Ivory Delights

Question 1

Strategic Management

a.

Ivory Delights is an already established company. To gain more market share, it aims at competing with its two rivals, Sweet Nothing and Wiggles. As the company focuses on manufacturing small candied confectionery, it wants to retain the market dominance in the confectionery industry. The other two companies are still trying to take over the market share owned by Ivory Delights, which wants to compete in a multinational organization. The confectionery industry is quite competitive because of its oligopolistic nature. Only two more companies are involved in the market. This makes Ivory Delights have more chances of winning a greater market share due to its potential.

b.

A business strategy is the means by which a business or an organization sets to achieve its objectives (Carroll & Buchholtz, 2014). It is simply a long-term business plan. Ivory Delights is needed to apply some well-calculated strategies to finally achieve its long term goals (Wheelen & Hunger, 2011). The long-term goals outline the Pluto Pinnacle’s overall strategy. There are various strategies that need to be employed. To start with, acquisition has proven to be a strategy worthing Ivory Delights’ success. So far the company has acquired Smickers in 2001 to achieve production and processing economies of scale. This also contributed to gain access to additional markets through Smickers’ accreditation and specialty store relationships. This has so far boosted the enlargement of Ivory Delights. The company needs to acquire other small companies that supply it with raw materials. This will cut off the cost of production thus maximizing profits. The acquisitions need to be a good strategic fit from operational and cultural perspectives. The next important issue is integration. Initially, it was the corporate strategy to vertically integrate along the value chain (Wheelen & Hunger, 2011). This is why Pluto Pinnacle facilitated the purchase of Ebony Boxes, which manufactures packaging supplies. In this case, integration means the company will not have to use other companies in producing the same goods. In its turn, that means the complete implementation if this integration, and the company will be to some point independent in production (Carroll & Buchholtz, 2014). In addition, Ivory Delights needs to involve itself in social-economic activities more. This will build its reputation by far thus making it leading company in industry.  It will then continue to grow at rates higher than the industry average. These strategies will lead to development of the Pluto Pinnacle’s overall strategy of success through acquisition. All of these is possible because of such strategy of being fully implemented though some complimentary strategies are needed.

c.

Ivory Delights has two main competitors in Australia, Wiggles and Sweet Nothing companies. These competitors seem to have similar weaknesses and strongholds. In 1999, Wiggles’ attempt to buy Ivory Delights for $250 million was unsuccessful. This shows that Wiggles has a weakness which can only be solved by buying Ivory Delights’ operation. This feature itself is a weakness. Given chance and capability, Sweet Nothing can also try to acquire the same since three companies are in the same market. Accreditation of Ivory Delights is serving as an added advantage to it. This, in turn, is a weakness of both Sweet Nothing and Wiggles, because the consumers have more trust in Ivory Delights’ products since the company is accredited with ISO 9002. As for other weaknesses, the name of the company matters a lot especially to the strangers. The brand “Ivory Delights” seems to be customer-friendly as compared to Sweet Nothing and Wiggles. In the case, where new clients hear three different names, they will undoubtedly go for Ivory Delights. This is serving as a weakness to other companies. The only strength Wiggles may be having over the Ivory Delight is its capital (Maier, 2007). The fact that Wiggles was willing to buy Ivory Delights’ operation proves the point. This means that there is a way Wiggles can organize itself to outdo Ivory Delights. Although, the efforts Ivory Delights is putting to avoid this are considerable.

d.

Whether Ivory Delights wins a greater market share or not, the industry has to grow. The future industry growth will be affected by many issues ranging from the internal to external factors. First, technology is a key player in this case. Advancement of technology day in day out has led to low cost of production. This has a direct effect on industry. Despite simplified cost of production, the technology has its side impacts (Carroll & Buchholtz, 2014). Exposure of dangerous ultraviolet rays is the major negative impact. In the case of Ivory Delight Company, which imports Pooran ingredient, some additional danger is posed. The chemicals used in production of the ingredient are not condoned by World Health Organization (WHO). This is due to its carcinogenic effects. As Ivory Delights continues to grow, more of this ingredient will be demanded. This will pose the consumers of Ivory Delight’s products to dangers of the carcinogenic effects. The resources are another issue that will affect future industry growth. For instance, Ivory Delights imports the ingredient from Pooran due to its scarcity. This means that some of these resources will be extinct with time. Thus, it will hinder the production primarily requiring the ingredient. These key issues highly affect the future industry growth (Wheelen & Hunger, 2011).

e.

