MBA-PIM: Strategic Management Analysis of Cargills PLC

This report provides a strategic management analysis of Cargills PLC, a prominent food industry company in Sri Lanka. It examines critical drivers of demand change such as product differentiation, competition, technology, customer needs, and government regulations. The report explores early signs of demand changes and the change management process, highlighting how Cargills responds to these changes through various strategies like lowest prices, local significance, focused growth, and product innovation. It also analyzes the influence of organizational culture on change management and offers recommendations for a change management plan, including organizational roles, system changes, and cultural considerations. Finally, the report discusses different schools of thought on strategic management and their relevance to Cargills PLC, providing a comprehensive overview of the company's strategic approach and performance within the Sri Lankan market.

Strategic management analyses with Cargills PLC
Prepared by
Jeyachandrika Piragalathan- MBA-PIM (University of Sri Jayawardenepura
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Executive summary
Strategic management is the nonstop procedure of implementing, creating and assessing
decisions that support an organization to attain its objects. Every organization is focusing the
strategic management aspects for their organizational performances. Based on the strategic
management the report was based on the Cargills PLC and their strategic business performances.
Cargills PLC is the one of the main food industry in Sri Lanka. They have more than 100 years’
experience in food chain industry in Sri Lanka.
According the technology, there is changes occurring in the every organization, so in this
specific concept was related to the Cargills PLC. Demand changes are the important factor of the
organization and also due to the demand changes they are several products are introducing to the
market, this is the main aspect of the demand change. So in this concept critically evaluated in
the report. Cultural influence and benefits analyzed the report. Effectiveness of change
management and recommendation and school of management explained in the report.
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Table of Contents
Introduction......................................................................................................................................3
1. Identified the critical drivers causing demand change.............................................................3
1.1 Product differentiation...........................................................................................................4
1.2 Competition............................................................................................................................4
1.3 Technology.............................................................................................................................5
1.4 Customer wants and need......................................................................................................5
1.5 Government regulation..........................................................................................................5
2. Early signs of demand change and change management process capturing opportunities......6
3. Responded to changes and managed the changes....................................................................8
3.1 Lowest prices.........................................................................................................................8
3.2 Local significance..................................................................................................................8
3.3 Focused Growth through Diversity........................................................................................9
3.4 Social and cultural trends to increase marketing...................................................................9
3.5 Diversification........................................................................................................................9
3.6 Network................................................................................................................................10
3.7 Product Innovation...............................................................................................................10
3.8 Competitive Environment....................................................................................................10
3.9 People capabilities................................................................................................................10
4. Influence of the organizational culture in change management.............................................11
5. Change management and the recommendation of change management plan........................12
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5.1 Organization role and leadership.........................................................................................12
5.2 System and procedures changes...........................................................................................12
5.3 Culture of internal and externals..........................................................................................13
6. Various schools of thought on strategic management............................................................14
6.1 The Design School...............................................................................................................14
6.2 Positioning school................................................................................................................14
6.3 Entrepreneurial School.........................................................................................................15
6.4 The Cognitive School...........................................................................................................15
6.5 The Learning School............................................................................................................15
6.6 The Power School................................................................................................................15
6.7 The Cultural School.............................................................................................................16
6.8 The Environmental School...................................................................................................16
Conclusion.....................................................................................................................................16
Reference.......................................................................................................................................17
Web................................................................................................................................................17
Figure 1..........................................................................................................................................13
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Introduction
The assignment will evaluate the strategic management concept with the Cargills PLC in Sri
Lanka. Cargills PLC is the well reputed retail industry in Sri Lanka and they have more than 100
years of business in the field. There are innovations and the technology which creates the
demand of the business, in this concept will evaluate in the report.
There are critical drivers and the causing of the demand changes will exhibit in the report with
the effective manner. Demand changes and the change management process will capture
opportunities, so in this concept will be related to the Cargills PLC. Due to the changes Cargills
respond to changes the management process, it will elaborate in the assignment. Organizational
culture creates the influences of the change management, so cultural influences exhibit in the
report. Finally there are different schools of strategic management will critically exhibit in the
report.
1. Identified the critical drivers causing demand change
Cargill’s plc is well reputed organization in srilanka; it’s made revaluation of Srilankan life style
in retail market industries. Modern business style in retail industries make customer so
conveniences and save time in purchase goods.
Every goods are under the one roof is the concept for the business; Cargills plc starts its business
in 1844 in srilanka base on ware house (Sunday Observer, Sunday, 15 January 2012).
