Background Information HEAVENLY LTD is a well-known luxury brand based in the Ne
Background Information HEAVENLY LTD is a well-known luxury brand based in the Ne
Background Information HEAVENLY LTD is a well-known luxury brand based in the New Forest in the South of England, it is a UK market leader in the manufacture of ice-cream products. HEAVENLY LTD’s ice-creams are packaged in plastic or cardboard-lined containers and distributed to customers, including supermarkets and other retailers, throughout the UK. HEAVENLY LTD’s product range includes ice creams with nut combinations, ice creams with fruit syrup and a combination of both. HEAVENLY LTD unlike its competitors currently only specialise in ice-creams as opposed to other dessert offerings. HEAVENLY LTD is run as an autonomous operating division of Tastey Delights. Other subsidiaries/divisions with the Tastey Delights consortium operate in the luxury frozen food market. Divisional managers are responsible for sales and costs and they provide the Tastey Delights board with a monthly analysis of each division’s revenue and operating costs. Key strategic decisions, including capital expenditure, are taken centrally. Divisional managers are permitted to make day-to-day operating decisions without interference from Tastey Delights central management provided they satisfy their budget targets set by the head office in the New Forest. The head office charge the divisions for the key functions they control centrally such as marketing, research and development, human resources management, finance and IT. Only the head office have permission to develop new product and divisional management are currently not offered any innovation incentives. A new opportunity Navia Nguyen, was appointed was appointed last year as the new head of Heavenly Ltd. She has an outstanding track record for leadership and innovation in the food industry with significant experience heading organisations in Malaysia, Brazil, Italy and the UK. Navia Nguyen has recently expressed her concerns regarding the lack of autonomy and authority to implements new ideas in order to make improvements to the operational and financial performance of her division. Navia previously ran a smaller but hugely successful luxury smoothie brand (Smelt) in a previous role in Venice, Italy. Navia arranged to have a formal meeting with previous employer (Carla Minnilo) at Smelt who is keen on expanding their operations to the UK. Carla however expressed some concerns with their current offering in particular: • The smoothie company currently does not have specialist vehicles to transport cold beverages and keep then cool to sustain freshness over long distances • Their smoothies have a particularly short shelf-life as they are highly perishable. • Their environmentally friendly containers are not air tight hence it is difficult to maintain the freshness of the smoothies for a long periods Navia believes that HEAVENLY LTD could benefit from a strategic alliance with Smelt. HEAVENLY LTD has facilities large enough to support the manufacture of smoothie products. Navia would however have to seek collaboration of another Tastey Delights division to support with transportation facilities. Other divisions within Tastey Delights have facilities to freeze, store and distribute frozen products including the manufacture of air-tight containers which have the capability of maintaining the freshness of frozen products. Navia believes that HEAVENLY LTD’s existing customers, including large supermarkets, would be interested in buying Smelt’s frozen smoothies on a large scale. Navia and Carla held a formal meeting a week later. Carla commented as follows: “I think that this is a great opportunity for both enterprises but I certainly have some concerns about the potential venture. I am not willing to give up my recipe and business to a larger company. Smelt may not be big enough to own its own manufacturing plant, cooling vehicles nor produce air tight containers but I wish to maintain a level of ownership and control of my business. I can clearly see the benefits of a potential alliance but in order for me to enter into a negotiation, I need the following assurances that: - The Smelt chain of 25 outlets must remain unaffected by any strategic alliance. - The smoothie recipe will only be disclosed subject to a contractual agreement guaranteeing extending the freshness and life of the smoothies - There are sounds proposals of a viable solution to cooling vans and air tight containers supported with firm contractual guarantees - I will maintain control of how the smoothie brand is to be developed in the future - The financial performance of the Smelt product is to be ring-fenced ensuring that profits generated can be equitably shared • Requirements i) Considering Porter’s view on companies’ choices please explain the three choices that were made by the company regarding “what type of customers being served, what relative price being charged, and which needs are being met”. (10 marks) ii) Given Heavenly’s plan to form an alliance with Smelt, give an analysis with Porter’s Value Chain and advice Heavenly based on your conclusion from the framework whether they should form this alliance or not. (40 marks) this a mock exam question that I should practice I need good writing and something understandable

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