This essay will discuss the problems Thornton’s has experienced over the last few years and what challenges they face in current period between 1997-2002, examining the competitive environment and internal analysis as well as external environment (Political, Economical, Sociological, and Technological - PEST). It will also identify and evaluate Thornton’s strategic development from set up to the present time using the relevant framework and strategic tools. The essay will conclude by identifying possible strategies that Thornton might pursue in the future with ambiguous reasons supporting these recommendations.
•Mail order response provided an economic response to seasonal pattern of demand. Thornton cafes introduced twist to the seasonal based Thornton’s. •Downturn in French economy.
•Devaluation of pound sterling.
•Not achieving profit and demand targets.
•Reduction of labour through manufacturing automation by up to 80% and helped to reduce the use of temporary employment. •Seasonal Demand (in particular Easter, Christmas, Valentines Day and Mothers day). •male customers, children and teenagers lowering the overall age profile of customers
•1998, Thornton’s went on a £3m programme to install EPOS (electronic point of sales).
•In 1999, launch of an Internet and interactive television sales operation. Thornton had to invest a total of 53m in new factory, warehousing and till systems. Figure 1: PEST factors for Thorntons (Jennings, 2000)
Thornton’s have received numerous other problems other to those stated above in figure 1 of the PEST analysis ‘Some franchisees had been very committed other operated units had come very run down’ (Jennings, 2000), hence creating a very noticeable impact on Thornton’s image as a specialist business. Thornton’s efforts were aimed at providing the franchises with a structure which imitates the same service structure provided to the customers by their own shops.
In 1998, 15 new products were discontinued, because they failed to reach the break even level of sales as illustrated by Jennings (2000). Therefore, the profits fell short of the company’s own target, this was partly due to the decrease in the profit margin resulting in renting costly external warehouse at £14m and discontinuing of 15 products. Jennings states in 1997-1998, production produced by Thornton’s was half of what they produced at peak time in which the main customer requirements came in seasonal periods. Thornton’s have found it difficult to meet their seasonal. Christmas 1998 according to Jennings, customers delayed their seasonal purchases from what Thornton’s predicted, and when demand finally occurred it ran ahead of capacity and shops. Franchise outlets Christmas sales period fell by 13.1 per cent, and commercial revenues declined by 6.1 per cent illustrated by Jennings (2000).
PEST analysis is used as illustrated above to identify external environmental issues and forecast potential threats and opportunities, and relates how they fall in terms of internal strengths and weaknesses of an organisation, strengths and weaknesses being the internal environmental factors and influences. The analysis of strengths, weaknesses, opportunities and threats together create SWOT analysis. SWOT analysis is used to analyse the future environment and forecast possible opportunities and threats to organisation. Figure 2, TOWS Matrix will be used to take part in abstracting the information from the PEST analysis above providing an accurate SWOT analysis. The TOWS Matrix relates the external and internal environment together to forecast possible future changes.
Figure 2: The TOWS Matrix
The TOWS matrix has demonstrated that Thornton’s need to grab the internet opportunity and strengthen its customer base as it is a...