In 1844, William Miller and David Sime Cargills launched a general warehouse, wholesale and
import business in Colombo-Fort. The concern was called the ‘House of Cargills’.
Most powerful demand drivers as follows;
Cargills is the well reputed name in food chain industry in srilanka. More than 100 years
experience in food chain industry in srilanka. Cargills history shows achievement, failures,
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pressures, pleasant surprises, market development and etc. Cargills first day operation and the
procedures are not now because there are different demand changes and the organization
operation also to be flexible to market. There are many powerful factors influence organization
demand (Sunday Observer, Sunday, 15 January 2012). Most powerful demand drivers details as
follows
1.1 Product differentiation
Due to the demand change, in 1999 Cargills was started obtaining vegetables and fruits directly
from farmers. When it familiar its first gathering centre in Hanguranketha. In 2002 it capitalized
in a dairy handling plant and thereby extended it’s out farmer network to comprise farmers.
Magic ice cream of Cargills was the result of this gamble in the same year Cargills expand into
agri-processing with Cargills Kist which formed further market prospects for farmers.
Cargills groups of companies includes following organization in its administration
01. Food city express
02. Magic ice cream
03. Kotmale poultry (Cargills, Annual Report, (2012/2013).
1.2 Competition
Every sector face the problem of competition, many academic people argued that the competition
is the best sign for the healthy marketing. Early period of cargills food industry there is not much
competitor to the cargills. After the cargills food supply process and the business pattern is
different from the other food chain industry. Cargills introduce the modern shopping. After the
success of cargills many organization follows the same operation style into their business and
update the business day to day. Today cargills direct competitors are John keels of groups,
Arpico, Laugh super market and etc (Cargills, Annual Report, (2012/2013).
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1.3 Technology
There are many powerful factors of demand changes but the preference factor is technology.
Today world is technology world. Technology affects and makes the changes in entire sectors.
When the technology will change or update then the less period the organization can evaluate the
sign of demand changes. Day to day technology development makes the organization survival
into more difficult, but the organization also includes the innovation and create new concept into
the business (Cargills Ceylon PLC, 2014).
1.4 Customer wants and need
Today business is customer based business and the customers are king. Due to the demand,
Cargills change its business pattern in every constant time period; earlier cargills involve only
the food supply but after long time cargills expand its service to poultry foods, Alcohol,
pharmaceuticals. The reason is customer wants and demand is not fixed customers wants and
needs are change. Normally organization avoid the customer needs mean that is the major risk to
the company. So the customer demand is one of the important factors on demand change
(Harfield, 1998).
1.5 Government regulation
Government is another factors influence in the demand. Mostly government makes some
changes and update in the country ongoing g process. Sometime country government directly
influence in demand. Introduce new tariff, Tax holidays, newly product imports, increase or
decrease Tax Government awareness programs, provide market ideas to citizen, political
inflexible, Government budget deficit and etc. The above government intervention makes the
changes in the demand and Government can make every changes so this is the more risky and
powerful factors in demand changes (Cargills Ceylon PLC, 2014).
Due to the demand as mentioned the above changes occurred in Cargills PLC.
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2. Early signs of demand change and change management process capturing
opportunities
Cargills is the well reputed industry in food change management but the cargills not stayed the
same operation. Cargills started many organization, introduce many products, join and acquire
leading companies, changes in the product, increase the customer strength and still cargills
compete with its competitor and etc. The above are the best examples for demand changes.
Human resource is the different resource from other resources and many professional says that
only an one resource will difficult to handle that is human resource, Because human activities are
change and flexible from day to day. Two decades ago customer need and wants are not a critical
to organization but now satisfaction of customer is the maximum risk in the business. There are
many signs that the organization can identified and measure that the demand changes (Cargills,
Annual Report, 2012/2013).
 Product sales reduced
 Political changes
 Environmental and social cultures changes
 Increase good returns
 Holding cost increased
 New product introduced in market
 Technology and innovation
The above are the symptoms of the organization demand changes. Sale continues reduced and
return good increase and holding costs are increased is the best sign that the customer needs new
products or the customers moving to the new products. Simply organization cannot stayed with
same product and same material, same operation strategy means the organization cannot survive
for the long time, and the organisation update the product or makes the innovation of the product
is the major part of the change management. Technology changes and update or enter new
technology means that is the best early sign in the demand change. Then the organization start to
re engineering the product with change management process (Cargills, Annual Report,
2012/2013).
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Change management is makes the organization into new way, then the organization will
definitely involve or affect from change management then the organization cultures and structure
change from periodic to period. This is necessary and anyone cannot drop or change customer
mind.
