Organizational Strategy

This report discusses the key challenges faced by Adnams in their external environment and the significant aspects of their internal business. It also explores strategic options and directions for sustaining future growth.

Organizational Strategy
NAME OF STUDENT
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Contents
Introduction...........................................................................................................................................................2
Conclusion..............................................................................................................................................................7
References..............................................................................................................................................................8
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Introduction
In this short report, discussion is made by focusing on case study Adnams: a living company, which is
tradtionally a brewing firm that was established in Southwold, Suffolk, UK and manufatures ales and
bottled beers. In this report the key challenges faced by Adnams due to their external environment has
been explained along with discussion about significant aspects of their internal business. Also strategic
options and direction to sustain future growth has been presented in this report along with suggestion
that can be considered by Adnams in future.
Q1.
The key challenges that are faced by Adnams in the external environment are as mentioned:
1. The beer sector of United Kingdom had been witnessing greater power of bargain from buyers
because the prefernce of beer consumers have changed dynamically from earlier days an also
more of beer consumers have started to switch from local beers. As such there are ver less
consumers in beer market which have posed challenge for Adnams. This decline in consumers
have resulted as beer industry has been experincing low switching costs due to which beer
consumers find it convenient to switch from beer to other close or distant subsitutes (Khan and
Khalique 2014). This rise in bargain power of buyers and already saturated beer markets in UK
have limited scope of differentitaion of Adnams beer much from standardised beer products or
from subsitute products.
2. Also the suppliers of beer industry in UK had low bargain power and inspite of several beer
manufaturers the current suppliers in beer market of UK have been facing challenges. The main
cause behind inability to rise prices to extend profits is overall rise in rates resulting from
government taxes which has resulted several consumers to swicth to subsitutes (Gupta 2013).
As such any further rise in beer rates would further decline the number of buyers and hence
would decline profit levels. Also beer products cannnot be differentiated much as such supplier
are unable to charge consumers high, which has resulted in low supplier base in beer markets
and this situation has created a challenge for Adnams.
3. The beer sector in United Kingdom is encountering intense rise in competitive landscape as
exisitng rivals fight for gaining larger share of market in ever decling profitabiity pool and
saturated beer market in UK. Also the beer industry is experiencing decline stage in life cycle
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which has resulted in existing beer manufacturers in UK market do every possible thing to stop
any other firm into industry to take away more profit sharing. Thus such situation has created
challenge for Adnams in external environment where other dominant beer manufaturrers are
almost equla in capacity and existence in market, which has resulted into cut throt competiton
and fight to gain more market share.
4. The pattern of beer consumption has also faced huge drop in demand for beer due to external
influnce and also due to factors like rise in price of beer, rise in awareness of health among
consumers and due to rise in promotion of close and distnat subtitute of beer (Gathungu, Aiko
and Machuki 2014). As the demand of beer is price elastic, so rising rate has created drop in
demand as beer is still consumed as luxury and not necessity and hence such situation has led
Adnam focus beyond their family business and this has opened up challenges due to more
external influnce.
Q2.
Some important aspects of internal business situation of Adnams is their ability to focus on small,
narrow niche market as the existing beer markets are already saturated and there is intense rivalry due
to presence of multiple manufaturers. Hence, Adnams focus on operational effeciency and innovation
has created differentitaion to enhance their competitive edge. Adnams has improved their operational
effetiveness by promoting their brand as a culture which is evident from their slogan “Adnams beer
from the coast”. This has made their brand stress local provenance, which is one of the significant
elements of their internal business environment. Also, to improve their internal buisness effeciency and
innovativeness Adnams have focused on niche makets and have included annual Suffolk shows,
Norfolk show and other festivals to establish their brands presence amongst locals so as to rise their
sales to consumers both with Suffolk and neighbouring local markets (Boons and Lüdeke-Freund
2013). Moroever Adnams have allianced with local sports like Ipswich Town and Newmarket local
racecourse to host shows which have helped them increase their internal busienss influnce and capacity
by rise in brand awareness and gain of more consumer base. Also Adnams has focused on innovation
through differentiation strategy by building a brand name that has created a better entry barrier and they
have continued to promote their brand as local to market which has sttringly positioned them against
competitors.
Also Adnams have incerased their effeciency of operations by utilising internet for marketing where
they have connected with local consumers through Twiiter so as to widen reach and connections and tis
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effect of utilisation of social platform have built larger awareness of their brand which has improved
their number of consumers who purchase their product due to local provenance influence. Further
Adnams have increased their capital resources by diversifying into various thematic sectors other than
brewary such as hotels, retail stores and distribution centres. These substantial investment in new
resources and infrastructure has led to rise in capital resources (Wilden, et al. 2013). Also Adnams
focus into retail store has extended their portfolio thus rising sale of products and number of customers
including women and from these retail stores Adnams sell branded classic cookwares, spirits, mixers,
cordials, bottled water etc. Moreover Adnams made substantial investment in their infrastructure to
make it updated and moderinised and these investment in modernizing brewary has made them one of
the most ethical and eco-friendly brewaries in UK which has helped to enhance their brand reputation
not only amongst locals but has even helped to attract customers from other markets who are more
environment conscious. Adnams uses their eco-friendly production for branding themselves and their
utilisation of eco-friendly bottles and local sourced ingredient has built a unique positioning and
innovative brand which is hard to imitate (Spieth, Schneckenberg and Ricart 2014). Another important
aspect of Adnams internal business environment is their focus on low cost production through
investment in moden distribution centres which are eco-friendly, efficient and backward integrated.
