Budock Bakery Corporate Strategy Proposal

Budock Bakery Corporate Strategy Proposal

 

Introduction

            Due to the drastic changes that are happening in the society, including the improvements in science, technology, and communications, many business organizations are compelled to develop and adopt new techniques, which would give them the edge in their industry. These strategies are based on their current situation and their goals in the company. Because of this, several concepts related to strategic marketing and corporate strategy must be used to attain success in the industry.

            Corporate strategies are developed in the desire of a business organization to cope with competitors, identify market opportunities, develop and commercialize new products and services, allocate resources among marketing activities, and design an appropriate organizational structure to ensure the profitable performance of the company. There is no specific strategy that succeeds for all business organizations in all situations, and with this, several factors must be given importance, such as the extent of product diversity, geographic coverage of the organization, its market segments, distribution channels used, role of branding, level of marketing effort, and role of quality. A business organization must also take note of its approach to new product development, use of technology, pricing policy, and relationship to consumers, competitors, shareholders, and suppliers (2003). The interaction of all of these factors and their interrelationships determine the success of an organization in the industry.

With these, this paper discusses the corporate strategy of a specific company, namely, the Budock Bakery, which would be essential for its growth and development. A proposed corporate strategic plan for the next three years will also be made, with a less detailed proposal for the next ten years. These proposals will be in accordance to the profile of the company and its current operations.

 

Profile of Budock Bakery

            Budock Bakery is owned by George Budock and was set up in 1963. George Budock trained at a small baker in the city of Birmingham at the age of 15, and at the age of 25, with a self-effacing amount of cash, he set up a rival business only two miles from where he trained. With a 30,000 square meter factory and five small retail shops in the suburban areas of Birmingham, George was able to sustain and maintain a medium-sized company, through two factors. First, the product had been hand made to a high quality, and second is the fact that people in the business were very much considered ‘part of the family’.

            At present, the Bakery has two operating divisions, namely, its retail and manufacturing divisions. The manufacturing division of the company has the largest contribution to turnover, having 91%. This division is housed on an industrial estate, is purpose built, and owns both the land of the building. It is comprised of 95 employees, which consists of the Senior Management Team that includes the whole family of the Budocks. On the other hand, the retail division of the company is relatively small and is managed by Eileen Budock, the wife of George Budock. Turnover has seen a downturn in the last five years, which has been affected by the growth of Greggs, the company’s competitor, who have, on four retail sites, moved within 300 meters of Budock’s.

 

Advantages

            The company, in relation to their operations and production is enjoying several advantages. Primarily, the cost of building of the manufacturing division building was funded by two loans, which will be paid back in the next 18 months, and will aid cash flow and improve the balance sheet of the company.

            Second, the manufacturing division of the company has 10 production supervisors who look after the departments of cakes, creamery, bread distribution, and special offer products. They can produce up to 2000 chocolate éclairs and over 3000 loaves of bread a day in a high-risk production unit that has tight health and safety requirements. In addition to this, the division can produce over 350 different bakery products with the highest quality and a number of varieties.

            Third, all machinery and equipments used in production are up to date. The only investment required in the next 3 years will be a new oven at a cost of 250,000 Euros.

            Fourth advantage is the fact that the whole family of the Budock’s is involved in the business, comprising the Senior Management Team. George Budock works as the Managing Director, Peter, his son as Production Director, Eileen, his wife as Quality Control, and Rebecca, his daughter, as the Office Manager. In addition to this, the members of the family are all shareholders, with Eileen having a significant 29% stake, his son and daughter both having 10% each, and George as the major shareholder. Moreover, strategic decisions are made in the presence of all Board Members.  

            Fifth, recently the business had reached a turnover of 6 million Euros with a gross profit of 2 million Euros, in the service of 200 employees of which 25 worked in the retail side of the business and the rest in the factory. In the last two years, the business turnover has grown by 20%, which is largely attributed to one customers increasing commitment to Budock’s, as a supplier of all their bakery requirements. This one supermarket now contributes around 80% towards Budock’s turnover.

            Lastly, the company’s distribution and transport has become extremely efficient and works well with the demands of the supermarket customer. It has become proficient in understanding supermarket requirements and working practices and has scaled the production site up to create more yields if needed. Other areas that have developed more importantly are their health and safety procedures, which are currently fulfilled by a part time consultant who is a specialist.

 

Problems or Disadvantages

            Despite a number of advantages that the company can derive their benefits from, it still encounters several problems or disadvantages, which may contribute to the decline of its production and operations. Primarily, the retail division of the company is relatively small and is threatened by the rise of competition from Gregg’s. Because of this, George questions whether this division of the business is profitable anymore and has recently changed the way in which the management accounts are provided to establish a true picture of each department.

            Secondly, George believes that his Management Team does not have the management skills required to meet the demands of the future and be able to take over the business when he retires.

