问答题
Introduction
Shoal plc is a well-known corporate organisation in the fi sh industry. It owns 14 companies concerned with fi shing and related industries.
This scenario focuses on three of these companies:
ShoalFish Ltd – a fi shing fl eet operating in the western oceans
ShoalPro Ltd – a company concerned with processing and canning fi sh
ShoalFarm Ltd – a company with saltwater fi sh farms.
Shoal plc is also fi nalising the purchase of the Captain Haddock chain of fi sh restaurants.
ShoalFish
Shoal plc formed ShoalFish in 2002 when it bought three small fi shing fl eets and consolidated them into one fl eet. The primary objective of the acquisition was to secure supplies for ShoalPro. 40% of the fi sh caught by ShoalFish are currently processed in the ShoalPro factories. The rest are sold in wholesale fi sh markets. ShoalFish has recorded modest profi ts since its formation but it is operating in a challenging market-place. The western oceans where it operates have suffered from many years of over-fi shing and the government has recently introduced quotas in an attempt to conserve fi sh stocks.
ShoalFish has 35 boats and this makes it the sixth largest fl eet in the western oceans. Almost half of the total number of boats operating in the western oceans are individually owned and independently operated by the boat’s captain. Recent information for ShoalFish is given in Figure 1.
ShoalPro
ShoalPro was acquired in 1992 when Shoal plc bought the assets of the Trevarez Canning and Processing Company. Just after the acquisition of the company, the government declared the area around Trevarez a ‘zone of industrial assistance’. Grants were made available to develop industry in an attempt to address the economic decline and high unemployment of the area. ShoalPro benefi ted from these grants, developing a major fi sh processing and canning capability in the area. However, despite this initiative and investment, unemployment in the area still remains above the average for the country as a whole.
ShoalPro’s modern facilities and relatively low costs have made it attractive to many fi shing companies. The fish received from ShoalFish now accounts for a declining percentage of the total amount of fi sh processed and canned in its factories in the Trevarez area. Recent information for ShoalPro is given in Figure 1.
ShoalFarm
ShoalFarm was acquired in 2004 as a response by Shoal plc to the declining fi sh stocks in the western oceans. It owns and operates saltwater fi sh farms. These are in areas of the ocean close to land where fi sh are protected from both fi shermen and natural prey, such as sea birds. Fish stocks can be built up quickly and then harvested by the fi sh farm owner. Shoal plc originally saw this acquisition as a way of maintaining supply to ShoalPro.
Operating costs at ShoalFarm have been higher than expected and securing areas for new fi sh farms has been diffi cult and has required greater investment than expected. Recent information for ShoalFarm is given in Figure 1.
Figure 1: Financial data on individual companies 2007–2009
Captain Haddock
The Captain Haddock chain of restaurants was founded in 1992 by John Dory. It currently operates one hundred and thirty restaurants in the country serving high quality fi sh meals. Much of Captain Haddock’s success has been built on the quality of its food and service. Captain Haddock has a tradition of recruiting staff directly from schools and universities and providing them with excellent training in the Captain Haddock academy. The academy ensures that employees are aware of the ‘Captain Haddock way’ and is dedicated to the continuation of the quality service and practices developed by John Dory when he launched the fi rst restaurant. All management posts are fi lled by recruiting from within the company, and all members of the Captain Haddock board originally joined the company as trainees. In 1999 the Prime Minister of the country identifi ed Captain Haddock academy as an example of high quality in-service training. In 2000, Captain Haddock became one of the thirty best regarded brands in the country.
In the past few years, the fi nancial performance of Captain Haddock has declined signifi cantly (see Figure 2) and the company has had diffi culty in meeting its bank covenants. This decline is partly due to economic recession in the country and partly due to a disastrous diversifi cation into commercial real estate and currency dealing. The chairman and managing director of the company both resigned nine months ago as a result of concern over the breaking of banking covenants and shareholder criticism of the diversifi cation policy. Some of the real estate bought during this period is still owned by the company. In the last nine months the company has been run by an interim management team, whilst looking for prospective buyers. At restaurant level, employee performance still remains relatively good and the public still highly rate the brand. However, at a recent meeting one of the employee representatives called for a management that can ‘effectively lead employees who are increasingly demoralised by the decline of the company’.
