(b) Using relevant evaluation criteria, assess how achievable and compatible these three s

Question

(b) Using relevant evaluation criteria, assess how achievable and compatible these three strategic goals are over

the next five years. (20 marks)

Answer 1

正确答案：
(b) The three strategic goals are to become the leading premium ice cream brand in the UK; to increase sales to ￡25 million;
and to achieve a significant entry into the supermarket sector. On the basis of performance to date these goals will certainly
be stretching. All three strategies will involve significant growth in the company. Johnson and Scholes list three success criteria
against which the strategies can be assessed, namely suitability, acceptability and feasibility. Suitability is a test of whether a
strategy addresses the situation in which a company is operating. In Johnson and Scholes’ terms it is the firm’s ‘strategic
position’, an understanding of which comes from the analysis done in the answer to the question above. Acceptability is
concerned with the likely performance outcomes of the strategy and in particular whether the return and risk are in line with
the expectations of the stakeholders. Feasibility is the extent to which the strategy can be made to work and is determined
by the strategic capability of the company reflecting the resources available to implement the strategy. It is interesting to see
that the three growth related goals are compatible in that becoming the leading premium brand will involve increased market
penetration, product development and market development. If achieved it will increase sales and necessitate a successful
entry into the supermarket sector. Time will be an important influence on the success or otherwise of these growth goals –
five years seems to be a reasonable length of time to achieve these ambitious targets.
Suitability – Churchill is currently a small but significant player at the premium end of the market. This segment is becoming
more significant and is attractive because of the high prices and high margins attainable. This is leading to more intense
competition with global companies. One immediate question that springs to mind is what precisely does ‘leading brand’
mean? The most obvious test is that of market share and unless Churchill achieve the access to the supermarkets looked for
in the third strategic goal, seems difficult to achieve. If ‘leading brand’ implies brand recognition this again looks very
ambitious. On the positive side this segment of the ice cream market is showing significant growth and Churchill’s success
in gaining sponsorship rights to major sporting events is a step in the right direction. The combination of high price and high
quality should position the company where it wants to be. Achieving sales of ￡25 million represents a quantum shift in
performance in a company that has to date only achieved modest levels of sales growth.
Acceptability – as a family owned business the balance between risk and return is an important one. The family to date has
been ‘happy’ with a modest rate of growth and modest return in terms of profits. The other significant stakeholder group is
the professional managers headed up by Richard Smith. They seem much more growth orientated and may be happier with
the risks that the growth strategy entails. The family members seem more interested in the manufacturing side than the
retailing side of the business and their bad previous experiences with growing the business through international market
development may mean they are risk averse and less willing to invest the necessary resources.
Feasibility – again this is linked to how ‘leading brand’ is defined. If as seems likely the brand becomes more widely known
through increasing the number of company owned ice cream stores then a significant investment in retail outlets will be
necessary. Increasing the number of franchised outlets will reduce the financial resources required but may be at the expense
of the brand’s reputation. Certainly there would seem to be a need for increased levels of advertising and promotion –
particularly to gain access to the ice cream cabinets in the supermarket chains. This is likely to mean an increase in the
number of sales and marketing staff. Equally important will be the ability to develop and launch new products in a luxury
market shaped by impulse buying and customers looking to indulge themselves.
Overall, becoming the leading brand of premium ice cream may well be the key to achieving the desired presence in the
supermarket ice cream cabinets, which in turn is a pre-requisite for increasing company sales to ￡25 million. So the three
strategic goals may be regarded as consistent and compatible with one another. However each strategic goal will have to be
broken down into its key elements. For example in achieving sales of ￡25 million what proportion of sales will come from its
own ice cream stores and what proportion from other outlets including the supermarkets? Sales to date of Churchill ice cream
are dominated by impulse purchases but in achieving sales of ￡25 million penetrating the take home market will be essential.
Finally, what proportion of these take home sales will be under the supermarkets own label brands? Over reliance on own
label sales will seriously weaken Churchill’s desire to become the leading national brand of premium ice cream. It looks to
be an ambitious but attainable strategy but will require a significant planning effort to develop the necessary resources andcapabilities vital to successful implementation of the strategy.