            Third, the company relies on agency staff, which has a higher employment cost of 11 Euros per hour, compared to normal production staff rates of 6 Euros per hour. Aside from higher employment costs, agency staffs are often unreliable, not turning up for work and going absent without explanation. Because of this, staff turnover at the company reached an all time high of 30% in terms of production staff, while the senior management team and supervisors have remained the same in the last 5 years.

            Fourth, although the company employs a total of 200 employees, no one is specifically responsible for human resources and employment issues. This is largely conducted in a reactive way when there are problems. In addition to company’s problems is the fact that 40% of the production staff does not speak English as a first language, and around 15% of those staff cannot speak English at all.

            Fifth, in relation to the performance of the company’s staffs, it is clear that production is not as efficient as it could be with product wastage being around 17% and many staff hanging around production lines without anything to do. George knows this but will not look at staff redundancies, for this is a family business or firm, many staff has worked for the company for 30 years and over.

Sixth, in relation to the company’s leading consumer, although this contributes to 80% of the company’s turnover, it increasingly puts pressure on Budock’s to distribute products around the United Kingdom as the supermarket opens outlets in the South of England rather than remaining in its northern routes. Budock’s is keen to remain supplying just to customers in the Midlands.

Lastly, the company has not conducted any formal research into how the bakery sector is developing, and no trend analysis has been completed in the supermarket sector either. George sees the way forward for growth being in supplying to other supermarkets and small retail outlets in the Midlands area but feels he needs some more expertise in developing a plan to help him do this. Being near the retiring stage, he is concerned about several issues in terms of succession planning, the vulnerability of one customer, and production efficiency.

(2007)

 

Corporate Strategy

            In line with the problems or disadvantages of the company that were determined, a corporate strategy must be adopted in order for Budock’s Bakery to attain its desired growth and profit in the next succeeding years. It has been reported that corporate strategy is the over-arching strategy of a diversified firm, and answers the questions such as, “in which businesses should a company compete?”, and “how does being one business add to the competitive advantage of another firm, as well as the competitive advantage of the company as a whole?” (2007).

In addition, corporate strategy describes the markets and the businesses in which a company will operate, and is decided in the context of defining the company’s mission and vision, encompassing what the company does, why it exists, and what is intended to come (2004). With these definitions, it can be understood that corporate strategy tackles the overall production and operations of a company, its reasons for being a company, its goals and objectives, and its aims in the future. Because of this, the Budock’s Bakery must be able to adopt effective and efficient strategies to be able to cope with the increasing competition in the same industry, improve the management of the company, continue producing products for the benefit of their consumers, and sustaining and maintaining the company’s sales and profit from the market.

           

Corporate Strategy Proposal (Next Three Years)

            The corporate strategy that will be proposed in this paper will be a solution for the current problems or issues being mentioned earlier. The following corporate strategies can be accomplished within three years, and can be used in the next succeeding years in order to maintain and sustain the operations and the production of the company.

• As its primary corporate strategy, Budock’s Bakery must be able to generate and clarify the company’s mission and vision statements, or simply put its organizational goals. It has been reported that the company’s mission and vision statements spell out the company’s management philosophy relating stakeholders’ relationships besides specifying the definition of the business and long-term objectives (2006). These goals would then have to be translated into functional strategies and objectives at the operational level in order to produce action, and to provide concrete targets and milestones. In line with this, the targets and objectives for departments and units of the company must be consistent with the mission and vision of the entire organization (Ko et. al. 2006). In addition to generating and clarifying the Bakery’s mission and vision statements, the members of the company must be able to adopt, implement and live them out to serve as guides for the company’s operations.


• With the implementation of the new mission and vision statements, the company would have to adopt new management or leadership styles that would suit the company’s operations. It has been reported that there are six leadership or management styles that can be adopted to effectively manage a team or a company, namely, Authoritative or Charismatic Leadership, Affiliative, Democratic, Coaching, Pacesetting, and Coercive (2000). Both the managers of the divisions of the company can adopt any or all of the leadership styles depending on the need of the situation and on the needs of their workforce.


• In relation to adopting new management or leadership styles and the problem of George Budock with the capabilities of his son, daughter and wife to run the business in the future, George and some of the company’s supervisors can contribute to the supervision and learning of future owners of the company. Consequently, direct supervision and monitoring is the most often used means of coordination and control, especially at the lower levels of an organization and in smaller companies. However, to reduce costs, process control and output control must be strategies to be implemented. To control workplace behavior, the company can supervise future owners with rules, procedures, routines, and workflow that would specify appropriate actions and steps expected of them. To supervise their work performance, the company must design and specify the right way for accomplishing their tasks (2006). In essence, the company designates its own protocols and procedures, rather than letting them find their own way in the company. This would be good strategy to enforce the rules and procedures, as the company wants it.


