Dangerous for the Band
Robin Hood knows that his band is in an uncomfortable situation. He is unsatisfied of the internal organisation and outside the environement has changed and becomes dangerous for the band.
This situation can be described by the EVR "strategic drift", according to J.L Thompson (2001) "Strategic management", because they lose touch with the environment.
Robin Hood (the organisation) is aware of what he needs to improve the situation, but he must not waste time because the sheriff becomes stronger and stronger.He has many political connections, and he is in a good term with Prince John so it becomes too risky to kill him. He has now got the money and men to be able to ruin the Robin Hood's band (CS p22:3).
The food capacity of the forest is not enough for the increasing band and the money begins to deplete because there is not enough rich people travelling through the wood. In fact travellers are avoiding the forest because they are afraid to be robbed.
Moreover the revenues are in decline and get worse the financial situation of Robin Hood's band (CS p22:1).
This situation can be often explained by a lack of management (J.L. Thompson. 2001, p.71:2). In this organisation, the size of the band is unmanagable (CS p21:4) and the Robin's Hood Lieutenants are unwilling to change their strategy (CS p22:2) because it "has been successful in the past" (Johnson et al. 2008, p.180).
Robin Hood's band needs desesperatly a new strategy and new ideas in order to regain EVR congruency (J.L. Thompson. 2001, p.71:2).
In order to get back in alignment with their environment the band needs to change their strategy before they go through another step.
According to Johnson et al (2008) "Explorating Corporate Strategy: Text and Cases" they are currently in a "Strategy as design" where the top manager driven but they have to move on a "Strategy as ideas" to be more innovative and find new ideas.
To achieve this aim they need to be re-organized. The forest becomes too small for them and it begins to be unmanagable for Robin Hood, so they can realise a geographical expansion in another forest and split the band in self-manage small groups.
They are not competitive any more against the Sheriff, so they need to merge with barons (CS p22:5) to become more powerful and try to release the king.
However to be able to pay the king ransom they need more money but if they continue the same policy of outright confiscation of goods, travellers wouldn't cross the forest anymore and the bands financial reserve is going to decrease. The solution is to set up a fixed transit tax (CS p22:2) and stop the first policy. Furthermore they can't recieve help from someone they stole from as they need more support as possible to be successful.
Five forces analys
The following factors as definied in Johnson, Scholes and Whittington (2002, p.113) "Exploring Corporate Strategy: Text and Case" FT Prentice Hall
Threat of new entrants (LOW)
- Chocolate industry needs high production, which create economy of scale. The cost of chocolate production is reduced and small competitors can't enter in the market because of large capital requirements.
- Product differentiation creates also an entry barrier for new entrants because there are many famous brands with loyal customers. Indeed if a company wants to enter in the market it has to spend a lot of money in marketing to become popular.
- The last entry barrier is an access to distribution channel because of large companies which are already established.
The bargaining power of suppliers (MEDIUM)
- The bargaining power of suppliers is reinforce by the limited number of suppliers because the production of cocoa needs specific climat and weather.
- Chocolate industry is an important customer for those suppliers and that decreases bargaining power. However, chocolate industry is also dependants of the supplier because there are no substitutes of cocoa bean.
- The bargaining power is reduced because suppliers can't become a producer because the threat of new entrants is low.
The bargaining power of buyers (LOW)
- In this market there is a large volume retailer like Tesco which have significiant bargaining power.
- Chocolate industry has product differentiation and customers loyalty, wich reduce bargaining power of buyers and increase the switching cost. Indeed buyers can't play competitor against each other.
- It's difficult for buyers to become producers because of hight entry barriers, which reduce bargaining power of buyers.
Threat of substituts products (HIGHT)
- There are many substitutes products as "product-for-product substitution" (Johnson et al. 2008, p.115) which can replace chocolate like snacks ( ice cream, fruits, chips ...)
- Chocolate is usually used as gift in special event but other products can be used for gift like jewelry, flower, clothes ...
Intensity of Rivalry (HIGH)
- There are many competitors with the same size, which increase the competition between each other.
- According to the industry life-cycle model (Johnson et al. 2008), the chocolate industry is a mature market, so the competitor needs a constant innovation to maintain market share, which increase rivalry.
- Because of large capital requirement there are high exit barriers which reinforce competitor rivalry.
The chocolate industry is on the one hand, is still attractive to existing players because it's a mature market with "higher margins" and "there are still significant potential to increase the UK market (CS p757:5 and p753:5). In addition it's easy to control suppliers and buyers because their bargaining power is low to moderate. However competitors have to fight to maitain market share with constant innovation, "consumers constantly expected new offerings" (CS p755:2) because the intensity of rivalry is high. The threat of substitute products is also high and that decreases the attractivity for existing players.
This industry is not attractive to potential new entrants because there are so many entry barriers according to part one of this portofolio and also because the market is on players and users saturation (Johnson et al. 2008 Exhibit 2.3).
Johnson, Scholes and Whittington (2002) "Exploring Corporate Strategy: Text and Case" FT Prentice Hall
Capon, C (2008) "Understanding Strategic Managment" FT Prentice Hall
J.L Thompson (2001) "Strategic management"
Porter, M (1985) "Competitive Strategy - Creating and Sustaining Superior Performance" Free Press