Pataka Tea Co., Ltd. (PT) - Reassessing the External Environment Pataka Tea Co., Ltd. (PT), founded in 1998, operated eight tea brands through the integration of production and sales. PT produced green tea, black tea, and scented tea, covering three grades: high-end, mid-end and low-end. Due to the regional characteristics of consumer tea products, PT, the number one tea company in Port of Spain, still faced difficulties in expanding its national market. Due to increasing and intensified competition, PT’s overall sales growth was weak, both in Port of Spain and in the national market outside Port of Spain. In June 2018, PT enlisted the consulting services of SSSL Business Management Co. Ltd. (SSSL). According to SSSL’s research report, PT’s development bottleneck was caused by an out of-focus operation. SSSL suggested that PT focus on the brand and market, and on selling high-end green tea in Trinidad. However, great uncertainties surrounded the sales of high-end green tea, and it was difficult to break the development bottleneck by continuing the sales of multiple brands and categories. PT faced a difficult decision. Should PT take a new strategic direction and transform its regional tea brand into a nationally well-known brand? Should PT continue to pursue its cost leadership strategy of diversified development, or adopt other competitive strategies to break through its development dilemma? Tea In Trinidad The three major non-alcoholic beverages were tea, cocoa, and coffee. Tea comprised the leaf and buds of the tea tree. Depending on the processing method and degree of fermentation, tea was divided into six major categories: green tea, white tea, yellow tea, oolong tea, black tea, and dark tea. Green tea was unfermented, while black tea was fully fermented. In addition, reprocessed tea was made from a variety of unprocessed or refined teas. The jasmine tea produced by PT was a reprocessed tea. In July 2016, PT introduced the Amoeba business model to the terminal store management, with the purpose of activating each employee’s business awareness. A single store was taken as the accounting entity, which was independently operated and responsible for its own profits and losses. The evaluation standard for the store had changed from being based on sales revenue to being based on performance (i.e., evaluating both sales revenue and expenses). However, after the actual implementation, it was found that firstly, the store had a limited degree of cost control. Rent and decorating costs could not be changed; only the water and electricity expenses could be controlled. Secondly, the sales staff were unskilled in the use of office software, which took up time normally devoted to sales. Most importantly, the Amoeba business model did not provide enough incentives for stores. Employees focused on how to control costs, and the operating results showed no positive growth. Direction 1: Adhere to the cost leadership strategy PT operated three major categories and eight brands, covering consumer groups and market scope to the greatest extent, and providing mass-market customers with cost-effective products. However, the implementation of this strategy meant that only limited resources and attention would be allocated among the eight brands. Each brand would receive fewer resources and less attention. There was a risk that none of the brands would succeed in transformation. Direction 2: Adopt the best-value focus strategy PT focused on category and brand, and on transforming Lemongrass into Trinidad’s leading high-end green tea producer. Different from its first national market expansion, this expansion was undertaken on the basis of strategic priorities. The transformation of national tea brands needed to be realized in stages for PT to truly become the leader. The resources and organizational conditions required by the best-value focus strategy differed, which meant PT would face huge changes ahead. As of May 2018, what challenges had PT faced in recent years? Assess the factors in the internal and external environment that led to those challenges? Analyze the industry competition conditions that PT faced. Identify the key external factors that affected PT’s strategic decision. Develop a SWOT Analysis for PT to help King develop his strategy. Indicate how each of elements from the four (4)components from your SWOT, can be used to enhance PT’s competitive advantage. Each component of your SWO must have at least three (3) elements If you were Phillip King, chairman of PT, what recommendations – at least four (4), would you make to improve company performance and address the challenges you outlined in question 1. Provide clear justifications for your reasons .
Pataka Tea Co., Ltd. (PT) - Reassessing the External Environment Pataka Tea Co., Ltd. (PT), founded in 1998, operated eight tea brands through the integration of production and sales. PT produced green tea, black tea, and scented tea, covering three grades: high-end, mid-end and low-end. Due to the regional characteristics of consumer tea products, PT, the number one tea company in Port of Spain, still faced difficulties in expanding its national market. Due to increasing and intensified competition, PT’s overall sales growth was weak, both in Port of Spain and in the national market outside Port of Spain. In June 2018, PT enlisted the consulting services of SSSL Business Management Co. Ltd. (SSSL). According to SSSL’s research report, PT’s development bottleneck was caused by an out of-focus operation. SSSL suggested that PT focus on the brand and market, and on selling high-end green tea in Trinidad. However, great uncertainties surrounded the sales of high-end green tea, and it was difficult to break the development bottleneck by continuing the sales of multiple brands and categories. PT faced a difficult decision. Should PT take a new strategic direction and transform its regional tea brand into a nationally well-known brand? Should PT continue to pursue its cost leadership strategy of diversified development, or adopt other competitive strategies to break through its development dilemma?
Tea In Trinidad The three major non-alcoholic beverages were tea, cocoa, and coffee. Tea comprised the leaf and buds of the tea tree. Depending on the processing method and degree of fermentation, tea was divided into six major categories: green tea, white tea, yellow tea, oolong tea, black tea, and dark tea. Green tea was unfermented, while black tea was fully fermented. In addition, reprocessed tea was made from a variety of unprocessed or refined teas. The jasmine tea produced by PT was a reprocessed tea.
In July 2016, PT introduced the Amoeba business model to the terminal store management, with the purpose of activating each employee’s business awareness. A single store was taken as the accounting entity, which was independently operated and responsible for its own
Direction 1: Adhere to the cost leadership strategy PT operated three major categories and eight brands, covering consumer groups and market scope to the greatest extent, and providing mass-market customers with cost-effective products. However, the implementation of this strategy meant that only limited resources and attention would be allocated among the eight brands. Each brand would receive fewer resources and less attention. There was a risk that none of the brands would succeed in transformation.
Direction 2: Adopt the best-value focus strategy PT focused on category and brand, and on transforming Lemongrass into Trinidad’s leading high-end green tea producer. Different from its first national market expansion, this expansion was undertaken on the basis of strategic priorities. The transformation of national tea brands needed to be realized in stages for PT to truly become the leader. The resources and organizational conditions required by the best-value focus strategy differed, which meant PT would face huge changes ahead.
As of May 2018, what challenges had PT faced in recent years? Assess the factors in the internal and external environment that led to those challenges?
Analyze the industry competition conditions that PT faced. Identify the key external factors that affected PT’s strategic decision.
Develop a SWOT Analysis for PT to help King develop his strategy. Indicate how each of elements from the four (4)components from your SWOT, can be used to enhance PT’s competitive advantage. Each component of your SWO must have at least three (3) elements
If you were Phillip King, chairman of PT, what recommendations – at least four (4), would you make to improve company performance and address the challenges you outlined in question 1. Provide clear justifications for your reasons .
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