• In accordance to the retail division of the company, it is true that the company cannot do away with increasing competition. Because of this, the retail division of the company can modify its operations by adding more employees so that it can find more suppliers for the company. In addition, with the rising competition against Gregg’s, the retail division can introduce new promos and gimmicks to attract more customers. In this way, the division can still be sustained and maintained, thus, increasing its revenues.


• With the current performance of the company’s employees, the company’s management can form and Human Resource Management Team, which will be in-charged of the concerns and the welfare of the employees. They will be assigned with providing incentives, maintaining employee relations, with improving and developing their performance, and reinforcing the company’s values, philosophies, and mission and vision. The Human Resource Management team will be concerned with all the activities that contribute to successfully attracting, developing, motivating, planning systematic approaches, and maintaining a high-performing workforce that result in organizational success (2002). With the team’s new role, the employees of the company will be effectively improved and developed to contribute to the company’s success. This would also reduce staff turnovers, for services, such as incentives can motivate compliance, decrease absenteeism, take care of their health and safety, and improve quality output (2006).


• To further reduce staff turnovers, the company can decide on hiring normal production staffs, instead of agency staffs. This would not only reduce turnovers, but would also lessen the expenses of the company in relation to providing salary to its employees. The company can be also guaranteed of that these normal production staffs will be performing much better than the agency staffs.


• In relation to the fact that some of the employees of the company do not know how to speak in English, the strategy that can be adopted would be to ask the HRM team to train these employees in speaking English. They could hire a trainer, or assign the head of the team to teach the employees. This should be done to reduce wastage, to effectively build interrelationships and to increase communication among employees. In this way, the employees would be able to understand each other to promote and encourage unity, teamwork and coordination. This would also help the management enforce its rules and regulations, and develop a similar culture all throughout the company.


• In relation to staff redundancies, the management can place them under employee training and development to further improve their skills and help the company with its productivity. If the company does not intend to let these people go, then it can assign them to form the Research & Development Team that would be responsible for formal researches on the bakery and supermarket sector. They will be also involved in the research of the company’s possible new ventures and opportunities.  


• The company can also utilize the services that can be brought about in using the Internet. With the increasing competition in the same industry, Budock’s Bakery can also use the World Wide Web to increase its market and introduce its products to more consumers.


• In relation to the pressure being put by the supermarket, which is the company’s most loyal consumer, Budock’s Bakery must be able to accept its offer of serving as its primary supplier. In the span of three years, the company has already had additional employees and departments that would ensure its smooth operations. Additional employees and departments for the company would mean that it is already prepared for more challenging responsibilities. The company must reconsider supplying to more markets located to other parts of the country, if it aims to strongly establish its reputation and position in the market.

 

Corporate Strategy Proposal (For the Following Decade)

            It can be presumed that Budock’s Bakery is already a very successful and well-established company if it continuous to operate effectively and efficiently. In the span of three years, it must have attained success in the market. However, existing strategies must still be implemented as new strategies are adopted if the company aims to stay in the industry for the next ten years. Additional strategies to be implemented are as follows:

Ø  The company can continually expand to accommodate the increasing demand of consumers in different parts of the United Kingdom. Expansion is needed for efficient service and faster production.

Ø  The company can find new partners to afford expansion to other continents, such as Europe, Americas, Africa and Asia. Additional partners are needed to help the company with additional expenses. These would also assist the company in terms of transporting their goods to its destinations, which would sustain and maintain its operations.

Ø  The company can hire new employees, generate additional departments, and purchase more advanced equipments to hasten production. In line with the company’s expansion, it would need more employees who would be responsible with its operations. They would also be involved in improving and developing new packaging for the products to improve promotions and advertising.

Ø  An added corporate strategy for the company would be to focus in not only supplying supermarkets, but also manufacturing plants and distributors. In this way, the company can further increase the variety of its products, from 350 it could increase to 500 or more. With this strategy, it would easier for Budock’s Bakery to introduce their products internationally.

Ø  Another corporate strategy that the company can implement is the improvement of its website, which would entertain and accommodate online purchase of products. In this way, the company’s presence would be reinforced and many consumers would easily have access to their products.

 

Conclusion

            From the discussion above, it can be understood that a corporate strategy must be adopted by a specific company, such as the Budock’s Bakery to ensure its success and position in the market. However, before adopting and implementing such corporate strategies, it would be essential if they will be carefully studied and evaluated to make sure that they suit the company’s situations effectively.

            In addition, with the interaction of a myriad of factors in relation to marketing, management, and consumerism, strategies must be simple enough to answer problems that would contribute to the success of the company as a whole. The company must plan ahead and anticipate changes and problems to prepare ahead of time and make sure that the operation and production of the company would not be affected drastically.

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