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Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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The case study is based on an article about Pataka Tea Co., Ltd. (PT) - Reassessing the External Environment.

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Assignment Questions

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.

Transcribed Image Text:the list for five consecutive years. Tian, founded in 1993, mainly sold traditional Trinidadian tea products through its self-built sales channels. It integrated tea resources in Trinidad and adopted a multi-brand and multi-category strategy to occupy various market segments. In addition to competition from the established tea companies, emerging Internet tea brands were impacting the traditional tea market. Founded in 2014, Jamaica Tea Co., Ltd. (Jamaica Tea) had transcended tea above agricultural products, collectibles, and cultural products to become a consumer product that truly served drinking. Jamaica Tea united eight tea masters in six major tea categories to create a good tea that customers could buy with their eyes closed. It simplified customer perception by unifying small pots, weight, price, and packaging. The consumption link was the process of buying and drinking tea. The upgrade of the consumption THE UNIVERSITY OF THE WEST INDIES GLOBAL CAMPUS Page 16 MGMT3107 New Approaches to Management-Course Information. Academic Year 2023/2024, Semester 1 level diversified customers' demand for tea. Price was no longer the most important factor when purchasing tea. Faced with more and more brand teas in the market, customers who did not know much about tea were more inclined to buy well-known brand teas. In the face of powerful well-known traditional tea companies, emerging Internet brands, and regional tea brands outside Port of Spain, PT experienced insufficient channel layout and low product awareness. Therefore, PT's competitive advantage was not obvious. Business Background Development Overview Established in 1998, PT was a key leading tea enterprise in Trinidad's national agricultural industrialization. As a kind of green tea, Lemongrass was named after Minister Kinkade in 1964. In 1998, Phillip King, the future chairman of PT, bought the Lemongrass Tea Factory due to the restructuring of township enterprises. After discovering the huge price difference between brand tea and loose tea, King, who had previously made only loose tea, decided to focus on producing branded tea. The tea, which was positioned as conveying an open minded attitude toward life, targeted politicians and businesspeople. In 2002, King created the tea brand Lemongrass, and adopted the slogan "Lemongrass, Just Let It Be." This

Transcribed Image Text:slogan was gradually internalized into PT's corporate culture and was actively used until 2015. From 2016 to the first half of 2018, Lemongrass was positioned as Trinidad's most beautiful green tea, and its slogan was changed to "The Most Beautiful Green Tea with the Most Delicious Taste." Since 2011, PT had been exploring an entry into Trinidad's national market, but it had a long way to go. Due to the unclear focus of the national market development, all parts of the country had moved forward together, increasing the number of stores blindly, but some resource allocations, such as for advertising, had been insufficient. Lemongrass, a regional tea brand, faced double difficulties in transforming into a national brand. Since 2013, some of the stores that had rapidly opened were restructured or closed due to poor performance. On the one hand, consumers' brand recognition was unclear. PT had been rooted in Port of Spain for 20 years; however, its eight brands were not well-known in the rest of the country. In particular, consumers could not distinguish the categories of Lemongrass. On the other hand, the cost of channel construction was high. As consumers paid attention to the drinking experience when buying tea in branded stores, the investment in store construction was relatively large. PT had introduced the Amoeba business model in its stores and then co-operated with a positioning consulting company, but failed to find a strategic plan suitable for the national expansion. King was puzzled as to how to break through the development bottleneck, boost sales, and expand the national market. Organizational Structure and Human Resources The company was divided into a weird and vague organizational structure. Tucuche headquarters and the Ducheng marketing branch, which consisted of the Sichuan Marketing Subsidiary and the Port of Spain Sales subsidiary. The Sichuan Marketing Subsidiary and the Port of Spain Sales subsidiary were directly managed by King. He felt overwhelmed by simultaneously managing three major tea categories-green, black, and scented tea-as well as overseeing many managers in the national market. As an example, the Port of Spain Sales Subsidiary comprised five managers who held their own distinct opinions during a meeting, making it difficult to reach a consensus. In addition, due to the vague powers and responsibilities of the Port of Spain subsidiary's operation department, the information transmission between the Ducheng branch and its subsidiaries was prone to information asymmetry, resulting in low work efficiency. PT's management, including the store manager, was mainly engaged in internal competition so

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