Shoal plc is currently fi nalising their takeover of the Captain Haddock business. The company is being bought for a notional $1 on the understanding that $15 million is invested into the company to meet short-term cash fl ow problems and to improve liquidity. Shoal plc’s assessment is that there is nothing fundamentally wrong with the company and that the current fi nancial situation is caused by the failed diversifi cation policy and the cost of fi nancing this. The gross profi t margin in the sector averages 10%.
Captain Haddock currently buys its fi sh and fi sh products from wholesalers. It is the intention of Shoal plc to look at sourcing most of the dishes and ingredients from its own companies; specifi cally ShoalFish, ShoalPro and ShoalFarm. Once the takeover is complete (and this should be within the next month), Shoal plc intends to implement signifi cant strategic change at Captain Haddock so that it can return to profi tability as soon as possible. Shoal plc has implemented strategic change at a number of its acquisitions. The company explicitly recognises that there is no ‘one right way’ to manage change. It believes that the success of any planned change programme depends on an understanding of the context in which the change is taking place.
Figure 1: Financial data on individual companies 2007–2009
Captain Haddock
The Captain Haddock chain of restaurants was founded in 1992 by John Dory. It currently operates one hundred and thirty restaurants in the country serving high quality fi sh meals. Much of Captain Haddock’s success has been built on the quality of its food and service. Captain Haddock has a tradition of recruiting staff directly from schools and universities and providing them with excellent training in the Captain Haddock academy. The academy ensures that employees are aware of the ‘Captain Haddock way’ and is dedicated to the continuation of the quality service and practices developed by John Dory when he launched the fi rst restaurant. All management posts are fi lled by recruiting from within the company, and all members of the Captain Haddock board originally joined the company as trainees. In 1999 the Prime Minister of the country identifi ed Captain Haddock academy as an example of high quality in-service training. In 2000, Captain Haddock became one of the thirty best regarded brands in the country.
In the past few years, the fi nancial performance of Captain Haddock has declined signifi cantly (see Figure 2) and the company has had diffi culty in meeting its bank covenants. This decline is partly due to economic recession in the country and partly due to a disastrous diversifi cation into commercial real estate and currency dealing. The chairman and managing director of the company both resigned nine months ago as a result of concern over the breaking of banking covenants and shareholder criticism of the diversifi cation policy. Some of the real estate bought during this period is still owned by the company. In the last nine months the company has been run by an interim management team, whilst looking for prospective buyers. At restaurant level, employee performance still remains relatively good and the public still highly rate the brand. However, at a recent meeting one of the employee representatives called for a management that can ‘effectively lead employees who are increasingly demoralised by the decline of the company’.
Shoal plc is currently fi nalising their takeover of the Captain Haddock business. The company is being bought for a notional $1 on the understanding that $15 million is invested into the company to meet short-term cash fl ow problems and to improve liquidity. Shoal plc’s assessment is that there is nothing fundamentally wrong with the company and that the current fi nancial situation is caused by the failed diversifi cation policy and the cost of fi nancing this. The gross profi t margin in the sector averages 10%.
Captain Haddock currently buys its fi sh and fi sh products from wholesalers. It is the intention of Shoal plc to look at sourcing most of the dishes and ingredients from its own companies; specifi cally ShoalFish, ShoalPro and ShoalFarm. Once the takeover is complete (and this should be within the next month), Shoal plc intends to implement signifi cant strategic change at Captain Haddock so that it can return to profi tability as soon as possible. Shoal plc has implemented strategic change at a number of its acquisitions. The company explicitly recognises that there is no ‘one right way’ to manage change. It believes that the success of any planned change programme depends on an understanding of the context in which the change is taking place.
