Sorry for the short notice because the case study just released today
BMO6511 Take Home Exam case study: 50% Instruction: As a business Strategist, justify why it is important to conduct an external analysis of the Haigh’s Chocolates business in the case study that you’ve just read and examined? Read the case study then use the PESTEL strategy to analyse in more detail and broad. No references require for this assessment. Word Counts: 1500+ Set Up Example: Introduction, Political, Economic, Social, Technological, Environmental and Legal (Sub-headings) and Conclution. Due date: 13 October 2019 Haigh's Chocolates case study - BMO6511 T2 2019 exam version.pdf 1 Haigh’s Chocolates – Their Future? A case Study Dr Paul A P Szuster Ms Kerry-Anne Smith MBA 2 Abstract: This decision-based case study about the iconic confectionary brand, Haigh’s Chocolates has been prepared to generate discussion in management education courses. Qualitative case research was used to gather the data. In preliminary interviews with the joint managing directors, Alister Haigh and Simon Haigh, a set of seven research issues were identified. Interviews were held with nine members of the executive management team. Data was recorded digitally and in note form. For each research issue, the convergent method was applied when answers were found to have a consistent response. As a case study there are no specific findings. However, students of management are asked to hypothesize: Will the company continue to grow and thrive? Can it maintain its culture of innovation, customer care and creativity? Will its passionate customers continue to be loyal in the face of rising competition and changing consumer habits? Can their two production facilities in Adelaide support further retail growth? And at what pace does the business want or need to grow? Being a tightly run family enterprise, the internal accountant was not interviewed at the request of the CFO. The research process was not given access to any more specific financial data than a publicly known turnover in the order of A$60m. pa. Issues confronting tightly run family enterprises, and fair-trade practices are presented. The addition of a “P” for partnerships enhances the traditional marketing mix. This work is the first time that a paper has specifically examined the operations of Haigh’s Chocolates. 3 In the boardroom of Haigh’s Chocolates, Chairman John Haigh reflected on what he had achieved in his 70 years serving the family business. He joined the company in 1946 with an ambition to take his grandfather’s business to a new level. In 1990 he handed the role of Managing Director over to his two sons, Alister and Simon. They too had ambitions similar to their father, and today Haigh’s Chocolates is an Australian retailing icon, with 16 company owned and operated, prime location outlets in three capital cities. The question now is where to next? Will the company continue to grow and thrive? Can it maintain its culture of innovation, customer care and creativity? Will its passionate customers continue to be loyal in the face of rising competition and changing consumer habits? Can its two production facilities in Adelaide support further retail growth? And at what pace does the business want or need to grow? This decision-based case study has been prepared to generate discussion in management education programs. The study looks at the background of the confectionery industry in Australia, including the unique history of Haigh’s Chocolates over four generations. Marketing will be addressed with consideration to the contemporary 7 Ps (Rafiq & Ahmed, 1995), noting that Haigh’s is both a manufacturer as well as a retailer of chocolate products. Consideration will also be given to the importance of partnerships in the marketing mix, especially in the supply chain (Berman & Thelen, 2004) as Haigh’s Chocolates seek to partner with other iconic products and supply chain stakeholders in its approach to continuous innovation. Succession planning and the complexities of running a family business are addressed, with the current Managing Directors considering how the next generation of Haigh’s will play a role in the future. However, this is not the only HR issue weighing on management. Haigh’s has developed a culture of recruiting quality staff, continuous training and the maintenance of loyalty. Readers will be encouraged to question how the company can maintain these characteristics as it moves towards the year 2030. Manufacturing operations are also discussed. Readers will be presented with the dilemma of how the current production facilities and outsourcing will cope with further retail growth. 