Analysing Thorntons based on different strategic models

Table of contents

1) Introduction

2) What is the organisation’s strategic position?

3) What are the key external drivers of change affecting the organisation?

4) How does the organisation add value?

5) How sustainable is the strategic position?

References

1) Introduction

The following report is about Thorntons. The company is a famous premium chocolate provider in the UK with core products like boxed chocolate. The paper is subdivided into three sections. The first section points out the actual strategic position in the chocolate business out. The second part discusses the major external drivers and possible changes in the future. Point number three shows the process steps the company tries to add value to their goods. The last figure draws a conclusion about the quality of the actual situation in the competitive landscape.

2) What is the organisation’s strategic position?

The following model shows an overview of the generic strategy of Thorntons plc. and the way the company competes. This will help to develop an understanding of the position and the way the company wants to gain maximum advantage in the fight for clients. Also the form illustrates potential competitors with the related direction and target group.

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The Journal Business Franchise (2007) suggests that cacao and therefore chocolate is still estimated as a high commodity. A competition on price is therefore very difficult and big conglomerates as well as small chocolatiers try to differentiate from each other. But the targeted market is extremely different. Thorntons attempt to aim at the premium end of the chocolate sector. However the classification is caused through a more diversified chocolate portfolio then a specialist. So they try to cover every segment of chocolate, but this occurs on a higher quality and image level then for instance Mars who target a broader range of customers.

The strategy clock fives more detail and refines the picture of Thorntons. The diagram exhibits how groups try to meet the customer demand. Thereby they can differ in major subjects, in the way they add value to their chocolate. Hence, the model demonstrates the importance of critical success factors to succeed in gaining the desired position.

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There are several reasons for positioning Thorntons at number 4 and adding value as a differentiator. First Thorntons has its own distributions channel, with franchised and company owned shops, an internet sales management and the possibility to deliver the commercial business. The whole retailing process is controlled by the firm and guarantees quality chocolate (Thortons plc., 2007). Moreover the new internet presence generates the possibility to buy all products and receive them the next day. But the real surplus value is the option to choose the favourite content of each gift, so it can be modified for every taste. Secondly the excellent service is a unique selling point, even if seasonal peaks decrease the quality of service. It includes also the customisation of products. Hence, the individual packaging is a significant sales argument, too. Thorntons also manufacture the core products like boxed chocolate in-house. Together with the freshness of their goods they want to convey a special impression. Consequently these features justify a competition on unique chocolate and premium prices (Johnson, Scholes and Whittington, 2006).

3) What are the key external drivers of change affecting the organisation?

The PEST Analysis helps to handle the increasing dynamic and complexity of the environment. This investigation will help to identify relevant environmental segments and influences for the future. Thus, identification of special innovations and drivers for further change, especially over the long run, is possible.

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Political

Only ten states in the world produce more then 90% of the world’s cacao (World Cocoa Foundation, 2007). This high concentration of production causes multiple problems. The main concern must be the stability of governments, the major problems in these countries is poverty. So very often military coups or civil wars had taken place and the economic situation becomes worse. A new example is Kenya or Hugo Chavez with the nationalisation of the oil industry (Bertelsmann Stiftung, 2007). Also most people are unsatisfied with the economic situation and think that the government benefits only a few, but discriminate against the majority. This could also be a reason for further disturbances. Nevertheless the commodity is also vulnerable in other parts. The plant needs a stable climate. But the ideal conditions in Africa and South America are in danger because of global warming. The weather will be unpredictable and natural disasters are possible. Consequently the plants get hurt and the productivity decreases (Ogodo, O., 2006). Moreover disease destroys over 20% of the cacao beans that should be use for chocolate production every year (American Forrests, 2006) Therefore companies should search ways to secure a steady flow of cocoa in the required amount and quality. Cooperation with the World Cocoa Foundation could be a solution. Confectioners like Ferrero, Lindt, Thorntons and Nestle realise this potential and try to improve future expectations (World Cocoa Foundation, 2007a).

Economic

A potential driver of change in the economic as well as social sector could be fair trade with cocoa farmers in Africa and South America. Fair trade means that a company buys a tonne of cocoa at the market price and pays a social premium for the commodity. This benefits the planter because of a steady income stream, which is more independent from the volatility of the market price. Furthermore a company with a fair trade label pays a percentage of the selling price to the centralised fair trade organisation. Corporations try to redeem these disadvantages through a higher quality of cocoa beans (Candy Industry, 2006). Furthermore an enterprise could gain a competitive advantage because of their social commitment. The customer can see a fair trade certification on the package and this is becoming more and more important. Due to the fact that clients want to know what they eat and where are the ingredients from. There is also the option to get access to the whole fair trade network. All in all this could be a major trend in the future. If companies adopt ethical standards they profit from the reasons above and are able to build a sustainable supply chain. This could be especially a significant advantage under the aspect of global warming (Doherty, B. and Meehan, J., 2006).

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