问答题
(a) In the context of Shoal plc’s corporate-level strategy, assess the contribution and performance of ShoalFish, ShoalPro and ShoalFarm. Your assessment should include an analysis of the position of each company in the Shoal plc portfolio. (15 marks)
【正确答案】ShoalFish
A PESTEL analysis of ShoalFish would focus on the fact that it is fi shing in an area where fi sh stocks are rapidly declining (environmental) and it is increasingly exposed to government intervention and restrictions (political). It is a relatively small player (12% market share) in a large, but declining market place (5% over two years). Profi ts are declining, although ShoalFish appear to have arrested the decline in the profi t margin. The 2009 gross profi t margin (4·9%) shows an increase over the 2008 figure (4·7%). This may mean that the company has been able to bring operating costs in line with the declining turnover.
In terms of the Boston Box, it has the characteristics of a dog, a company with a small market share in a declining market. However, Shoal plc perceives that there are important synergies between ShoalFish and the other companies in the Shoal plc portfolio. For example, it helps secure a signifi cant proportion of the raw materials required by ShoalPro. ShoalPro is also ShoalFish’s main customer, accounting for 40% of the company’s catch. ShoalFish also has an intended role following the purchase of the Captain Haddock group of restaurants. Shoal plc would like ShoalFish to directly supply the Captain Haddock restaurants and so potentially reduce raw material costs at Captain Haddock.
Shoal plc needs to look carefully at the viability of maintaining this fl eet. They are operating in an area where owner-skippers are very common (almost half of the boats in the western oceans are owned and operated by the boat’s captain). There may be an opportunity for ShoalFish to sell, lease or rent their ships, perhaps to individual owners, with the promise of guaranteed sales to ShoalPro (and potentially Captain Haddock). Alternatively, they could tolerate declining performance from this part of the portfolio, in the knowledge that it forms an important part of the supply chain for other companies in the portfolio.
ShoalPro
ShoalPro is a profi table and expanding organisation. A signifi cant percentage of its raw fi sh supply is currently provided by ShoalFish, but this percentage is declining as it increasingly processes fi sh for other companies. It is in a mature, but still expanding (+2% from 2007 to 2009) market-place where it holds a signifi cant (40%) and slightly increasing market share. Gross profi t margins are improving slightly (from 10% in 2007 to 10·6% in 2009), suggesting that costs are increasing at a slower rate than revenues.
Its consistent profi tability would classify this business, using Boston Box terminology, as a cash cow. A company with a signifi cant market share in a low growth market.
A PESTEL analysis would focus on the fact that ShoalPro factories are in a region which attracts national grants due to high local unemployment (political and economic). This reduces operating costs and the persistence of high unemployment suggests that a local skilled workforce is still accessible to ShoalPro (socio-cultural). Analysis suggests that ShoalPro is an important part of the Shoal plc portfolio and should be retained and maintained.
ShoalFarm
ShoalFarm is a relatively new acquisition. It currently has a relatively low market share (10%) in an expanding market-place. ShoalFarm is itself growing (+12% from 2007 to 2009), but not as fast as its market (+20% in the same period). A PESTEL analysis would reveal a market-place that is perceived as ethically acceptable, stressing the conservation of fi sh supplies (socio-cultural). It seems likely that this will increase in importance in the future although the diffi culty of fi nding potential sites (environmental) may be a signifi cant factor. Gross profi t is high (14% in 2007, comfortably out-performing ShoalFish and ShoalPro) but declined in 2008 (12·7%), recovering slightly in 2009 (13·3%).
ShoalFarm may also have a signifi cant role to play in providing raw materials for both ShoalPro and the potential acquisition – Captain Haddock restaurants. In terms of the Boston Box classifi cation, ShoalFarm is probably a question mark or problem child. It needs increasing investment to ensure that it becomes a key player in a signifi cant market-place. If Shoal plc is prepared to do this, then the recommendation is that they should expand and develop. If they do not – and the potential synergies with Captain Haddock are not realised – they may wish to divest.
