEST analysis before that identified the issues and concerns in the external environment. This has created a general picture of the environment that Case Study Analysis was facing. Following the dissolution if the major course of income after the airline crisis, FG was in dire need of a new source of income which could offer sustainability to the business. Simultaneously income was also affected later during economic downturns in the airline industry but by then Case Study Solution Gourmet has already diversified and adapted to the changing needs of the environment.
The need of the hour during the initial days of the airline crisis was to find new sources of income which were particularly from amongst business areas which had not been affected by the crisis. This required an act of market development since new markets had to be explored to lower the dependency on the airline business. The external environment had created a situation where long term reliance on the airline industry would be risky and so a new market had to be developed in the long run which could withstand the pressures of economic downturns in the future if another one of these crisis hit the airline industry. In addition to this Case Study Solution’s ethical obligations in the form of continued employment for approximately 50 employees had to be justified. So their services needed to be utilized in order to justify their costs to the organization.
Identification of Problems: As per the framework, the second task at this point was to identify the problems that needed to be solved. While the first step had looked at the needs of the environment, the organization now had to identify issues which needed to be tackled for adapting to the environment. The first step required in this direction was to reduce reliance on one or two markets and so the optimal solution for Case Study Help Gourmet was to diversify. This also meant that relationships with airline caters should be maintained so that FG could get back into this segment once the industry recovered. It has already been mentioned in the SWOT analysis how the airline industry offered a large potential market and therefore it was important to maintain these strategic relationship even if there was a temporary breakdown. This mean that another significant factor was to look towards provision of low cost and efficient supply of seafood to the airline industry in the future so that even if the airline industry went into a crisis again, its reliance on Case Study Solution Gourmet’s seafood products was not viewed as a costly expense.
During the period of solving problems, Case Study Solution made sure that there were enough tasks and jobs at hand to keep the employees engaged . He wanted to make sure that the organization stuck to its ethical practice of avoiding redundancies and therefore each employees cost had to be justified via an effective utilization of his time. This was the period when Case Study Analysis Gourmet actually started looking for avenues which could be explored for potential revenue generation options. In order to reduce the burden of overheads on the organization during low revenue periods, the organization did not make any employee redundant and remained true to its promise of finding alternative means of efficiently utilizing working hours and resources. Rewardingoptions were offered to employees in the form of additional leaves with pay if they voluntarily took time off without pay.
Problem Analysis & Solution Generation: Case Study Solution’s approach to problem analysis led to the generation of solutions which could affectively help the organization in adapting to its external environment. These solutions included market development and product development respectively where new markets were identified and new products were developed. In addition to this, diversification was adopted for identifying new products for new markets.
The initial stage of reducing overheads made use of the strategy of reduction of the number of hours worked by each employee. This was an effective short run solution for reducing overheads before Case Study Solution Gourmet could actually diversify into markets which could offer additional revenue streams for risk aversion.
The initial market was in the form of small shops and gourmet outlets where Case Study Solution gourmet made deliveries of soup. Not only was this the identification of a new market, it was the introduction of a new product in the product line as well. The initial strategy had been a complete reliance on airlines where high quality fish products were delivered to the high-end airline segment. While this may have been profitable while it lasted, the less desired parts of fish were not utilized for the airlines. The utilization of off-cuts and less desired fish products for additional markets was not only a form of market development for revenue generation, it also acted as a means of covering costs. Where markets may have seemedinaccessible in other channels of distribution. Case Study Help gourmet used the strategy of reaching out to the market more conveniently. For instance parking lot sales were developed for accessing housewives and party organizers and thus an additional market segment was identified by going beyond the comfort zone. In addition to these strategies, retails, hotel and small shop sales were Case Study Solution Gourmet’s idea of further reducing risk via diversification.
Solutions Evaluation: As per the four stage of the theory of innovation, generated or proposed solutions need to be evaluated in terms of their effectiveness for solving the identified problems. This would elaborate the effectiveness of the solutions for respective problems.
Diversification and new market development turned out to be a rather favorable move since Case Study Solution Gourmet has become a flexible company which is able to adapt to changing market situations.
The initial move of identifying the soup market turned out to be an effective solution since it became one of Case Study Analysis Gourmet’s best secondary income sources and has been a consistent income generator till 2013.
The solution in the form of selling off-cuts developed products did not just turn out to be an effective income generator but was also a means of covering costs which was the initial plan for opting for this strategy. This suggests that both the soup market and off-cuts market have been favorablesolutions for the problems at hand.
In addition to this the use of parking sales turned out to be an effective means of reaching out to housewives and party organizers and the fact that this market has a high elasticity of demand made it even more vulnerable to discounts offered for luring more customers. The effectiveness of this strategy can be assessed by the fact that it was further developed into a home delivery service which means that a greater number of potential customers showed interest in the service than the identified parking lot market.
The fact that Case Study Solution Gourmet did not let go of its long-term relationships with airline caterers also aid off since following the crisis the sales from this market segment also picked up and significnat orders and sales were generated .Since Case Study Solution Gourmet had adopted a flexible approach to catering , it could easily adapt to the changing demands of the airline catering companies and therefore it was able to experience significant sales volume.