4 Throughout the paper, references will be drawn from the literature. Reflections will be made to contemporary management theories such as the resource-based view, PESTEL, Porter’s Five Competitive Forces and VRIO. The research methodology Qualitative case research was used to gather the data (Yin, 2013). In preliminary interviews with the joint managing directors, Alister Haigh and Simon Haigh, a set of research issues were identified. Interviews were held with nine members of the executive management team and the two Managing Directors over a one month period in mid 2016. Each interview took approximately one hour, the interviewee presented with each of the seven research issues as open-ended questions. Data was recorded digitally and in note form. For each research issue, the convergent method (Perry, 2013) was applied when answers were found to have a consistent response. The internal accountant was not interviewed at the request of the CFO. The confectionery industry in Australia The chocolate manufacturing and retailing industry in Australia is a mature industry with approximately $5.9B in revenue each year (IBIS, 2016; Little, 2015). Haigh’s Chocolates, being a tightly run family enterprise, the research process was not given access to any more specific financial data than a publicly known annual turnover is in the order of A$60m. Like all industries, there are a range of external influences impacting on operators including; An increase in free trade agreements opening up the industry to global competition (Australian Government, 2015). Challenging economic times put pressure on markets, however it has been argued that this is not necessarily the case with luxury goods (Truong et al,2008) and in this case, premium chocolates. (Hauck & Stanforth, 2007). Globally, buyer sentiment towards premium chocolate is growing, with an increasing demand for luxury couverture chocolates, (IBIS, 2016; Magner, 2015a; Magner, 2015b). 5 A range of social trends impact consumer choice including consumers searching for quality produce and an increasingly time-poor society (Weber Shandwick, 2014). Improvements in technology are increasing manufacturing efficiency which, in the confectionary industry, is leading to the entry of new boutique chocolate manufacturers (Donoghue, 2015). Direct online shopping through e-commerce channels is enabling premium boutique lines to grow (Mercieca, 2010). Food handling and labelling legislation are important for food manufacturers and retailers to be aware of (Foodstandards.gov.au, 2015). In addition to the range of external impacts, competition within the industry is high, and though moderated through contractual arrangements (Little, 2015), bargaining power of suppliers and buyers is significant. Currently Haigh’s is vertically integrated, supplying chocolates from its manufacturing business to its own retail outlets, and based on this model, Haigh’s believe that they do not have any immediate or direct competitors in the premium chocolate market. They are the only significant chocolate company in Australia who are a “bean to box” producer. In their interviews, several of the Haigh’s management team mentioned that Haigh’s “owns the brand” in Australia. The industry benchmark status is evidenced with the evolution of the Collins St. precinct in Melbourne, ‘anchored’ around three Haigh’s stores. With a premium position in the market, the Haigh’s management are comfortably aware of the increasing perceived indirect competition, with Alister Haigh noting that: “It (competition) helps to raise the profile of quality and artisan chocolates with consumers”. The market is a highly customer driven market and relatively insulated from the economy (IBIS, 2016). In terms of retail competitors, specialty chocolate stores such as Koko Black and Chocolate Box also market in high traffic shopping precincts. The former has a business model based around a 6 café culture, while the latter retails product under their own brand name that are manufactured by third party contractors. Koko Black established itself in recent times as a direct competitor, targeting Haigh’s with similar products, locating their café shops close to Haigh’s. Initially this competitor failed financially. However, the new owners do not appear to have made any noticeable changes to operations. In addition, there is an ever-evolving cohort of boutique chocolatiers, who in the main also use the café business model. Peter K, the manufacturing engineer, explained that it is relatively easy for boutique operations to start up. New, small-scale equipment is readily available, describing these operations as similar to the contemporary evolution of micro-breweries. At the supermarket end of the spectrum are the global brands such as Cadbury, Nestle and Lindt. Haigh’s do not regard these as direct competitors. Noting that Chairman John Haigh commenced his stewardship of the company with work experience at Lindt in Switzerland in the early 1950s, it is interesting to observe the recent expansion of this brand in the Australian market place. Management at Haigh’s believe that Lindt have spoilt their brand by going into supermarkets, a market space where Haigh’s have no desire to be. Direct competition isn’t the only consideration. Noting the Porter Five Competitive Forces model (Porter, 2008), the market in which Haigh’s operates has many substitutes. Haigh’s acknowledges that their real competitors are the retailers of nut-based treats, premium wines, edible flowers and, of course, being in the personal gift market, even traditional florists. Product 7 Haigh’s Chocolates is unique in the Australian market as a “bean to box’ confectionary manufacturer. It imports premium raw cocoa beans to produce its own cocoa mass/liquor and cocoa butter from which to manufacture over 200 lines for sale through their own retail outlets. The company offers four categories of chocolate products. These are: the artisan hand crafted chocolates available in various sizes of boxed sets, or individually for selection from glass display counters, packets of chocolate coated nuts, fruit and flavoured fillings, seasonal gift items,