Overall, the three companies can be seen as integrated parts in a comprehensive value chain. Confl icting environmental forces are at work, on the one hand reducing the level of dependency between the companies and, on the other hand, reinforcing the competitive advantages (synergies) of being in a vertically integrated group. The potential acquisition of Captain Haddock could further enhance these advantages but only if the correct inter-fi rm trading relationships are established.
【答案解析】
问答题
(b) Shoal plc explicitly recognises that there is no ‘one right way’ to manage change. It believes that the success of any planned change programme will depend on a clear understanding of the context within which change will take place.
(i) Identify and analyse, using an appropriate model, the contextual factors that will infl uence how strategic change should be managed at Captain Haddock. (13 marks)
Professional marks will be awarded in part (b)(i) for the identifi cation and justifi cation of an appropriate model. (2 marks)
(ii) Once the acquisition is complete, Shoal plc wish to quickly turnaround Captain Haddock and return it to profi tability.
Identify and analyse the main elements of strategic change required to achieve this goal. (8 marks)
Professional marks will be awarded in part (b)(ii) for the cogency of the analysis and for the overall relevance of the answer to the case study scenario. (2 marks)
【正确答案】(i) Shoal plc recognises that there is no ‘one right way’ to manage change. The success of any planned change programme will depend upon an understanding of the context in which the change will take place. Balogun and Hope Hailey have highlighted a number of important contextual features that need to be taken into account when designing change
programmes. These features are used as a basis for this model answer. However, other frameworks that recognise the context that changes takes place within could be used by the candidate and appropriate credit will be given.
Shoal plc has little time to complete the acquisition and effect the strategic change necessary. The decline in Captain Haddock’s turnover and profi ts is increasing dramatically. The resignation of the chairman and managing director of the company was triggered by concerns about breaking bank covenants. If Shoal plc does acquire Captain Haddock then strategic change will have to be implemented quickly.
Shoal plc will need to put into place policies that help them preserve the aspects of Captain Haddock that need to be retained for future success. It is recognised that the employees and the training they receive are fi rst rate. Steps need to be put in place to ensure that these employees remain within the company. Similarly, the Captain Haddock brand is strong and needs to be re-affi rmed.
Change is usually easier if there is a diversity of experience, views and opinions within the organisation. This is not discernable at Captain Haddock. The suggestion is that most employees are recruited directly from school or university and then remain within the Captain Haddock training programme as they progress through the company. There is very much a policy of ‘recruit from below’. In such circumstances it is unlikely that norms and practices will be challenged. A homogenous internally shared view was developed that Captain Haddock did things the right way, whatever was changing in the world outside. Shoal plc will have to be sensitive to this, as well as recognising that it will need to bring the required diversity of thinking to the company.
Capability is concerned with the extent or experience of managing change in the organisation. Within Captain Haddock there appears to be little experience of such change. Indeed the preservation of established norms and practices was the focus of management and the supporting training. In contrast, Shoal plc have experience of managing change and this is a major capability that it should bring to Captain Haddock. However, it has to be recognised that this capability has not been tested in the restaurant sector and Shoal plc will have to be sure that their capability is applicable to this sector.
The capacity of an organisation for change considers the resources available to support change. Change may be costly, both in real fi nancial terms and management time. Captain Haddock has little capacity for change from its own resources. So, this is again something that Shoal plc will bring to the company. Substantial investment will not only be required to improve Captain Haddock’s fi nancial position, in terms of fulfi lling bank covenants, but also to fi nance the change programme necessary within the company.
There appears to be little doubt that Captain Haddock is ready for change. Two senior members of management who could have been the focus for some resistance to change have left the company and employee representatives are keen for someone to come in and ‘effectively lead employees who have become increasingly demoralised by the decline of the
company’. Shoal plc should acquire an organisation that is receptive to appropriate change.
It is necessary to identify people in the organisation who have the power to effect change. Again, this will be a key responsibility of Shoal plc if they acquire Captain Haddock. They must give the appointed management suffi cient power to implement the required changes.
So, in summary, Shoal plc will be faced with ensuring that many of the contextual requirements for successful change are put in place. They will need to provide management with appropriate capability and diversity and then give them the power and capacity to effect required changes. They will have to move quickly to preserve Captain Haddock’s strengths, but they will fi nd a workforce that is receptive for change.