Furthermore, it can be said that the retails, parking lot, hotel and gourmet shops were aslo effective stargic moves since these markets became strong customer bases for Case Study Help Gourmet after the crisis. The diversification into sveral avenes proved to be a rather successful move which made the company eneter alternative markets which could each offer a cussion for other makret segments during times of economic crisis.
Evaluation of AlternativesThree alternatives would now be evaluated on the basis of their attractiveness for Case Study Solution who is interested in finding the best alternative for deciding the fate of his business.
Sell of Business: The option of selling FG can be further broken down into two alternatives, Case Study Solution could either put the company for sale to a third party on the open market or he could offer the company for sale to the current employees of the business.
Since the employees have shown intense loyalty to the company, it is a good chance of acknowledging their services by giving them the option of buying the company. This way they can share in the wealth that they have helped Case Study Solution create over the years. By buying shares of the company, the employees can have a direct say in the running of the business and the company does not have to go through any dramatic changes in terms of management or organization. The same workforce can continue to take the company forward with its existing competitive edge while at the same time this would be a secure move since external parties would not be getting involved in altering the course of the business.
Since Case Study Help is looking for some time off for himself, he could remain a part owner of the company which would reduce the burden of decision making from him while at the same time he would not be losing his complete ownership.
However, there are certain drawbacks with this option. Since some of the employees are older than Case Study Solution, they may themselves be looking for retirement plans so there may be lesser interest from their side. As far as the younger employees are concerned, they may not have ample savings to buy shares which could give them ample ownership rights. Even if they are interested in going ahead with this offer, they may have to take loans, which could increase their long term liabilities thus resulting in overheads in the form of interest payments.
Selling to a third party has its advantages for FG since the business is positioned to cater to the demands of the specialized seafood market and has the potential of attracting a larger player like a multinational organization. However, it should be noted that Case Study Solution has been valuing the long-term commitment of his employees and selling to athird part could mean handing over his business and human resources to a party which may not be too focused on giving the same privileges to employees. This way FG may eventually lose its competitive edge, which has been built over the years through these long-term relationship.
Internal Recruitment for senior management: The second alternative available to Case Solution is to retain the ownership of the company but allow someone else to manage the company. This alternative again has two further options in terms of who can take over the management from Case Study Solution. Case Study Solution’s wife can be a great replacement since she has the experience of seeing the company develop from its earlier days. She knows about the problems that FG has had to face in the past and has the knowledge about Case Study Solution’s vision for the company. However, handing over the management of the company to Case Solution’s wife would mean engaging her in the role of the manager as a full time resource and Case Study Solution’s idea of retirement would be marred by this alternative. His plans of travelling, relaxing and pursuing post retirement activities may not be possible of his wife gets completely held up by the management of the company.
The second option is to hand over the company’s management to the long-term managers of the company. It may be high time to promote some of the mangers for taking the roles of the senior management of the company while at the same time this would mean allowing the company to continue with its existing vision. While this option would allow Case Study Solution to indulge in post-retirement activities, it would also keep the ownership in his control. Along with this, this option would also keep the avenue of taking up the senior management role again in case the alternative does not remain sustainable. Additionally, this would be a good move in terms of training the managers to take control in Case Study Solution’s absence.
However, there is the possibility of jealousy arising from the internal circle if Case Study Solution promotes a certain manager to the position of the senior management of the company. This could result in demotivation amongst the managers who may be expecting Case Study Solution to choose them for the role.
External Recruitment for Senior Management Role: A third option is to opt for external recruitment and hand over the company’s management to an outsider. This option has the potential of injecting new ideas and new energy into the business, which could complement FG’s market-orientated approach. Although this could prevent internal resentment while at the same time it would allow Case Analysis to go ahead with his retirement plans, there are various implications of this decision.
Firstly, an outsider may not share the same vision that Case Study Solution has for the company and so it may lead to a cultural change within the organization. Secondly, this may also result in resentment from the company’s long-term managers whohave shown loyalty over the years and may be expecting Case Study Solution to select a senior manager from amongst them. If this resentment leads to loss of human resources, it may prove to be a blow to the environment especially as Case Study Solution himself would also be resigning from the role of the management.
An analysis of the three alternatives indicates that an option which allows Case Help some time off for pursuing post retirement activities would work well for him. However, giving up the entire ownership of the company to a third party is not a feasible option since that would mean giving up on all the ethical values that the company has held on to in the past. The fact is that Case Study Solution Gourmet is not undergoing any financial crisis as evident by the rising income over the years. Additionally it can be seen that the company is well equipped to survive in economic downturns, which shows that Case Study Solution does not have to worry about injecting further capital into the company at this point. Giving up this venture in terms of selling it to a third party would take away the option of taking it forward via innovative strategies. Therefore, it is recommended that Case Study Solution should train his senior managers to take his place in his absence while retaining ownership of the company. This way he has the option of taking control of his company later in the coming years if he is does not want to pursue the option of an early retirement.
As a contingency plan, he can always opt for selling the companyto a third part later in the years if he feels that his senior managers are unable to cope with the pressures of a dynamic environment in his absence.