These distrbution centres have permitted Adnams to manufacture beer in market with leading low cost
manner and with better quality which has lowered barrel return due to poor beer quality. Also these
distribution centres need less infrastructure investment in heating and air-conditioning which has led to
saving in energy and electricity bills as well as has lowered production cost and raised profits (Olajire
2012). Further Adnams has invested in Bio energy site filled with brewing waste which is converted
into biogas and used in fuel in delivery trucks, and these have further lowered cost due to significant
decline in delivery costs, all of which has improved capital resources. Further important aspect of
Adnams internal business is their human resources or employees which is yet other evidence of
differentiation from rivals, where employees at Adnams feel sense of belonging and pride in real sense
that helps in low turnover rates, rise in productivity and low absenteeism level.
Q3.
The strategic options and directions that can be considered by Adnams in order to sustain their future
growth are as follows:
Presently Adnams have built their marketing capabilities but due to intense comptition and saturation in
beer market in UK, they have to move beyond their family business to open doors to extend to offshore
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markets which along with opportunities can also bring challenges due to outer influence. So Adnams in
order to sustain growth by penetrating into offshore markets, should consider not to set up a separate
bewary in internal locations. This is due to the fact that Adnams have already positioned themselves as
local brand, so by establishing brewary outside Suffolk or even by setting up a new brewary in offshore
market, Adnams would negatively dilute their brand and loose local provenance. So in order to set foot
in new international markets, Adnams can think of strategic opportunities in marketing of their brands
to new markets of international location through internet platform use which might prove to be
beneficial. Alternatively, they can partner with local marekting and distrbution firms in offshore
markets to extend their distribution of products outside local markets without taking the into
consideration the risk to establish separate brewary in international market and loosing its local brand
image (Evans, et al. 2017). Moreover Adnams already utilise diversfication strategy through protfolio
in hotels, retail stores and distrbution as well uses cost leadership thorugh low cost strategy and
differentiation by tageting niche markets, so all these three approaches include certain risk particulary
in long term in context to financial sustainability as well as risk of loosing parent control. Nonetheless,
by considering alignment control in supply network, manufacture network and delivery networks,
Adnams can build sustainable growth in future by creating mature market with sucessful application,
substantial investments so as to promote their brand strongly particlularly in context to beer that
cannnot be imitated so as to strategically position and dominate hold in contemporary markets. Hence,
though diversification approach of Adnams has been successful, but they need to remain cautious in
their strategic choices and directions so as to consider sustained future growth without risks.
Q4.
Over the next ten years it is recommended that Adnams can focus to develop the following:
Adnams can incentivise their supply networks and customers to go green in future to focus on
promoting sustainability by undertaking three significant steps i.e. encouraging change, rewarding
actions and exemplifying outcomes. Adnams can concentrate to facilitate their best practices by
highlighing potential win-win approach so as to change suppliers and consumers perspectives and
behaviour towards sustainable consumption. This will build Adnams image uniquely in market in
situation where it is threatened to sustain due to drop in pubs and wet-let alcohol consumption as well
as due to risk from multinational acquisitions along with extension of craft micro-brewers which has
led Adnams into a challenging and threatening condition. So in busines situation which is facing rise in
commodity rate and impact on supply chain due to environment issue, it will be beneficial for Adnams
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to focus on promoting green stewardship at the heart of their business operations to present a unique
image. Adnams can position their supply networks so as to offer more focus on best practices towards
environment to lower competition and build a unqui green corporate image that will help to promote a
sustainable future (Björklund, Martinsen and Abrahamsson 2012).
Fig: Emission report of Adnams (2018)
Source: Adnams Annual report
Adnams can partner with existing structure and regional brewers and this collaboration will prove
beneficial as by working within current structures, additional expenses and working hours can be kept
low. Also it will facilitate reciprocity across regional brewers due to colloboration and will promote
cost savings through BrewFit networks while having restricted influence on business competitive
position because regional brewers would be able to compete on taste, brand and alterations in customer
patterns.
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Approach to attain Green Stewardship at Adnams
Source: Self
Moreover Adnams will be able to utilise this go green environment leadership approach to encourage
other regional brewers to promote best practices and share a vision which will help to cover and extend
support towards supply chain concerns by facilitating improvement in environmental governance
benefits. Also Adnams can reward environmental initiatives through sharing of best approaches,
employee led workshops to promote more capital intesnive schemes that will reward not only
financially but also will help to share knowledge, mutual cooperation towards similar environmental
concerns (Beckmann, Hielscher and Pies 2014). Moreover larger participation can be promoted with
best practice outcomes for internal and external stakeholders which will enlarge green brand reputation
as well as will offer opportunities in new markets by spreading of environmental best practices.
Conclusion
Thus it can be concluded that though Adnams faces some challenges due to external environment
factors like intesne competition and changes in customer preference but these can be overcome by
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focusing on innovation through differentiation and by building uniquness in capabilities, capital
resources and people resources so that competitiveness can be enlarged within the industry to sustain
future growth and cut throat rivalry. Also by building a unique green corporate image Adnams can
leverage environmental sustainability benefits which will help them position their brand reputation with
a difference to create a stong impact on consumer which will help to enhance sales as well as develop
their business in future.
References
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