The future industry profitability will be defined by many factors. Market share is one of the key issues. Currently, every company in industry is struggling for being the most dominant player in the market. Under most circumstances, the companies that have achieved a high market share are considerably more profitable than their competitors with smaller share (Robert, D). Market share and profit are directly related. This poses a danger to the market since the competition may be rather stiff. All of these factors call for an action for the governments concerned to control the products. Again, it will be upon the governments to facilitate larger markets for their domestic products. The other issue is cometition (Carroll & Buchholtz, 2014). In any case, the companies have an average market share, and the competition becomes stiff. Future industry will be subjected to this. For instance, if Wiggles or Sweet Nothing manage to catch up with Ivory Delights, the competition between these two will be tight. This will negatively affect the industrial profitability given that the small companies that are already coming up will have reached the current level of Wiggles or Sweet Nothing. That means that the competition will be almost uncontrollable (Ashby, Leat, & Hudson-Smith, 2012). Corruption is also key issue that can affect future profitability in industry. Nations like Pooran are led by very corrupt leaders. This will have a negative impact on industrial profitability in future. Technology is another key in this case. Further technological advancements will simplify the production process. The new technologies may be very expensive. Thus, only a few wealthy companies will be able to afford it. This will limit the industrial profitability to young companies (Maier, 2007).

f.

Ivory Delights, as a well-established company, has many stakeholders. They are mainly the family-based stakeholders. For instance, Darrell Lea’s grandfather established the Ivory Delight over 50 years ago. This makes the managers of various departments (who are also stakeholders in the company) to try their best in order to keep the company growing. Customers are other key stakeholders. In almost every well-established company, customers are the most crucial stakeholders. Ivory Delights supplies both retailers and consumers. Thus, even the consumers that buy from retailers are still indirect stakeholders. The fact that one of the company’s main goals is customer satisfaction is because they are main stakeholders as well (Maier, 2007). The society plays also a crucial role. It is the society’s duty to to provide the Ivory Delights Company with employees. The last key players are the suppliers. For instance, the Pooran government facilitates the supply of ingredients to the Ivory Delights Company. The ingredients are crucial and so are the suppliers. At that point, the suppliers are very important stakeholders of the Ivory Delight Company.

Question 2

Knowledge Management

a.

Knowledge management is the process of capturing, analyzing, and sharing knowledge effectively within an organization. It is one of the planned strategies of Ivory Delight. To implement the strategy, the focus should be majorly put on objectives like innovation, competitive advantage, and improved performance (Ashby, Leat, & Hudson-Smith, 2012). This is exactly the same line that Ivory Delights should follow. Since the knowledge management entails capturing, storing, and rewarding of knowledge, these three processes should be approached independently. These will cumulatively yield the strategic success.

Firstly, the capturing of knowledge is basic. To improve knowledge management, Ivory Delight can only initially improve the way knowledge is captured. To achieve this, the company needs to involve scholars in its activities (Wheelen & Hunger, 2011). In a case where the company’s sponsors conduct some research related to their activities, then the desired knowledge can be captured. This can best be achieved in collaboration with the students from various institutions in the concerned discipline. Participation in trade fairs and exhibitions can also compliment the capturing of knowledge. Another way to improve knowledge capturing is realized through employing specialists undertaking research. Holding meetings within departments and seeking for any knowledge will ensure that the maximum knowledge is captured (Epstein & Buhovac, 2014). Customers are also a good source of some critical information. This information can be deduced at times to provide relevant knowledge to the Ivory Delights Company. Once captured, the knowledge needs to be stored in a manner that  serves the required purpose. Ivory Delights can best achieve this through proper storage of the knowledge. This includes the security of the stored knowledge. The correct staff can be identified to deal with the knowledge and to work on it. This may include conducting more research and correcting any mistakes found. Interactions should be highly encouraged for the knowledge to flow. Discussions among the employees and various managers can add value to the overall knowledge. Ivory Delights can fully implement this process to ensure maximum benefits from the knowledge. Lastly, one should mention the rewarding of the knowledge. Ivory Delight should implement some motivational activities to the individuals availing necessary knowledge. This will encourage more knowledge inflow. Coming up with a way of appreciation or reward when you input some valuable knowledge will encourage more employees to do so (Ashby, Leat, & Hudson-Smith, 2012). Knowledge management can take Ivory Delights to higher levels in terms of market share and products’ quality. To achieve this, the company should perfect data capturing, storage, and rewarding.

Question 4

Transfer Pricing and Performance Management

Ivory Delights should be prepared to pay for the cost of boxes’ production observing the variable cost. That is:

$0.04 + $0.003= $0.043

On the other hand, the Ebony Boxes Company should be willing to accept the value it sells externally while observing variable costs. That is:

$0.045- $0.003 =$0.042.

1)

The change of outside sales price of boxes from $0.045 to $0.047 will mean that Ebony Boxes is making more profit. In 2014, Ebony Boxes was purchased by Ivory Delights. It means that everything happening to the former affects the latter and vice versa. In its turn, it means that an increase of outside sales price of a box to $0.047 will lead to reduction of the internal transfer price. This simply means that the greater the profit that Ebony Boxes making is, the more Ivory Delights is benefiting directly. Thus, it is expected that the converse will hold. That means if the outside sales price reduces to a level below $0.045, such losses will be reflected to the Ivory Delights Company. Simultaneously, this will affect the cost of internal transfer.