The fi nal contextual feature that needs consideration is the scope of change. The type of change required at Captain Haddock can be viewed in the context of the following model.
【答案解析】
问答题
(c) Portfolio managers, synergy managers and parental developers are three corporate rationales for adding value.
Explain each of these separate rationales for adding value and their relevance to understanding the overall corporate rationale of Shoal plc. (10 marks)
【正确答案】Portfolio managers, synergy managers and parental developers represent three corporate rationales for value creation in a multi-business organisation as suggested by Johnson, Scholes and Whittington. The distinction between the three is considered here.
Portfolio managers act as an agent on behalf of fi nancial markets and shareholders. They seek to increase the value of the companies in their portfolio more effi ciently and effectively than fi nancial markets could achieve. They seek to acquire under-performing or under-valued companies and to improve their performance so that they can later be sold at a premium. In many instances, poorly performing parts or businesses of the acquired company are sold off as part of performance improvement. The key issue for most portfolio managers is the opportunity to extract value from a business. The nature of that business, the market it is operating in and its relationship to other businesses in the portfolio is relatively unimportant. Portfolio managers manage businesses with a low cost centre and do not intervene signifi cantly in the running of each business in the portfolio. Instead, they set fi nancial targets for the senior executives of those companies, with high rewards for those executives who achieve their targets. The value-added activities of a portfolio manager are usually restricted to investment, setting expectations and standards and for monitoring performance. The profi le of a portfolio manager does not fi t the philosophy of Shoal plc.
Johnson, Scholes and Whittington claim that synergy is often seen as the raison d’etre of the corporate parent, with value being enhanced across the business units in a number of ways. Underpinning this approach is the belief that the whole is worth more than the constituent parts. Johnson, Scholes and Whittington particularly identify the sharing of resources or activities; for example, a common brand name (as in the case of Shoal plc) may provide value to different products within different businesses. There may also be common skills or competencies across businesses. For example, expertise built up in the politics of fi shing is likely to be transferable throughout the Shoal plc businesses.
Shoal plc also sees the synergy in terms of one business being a customer of another. For example, guaranteeing a supply of raw material or as a guaranteed customer of a product. This may be problematic because it could lead to ineffi ciencies and confused objectives within each company. The ‘supplying’ company may not control costs or ensure quality suffi ciently because it knows it has a guaranteed customer for some of its products. Similarly, the ‘purchasing’ company might not be able to meet profi t objectives because of the cost and quantity of the raw material it has to purchase from its related supplier. Business managers are usually rewarded on the performance of their business unit, but under this strategy they are being asked to co-operate in something that could compromise the performance of their business unit. As Johnson, Scholes and Whittington suggest, the manager of the business unit might respond by asking ‘what’s in it for me? and they may conclude that there is very little’. There is also a concern that Shoal plc knows a lot about sourcing and processing fi sh, but not much about the restaurant industry. It may be that Captain Haddock is quite different to other companies in the portfolio and so the hoped for synergies may not appear. However, despite these reservations, it is clear that Shoal plc’s overall corporate philosophy is that
of a synergy manager.
Finally, the parental developer uses the competencies of the parent to add value to businesses in the portfolio. So, in this instance, the parent company is confi dent about its resources and capabilities and wishes to use these to enhance the value of the businesses in the portfolio. For example, the parental developer may have a brand name that is recognisable throughout the world and is associated with value and quality. Such a company needs to identify businesses which are not currently fulfi lling their potential but could if they were associated with a well-known brand. In effect, their brand name brings these companies to a wider audience who automatically assign the values of the parent to those of the acquired company. For parental developers, achieving synergies between companies in the portfolio is not a priority. The focus is on providing the companies in the portfolio with the competencies of the parent. This is not really the approach of Shoal plc. Developing strategic capabilities, achieving synergies and transferring managerial capabilities are not value-adding activities of a parental developer.
【答案解析】