Analysis of strategic capability
Thornton operates in a very volatile industry made up not only of fast moving consumer goods but one in which the consumer tastes and preferences continue changing continuously. Using Deal and Kennedy’s structure, the industry operates in one that has rapid feedback and low risk because of the fast moving nature of the goods. Effectively handling this kind of market according to Morden (2004) requires two elements which are a persistent management and a workforce that can keep up. The company’s competencies for that reason will be based on its ability to have a management that is consistent and one which is able to get the workforce to keep up. Before analyzing the company’s strategic capabilities, it is important to identify its critical success factors or those elements that will determine whether or not the business is successful. The company receives orders that fluctuate from season to season yet the customers demand a personalized service of products that are fresh. This makes it hard for the company to capitalize on economies of scale because the possibility of mass production is not possible. Central to the analysis of the company’s strategic capability is its core feature of vertical integration and whether it has helped the company to meet its critical success factors. Vertical integration
Thornton exercises total control over almost all the processes involved in the manufacture of its products and only outsources noncore elements. It is this total control that qualifies the firm’s process to be referred to as a vertically integrated process. The firm also has limited horizontal integration instances but that does not reduce the prominence of vertical integration. Jones & Hill (2009) give few advantages that come with vertical integration those that are relevant to Thornton meeting its required core competencies are improved scheduling and improved product quality. The customer in the company’s case has proved to be very unpredictable which means that it is best if there is total control over the whole process so that changes can be made as conveniently as possible. One case in point is illustrated by the fact that the company’s Chief Executive officer’s note that new products will drive 92% of the sales. Given that the company is in the business of selling fast moving goods and more specifically goods that mostly sell during short durational seasons, it was important for it to be able to get all its sections ready for any sudden changes that may be needed to keep the sales momentum. For example, one of the firm’s product features include personalization, which may be defined by a personal message. The firm may have to decide a few days prior to the start of the season to pick on the message to put on its packages and that means that its employees have to wait until the beginning of the season to start preparing the packages. However, this strategy also has its own weaknesses and may explain some of Thornton’s problems. Wessels (2006) gives some of the weaknesses of vertical integration as reduction of innovation and costs due to the slackness that may come from the company’s employees and which would have otherwise been borne by the outsourcing firm. In light of the fact that all of Thornton’s processes are handled in house, it is possible that the employees may not be that innovative because they do are not necessarily going to get direct benefits from them. This is not the case for outsourcing firms because innovations will result in reduced costs which may act as the motivation. Kuei & Madu (2005) also give another major weakness of outsourcing as that of the company being unable to capitalize on its strengths while at the same time outsourcing on areas they may have weaknesses on. Thornton may not be proficient in all the areas that it engages in. For example, one of the things the firm was forced to ponder about was its continued focus on...
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