Mostly organization marketing division announced the current situation of the market. That
report includes the current market trend, company product market status, new innovation and
changes in market. then company top management instruct the research and development to
evaluate the statement then the research and development request the changes of the product to
an organization (Barney, 1996).
After the request of the changes then the management decides the further process of the product,
and evaluate and measure the impact analysis this analysis includes market after the change the
organization financial impact, resource allocation, marketing style, production and stores, risk
management and etc
Every time the market has a new entries but the organization cannot restructure the organization
day to day. The only critical situation and company cannot process the product or face the
market then the organization move into change management process. After the many discussion
and expert advice and other factors evaluation management approved for the demand changes
Implemented changes and reporting are the preparation for the new product market result.
Organization makes changes in the product then the organization cannot achieve the entire
market. Then the marketing and other stakeholders observe the market and report to the
management about change management success or the failure (Managing change, 2011).
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3. The organization responded to changes and managed the changes
3.1 Lowest prices
New steps were taken to successfully manage the closing stock; the one-off impact outstanding
to the same was Rs 170 Mn which directly impacted net profit. Created ‘Lowest Price’ culture in
marketing
During the year cargills is an only supermarket chain to ensure the lowest price on essential
items with no circumstances attached. Cargills price backed by a capable strong backward and
supply chain integration reaching thousands of small farmers received helped to drive this price
separation with competitors especially in the fruit and vegetable category. Further Cargills has
revisited its fresh-fish supply chain and has invested in the establishment of a new Fish
Processing Centre in Negombo. Two fish collection center operate in Point Pedro and Kalpitiya
on a seasonal basis with the total supply-chain now accounting for around 4 tons per day and
directly around 200 fishermen. Benefit from scheme (Cargills Ceylon PLC, 2014).
3.2 Local significance
In response to an increasing demand for the modern trade experience beyond the Colombo
metropolis Cargills has reinvented the supermarket experience through its smaller format stores,
‘Cargills Food City Express’. The smaller store size and paying attention range provides a value-
for-money supermarket experience to the sufficient at the same time as maintaining the highest
standards of food safety and sanitation. The new format has been well received in the smaller
townships of Sri Lanka (The Island, Friday November 14th 2014).
3.3 Focused Growth through Diversity
During the year we opened 30 new outlet including 17 Cargills Food City Express stores with the
store development plan now responsiveness towards the smaller-sized experience. While
expansion to capture the tremendous growth potential in the sector will continue, Cargills is
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cognizant of the potential for over trading, and regularly monitors its performances (Cargills
Ceylon PLC, 2014).
3.4 Social and cultural trends to increase marketing
Cargills link with the farmer communities of Sri Lanka continues to be a rewarding business
relationship that extends well outside the conventional role of purchaser. Cargills create
payments to its farmer network.
In the year concluded Cargills has introduces its first Vegetable and Fruit wholesale price show
fatal at its fresh produce gathering centers. The wholesale price fatal further recurrences the
pledge of Cargills near the enablement of minor farmers. Cargills endures to bargain prices
above the wholesale marketplace to farmers beside with training, technical inputs, and market
information though facilitate credit. Its continued focus on improved post-harvest practices
including efficient transport utilizing plastic crates continues to yield dividends for farmers and
consumers by way of ‘best prices’ for ‘best’ produce.
Cargills Farmer Community Development funds continue to form sustainable value for local
communities. There are donation of educational scholarships for farmer children, distribution of
learning material and farmer equipment giving by the Cargills (Cargills, Annual Report,
2012/2013).
3.5 Diversification
Cargills , KFC Delivery Service is now accessible in entire Restaurant Trade areas. The idea of
dining-out at home is currently growing trend between busy middle class families and the KFC
distribution service has been well established.
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3.6 Network
Cargills remain mindful of the emerging macro-economic trends and regional social and cultural
nuance in ensuring a planned expansion strategy.
3.7 Product Innovation
Innovation continues to be the key power of this sector. The value-for-money stage and the
localized menu remains the winning edge of KFC.
3.8 Competitive Environment
The retail industry in Sri Lanka is highly competitive. To remain competitive the Group is
focused on areas such as price, product range, quality and service. We monitor our performance
against a range of measures including customer satisfaction, perception and experience while
also evaluating the performance of competitors (Cargills, Annual Report, 2012/2013).
3.9 People capabilities
Their greatest asset is our employees. It is critical to their success to attract, retain, develop and
motivate the best people with the right capabilities at all levels of operations
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