2)

Just as in the case of changing the outside sales price, the change in demand of boxes does not only affect Ebony Boxes, but also Ivory Delights. An increase in idle capacity within Ebony Boxes will lead to losses in the same. To react to this, the internal transfer price is likely to increase in order to maintain the balance within Ebony Boxes. Thus, the internal transfer price is expected to increase with the same magnitude.

3)

Ivory Delights is a big and well-established company. This means there is some level of interdepartmental dependence. This means, in turn, it is the manager of the concerned division who makes decisions depending on the situation and funds. Giving a non-negotiable formula by the company as a whole can only create more problems. Next, it is the manager of a given department who knows the quality and quantity needed. The concerned managers can easily negotiate and come to a peaceful consensus (Werbach, 2011). In the case that a non-negotiable formula is given, the chances are that the involved divisions will have wrangles with time. This will gappen because the non-negotiable formula will overlook the occurrences like change of outside sales price of a box among others. Thus, it is in the company’s best interest to let the concerned managers only to negotiate unless they want to involve third party (Epstein & Buhovac, 2014). The third party in this case can be a fellow manager from another division or a finance expert who may be involved to avail some clarifications during the negotiations.

Question 5

Sustainability

1)

Sustainability reporting is a practice of measuring and disclosing sustainability information alongside the existing reporting practices of any company. The report summarizes on how companies use and affect resources and the way corporate governance is conducted. An increasing number of companies are reporting on their sustainability performance to benefit from the advantages of the same (Holsapple, 2013). This means building reputation and customer reliability. Mostly, small companies use this strategy to widen their ways. They try to give the sustainability report to convince their potential customers and also the investors to have their trust.

Sustainability reporting is a vital step towards achieving a sustainable global economy. This is because of the enhanced company’s accountability, thus building on trust in the company. Moreover, the government uses the sustainability report to assess its own impact and value to the economy. The reporting also creates transparency and marks the economic health (Ashby, Leat, & Hudson-Smith, 2012). A company benefits much from sustainability reporting. First, there are improved processes and systems. This entails developed internal management and decision making. As the company tries to attain certain required standards, it is bound to have some decisions in place. These decision-making instances improves the ability of any company to make a comprehensive decision when need arises. Next, the report builds on the company’s trust. The sustainability report clearly outlines the various capital sources and the ways the funds are utilized in the company. This accountability attracts many new customers to the company (Dawson, 2012). Additionally, some investors with new ideas are attracted simply because they can trust the company with any of their inputs.

Thirdly, the reporting reduces compliance costs which may be a burden to the company.  This comes up whereby the company tries to meet regulatory requirements while measuring sustainability report. Some of these requirements are too lengthy and costly to attain (Ashby, Leat, & Hudson-Smith, 2012). While trying to come up with a sustainability report, it is a bit easier to meet such requirements. Lastly, sustainability reporting gives the concerned company some competitive advantage (Stead & Stead, 2013). After some convincing sustainability report, the company may stand out very strong and with broad future; this attracts the investors thus initiating new activities.  The entry into new markets and negotiating contracts are also benefits of sustainability reporting to the company (Dawson, 2012). This can make a smaller company shine while being young. In such a situation, even consumers rush to try the products of the concerned company. The publicity left for the concerned company is long-lasting.

2)

As the company doing business, Ivory Delights is competing with other companies for the market. When the small companies start sustainability reporting, there is a possibility that some customers may be attracted away from Ivory Delights. To avoid this, Ivory Delights should take necessary actions. These actions aim at strengthening the customers’ trust in the company. It is upon the Ivory Delights’ management to come up with a well-strategized reaction that will settle the score (Ashby, Leat, & Hudson-Smith, 2012). For instance, the Ivory Delights Company can decide to come up with a more comprehensive sustainability report. This will convince most of its customers that whatever the step the small companies have taken is not playing any crucial role. The company may also decide to acquire some of those small companies with the most comprehensive sustainability reports (Dawson, 2012). This will serve two purposes. Firstly, it will promote the acquisition and integration strategies of the company. This will assist Ivory Delights in growing and reducing its cost of production. Secondly, acquisition of the companies with already comprehensive sustainability report will balance the scorecard. This is possible because of convincing the customers that in any case, Ivory Delights Company is superior.

In addition to this, Ivory Delights can start other product promotion activities to win a greater market share. These publicity activities may include involving itself in society based programs. To attract investors, the Ivory Delights Company can introduce some new activities that look innovative. This will attract investors, especially the young ones. The best target is the college students (Ashby, Leat, & Hudson-Smith, 2012). If, for instance, the Ivory Delights Company introduces research-based activities in some colleges, this will balance the scorecard by far.