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).
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.
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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).

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

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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
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

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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.

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.

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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

4. Influence of the organizational culture in change management

Change management is the most difficulties to organization because change management makes
the entire operation into change and many people cannot flexible in short time period,
organization resource to change , new team generated, explain and training programmes to staff.
Basically change management makes the pressure to the employees and they are struggles in the
short term period, then they loss the effectiveness, productivity and other expense are high and
organization cannot constant for the short time (Harfield, 1998).

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Change management influence in organization internal culture and external cultures and the
organization move to the next level of culture,Specially change management not only change the
products and services but also change in organization process and procedures . There are
sometimes that became positive or negative, that up to the organization decision. The figure
exhibits the change management aspects of the organization.

Figure 1: Aspects of change in the organization

Source: Managing change, (2011)

5. Change management and the recommendation of change management plan

The recommendation is the organization change management directly affects the resource and
structure. Under the resource changes the people and their attitude, behaviours, their skills and
their knowledge and experience are influence by change management. Because the organization
change management change organization atmosphere .influence of infrastructure facilities is the
important factors in change management, because infrastructure facilities makes the production

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into more conveniences, but some reason the organization infrastructure influence the
organization culture in to modern way and transfers traditional into modern.

5.1 Organization role and leadership

Early period of the business involves that the same job and routine leadership follows in
orgasnisation, but after the product development, innovation, technology development makes the
product into many changes affects the role and leadership quality also as well. Organization
cannot stay with the same position and procedure, then the leaders are including different ideas
and modern business procedures in their business, so that is the main reason for leadership
changes (Trim, 2004).

5.2 System and procedures changes

Organization system and procedures changes are another impact of the change management.
System and procedures changes inform that culture of the organization is different from the
others. When organization every changes will makes the system also to be change. Simply
organization system and procedures are depending in change management. New project team
generation, changes in procedures, include new system, reporting power change, authority
structure change, new people arrivals and employee turnover are the major changes occurs after
influence of culture change in demand change management (Ettorre, 1995).

5.3 Culture of internal and externals

Normally cultures directly affect the internal and external environment. Culture change became
internal and external is most important factors. Cultures and relationship between customers and
organization are different, because the reason for change management. Change management
creates a new style of culture to organization. Organization customer care and handling pattern
are different from every culture changes. Cagills will leading organization in customer handling
and most of the times cargills manage the change management with proper customer handling.
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Change in seasonal, changes in market style and market explanations are little evidence for
maintain and attract new customers in change management (Brown, and Kathleen Eisenhard,
1999).

6. Various schools of thought on strategic management

6.1 The Design School

Design schools are based on the SWOT analysis strategy and this strategy includes the
strength, weakness, opportunities, threats.

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Top and experience management team involved long analysis then they design clear and simple
strategies in a conscious process of aware idea –Designing strategies can understand by every
staff from the organization. Communication designing is also being a part of design school
Basically SWOT analysis is a best thing in design of change management. And every project
has a specific goal and the participants can flexible in project design

6.2 Positioning school

This authoritarian school was the major view of strategy formulation. Strategic formation was
made by the specific team with high sensitivity and careful. It was given strength especially by
Harvard professor Michael Porter in 1980; basically past experience is the mostly considered in
this subject. Following past work on strategic positioning in college and in converse with, all
come first by a long literature on services strategy,. In this view, strategy reduces to common
positions selected through formal analysis of industry situations. Because today every
organizations are expects to go through with specific and different strategy to beat the
competitors. Hence, planners became analysts. At the planning minute organization starts the
strategy (Ten Major Strategic Management Schools).

6.3 Entrepreneurial School

When assessing the entrepreneurial school which is centered the course on the executives;
entrepreneur is the person accepts the risk and innovator. These schools develop the executive
attitudes and theory. This involves design of entrepreneurships and this is includes direct
opposite with planning and positioning, then the most valuable budge the strategies from exact
designs, plans, or positions to unclear visions, or standpoint, typically to be seen through
symbol,

6.4 The Cognitive School

On the academic front, there was attention in the beginning of strategies. Every Starting point
of strategy management will describe in this school. This school fully concentrate initial stages
of the strategy procedures such as models, established in people’s attention as frames, or
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maps, , people’s life style , attitudes of the individual. New creation, innovational activities,
additional special features to build a strong strategy in the beginning of strategy stage (Ten
Major Strategic Management Schools).

6.5 The Learning School

This school basic idea is different strategy from different practice. Don’t use the same
procedures and strategic style to a new practice. Gain the experience from previous and use the
experience to prepare the strategy with new way. In this view, strategies are developing;
strategists can be found throughout the organization. All the explain schools, the learning
school became an unqualified signal and challenged the universal regulatory schools

6.6 The Power School

This quite small, basically many organizations not apply this strategy in its marketing. Power
school is use in many organizations with their own strategy handling styles. But relatively
different school has paying attention on strategy making entrenched in power. These
development strategies within the organization are includes fundamentally change management
factor and uncontrollable factors of the organization that are the political, a process involving
influence, bargaining, and disagreement among inside actors (Ten Major Strategic Management
Schools).

6.7 The Cultural School

The cultural school focuses on common notice and addition. The strategy formation is observed
as a societal procedure embedded in culture. Culture school indicates the organization culture,
organization external customer handling manner, customer specification, marketing culture,
political culture and the movement and observation of cultures changes.

6.8 The Environmental School

Perhaps not strictly strategic management, the environmental school all the same warrants
concentration for the light of day it pitch on the demands of the environment. How general
environmental effects company procedure? How can organization survive from external
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environment impacts? This school is based on the mass society and problem. Environmental
culture can change or affect the company progress suddenly. Then the organization can
surviving strategy is the basic concept of this strategy (Ten Major Strategic Management
Schools).

Conclusion

Strategic management is the process and focusing to implement, create, and assess the decisions
to help the organization. According the strategic management concept, the report was based on
the Cargills PLC and their strategic business performances. Cargills PLC is the one of the main
food retail industry in Sri Lanka. Due to the technology there are changes occurring in Cargills
PLC. In this concept was evaluated in the report. Demand changes are the important factor of the
organization and according the demand changes they are several products introducing to the
market, this is the main aspect of the demand change. It was 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.

Reference
Barney, J.B. (1996), Gaining and Sustaining Competitive Advantage . Addison-Wesley,
Reading,MA.3.

Brown, Shona L., and Kathleen M. Eisenhardt. (1999), Competing on the edge: strategy as
structured chaos. Boston: Harvard Business School Press.

Curry, B. (1996). Knowledge-based modelling for strategic decisions. Marketing Intelligence

&Planning, 14(4) pp. 24-28.8.

Ettorre, B. (1995). Managing Competitive Intelligence. Management Review, pp. 15-19.10.

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Harfield, T.(1998). Strategic Management and Michael Porter: a postmodern reading. Electronic
Journal of Radical Organization Theory 4 (1).

Kotler, P. (2003), Marketing Management 11th ED, Prentice All: USA.

Mintzberg, H. (1990), The design school: reconsidering the basic premise of strategic
management. Strategic Management Journal 11:171-195.

Trim, P.R.J. (2004), The strategic corporate intelligence and transformational marketing model.
Marketing Intelligence & Planning , 22(2), pp. 240 – 256.28.

Web
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<http://www.cargillsceylon.com/InvestorRelations/downloads/annual_reports/Cargills_Annual_
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