The Windsor Group PDF Print E-mail

G
entlemen, began Peter Ford, Managing Director of The Windsor Group at the opening of the company's 1999 strategic planning session, ?it is my belief that our company has lost its focus, and the purpose of the next two days is to try and re ? establish exactly where we should be going over the next one to three years, and to develop a plan that will take us there. We are going to have to work smarter, and all directors must be focussed in the same direction.?

Andrew Feldman was seething. He had been Windsor's Marketing Director for the past four years, working under Ford for three of these. An outspoken critic of Ford's management style, which he saw as being purely financially driven, with little or no regard for the customer or the company's employees, Feldman had frequently counselled his colleagues on a number of occasions about holding strategic indabas of this nature in some exotic venue that did little more than extrapolate the previous year's financial forecasts, and spent more time on game drives and braais. And now, he thought to himself, simply because Ford has brought in a consultant to be used primarily as a sounding board for his ideas, he now expects us all to practice what I have been preaching for years, and all because market growth is stymied, and the trade is beginning to gripe. Feldman had his doubts about the assembled group being able to achieve Ford's goal in two days. His main concern centred on the issue that no strategic audit had been conducted, and no competitive intelligence gathered. For three years he had been battling to get his boss to implement a proper strategic infrastructure, but to no avail. Moreover, nowhere on Ford's agenda was there anything remotely related to company structure. Ford, he thought was looking for a quick fix solution, and he was convinced that the logically structured agenda which reflected his boss's financial background, would not provide the answers that were needed. He knew from his days at Lever Ponds and Shell that strategy was a much more messy business that his Managing Director realised.

The Windsor Group was established in 1976 for the specific purpose of manufacturing wooden kitchenware products, and this had remained its core business. Feldman's own forecast was that 80% - 90% of Windsor's sales would continue to come from its core activities by the year 2000. Since its inception, the company had grown into a successful operation with an estimated turnover of R150million for year ending February 2000. As one of the major players in the Southern African market, it boasted a product range of some 65 products from rolling pins to spice racks. Sixty percent of these were locally made, with the remainder being outsourced from The People's Republic of China. The company enjoyed limited success with export sales across the product range, albeit at low margins.

Since the beginning of 1998, the South African economy had been feeling the full force of becoming part of the global economy, and as an emerging market, had become a victim of the so-called ? Asian flu'. Moreover, the impact of the depreciating Rand meant that imports had come under severe margin pressure and Ford was aware that these would not provide the profit contribution required. Feldman had advised his boss that, from a marketing perspective, imports add flavour to the product range, but conceded that outsourcing on the local front was becoming increasingly attractive. Ford had added that on the export front, Windsor was more competitive and a decision had to be taken as to whether the company would rely on continued exchange rate weakness when quoting on export prices.

Feldman however was worried about the lack of market potential for the kitchenware range as a number of smaller start-ups had began to eat away at Windsor's 70% market share. Moreover, the trade had turned its back on the new bathroom ware range the company had launched during 1998. Nonetheless, he had become particularly excited by an opportunity that had arisen to supply DIY knock down or semi knock down furniture under the Windsor brand name. His research had indicated that currently, the market appeared to be wide open and potential turnover could be anywhere between R1million to R10 million per annum. Discussions with production on user friendly issues had already proved fruitful. The channels of distribution would be the likes of Pick'n Pay Hypermarkets, Hyperamas, Game, Dion, Macro, selected Shoprite Checkers & OK as well as selected Mica stores. Feldman had identified a potential range including everything from bookshelves, bar stools, spindle chairs and tables to coat and hat stands. Most encouraging had been the positive response from the trade. Game had even indicated that they would be prepared to work with him to develop the range. He had already drawn up a plan to research consumer profiles, packaging and to conduct a more in depth market analysis, when Ford had put the brakes on the project. Now he felt that he had to endure a presentation by his boss that was going to achieve very little in terms of what he knew strategic thinking to be all about.

?Currently, there are a couple of issues that are of prime concern to us? continued Ford. ? Firstly, the local market for our product range is a major limiting factor to growth. The Windsor brand name is a strong one and is well regarded in the trade and with the end user. However, the trade is resisting our new wooden bathroomware range. Secondly, although our factory is extremely efficient, our product range is too wide. This means that production runs are often short, which necessitates the recruitment of additional staff. Moreover, we are being prohibited from becoming internationally competitive because our current overheads, necessary for a large range, are high. The factory runs on a single shift basis and John Tate, our production manager has stated that larger orders of fewer items would dramatically improve the situation. Remember, gentlemen, our vision is to become a world class producer and marketer within our chosen market segments. Don't forget, that at our last stratplanning session this time last year we agreed to include outsourced complimentary products which we would market on a local as well as an international basis. Therefore, to facilitate our discussion, I have sketched an outline of what I believe could form the basis of a strategy?

Moving deliberately towards the overhead projector, the managing director began to recite the copy from the reflection that lit up the conference room.

?Firstly, I believe we must adopt an outward stance by marketing our products both locally and internationally. Secondly, we must produce only those products with which we can have a natural competitive advantage. Thirdly, we should complete the range by outsourcing the balance of the range on an economic basis. My fourth point is that we must continue to market products under our brand name and of the highest possible quality. The fifth part of my strategy suggests that we should keep an open mind to launching other brands in other segments should the need arise. And lastly, our factory should be regarded as an asset, and that should be reflected in the introduction of new technology over the next three to five years.?

? That concludes my opening remarks gentlemen. Now does anyone have any questions or comments before we break for tea??

Andrew Feldman yawned and lazily began to scribble down his ideal Springbok squad for the forthcoming World Cup.

 
 
Meet Paul Dorrian
Principal Consultant

Paul has over twenty years experience as a management consultant, and has directed many projects in the fields of strategy, marketing and organisational effectiveness. His expertise has assisted many of South Africa's leading companies across numerous industries and national backgrounds....
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