BOWLAND

[Vivienne]

Bowland Carpets ltd is a major producer of carpets within the UK.The company was taken over by its present parent company,Universal Carpet Inc in 20X3.Universal carpet is a giant ,vertically intergrated carpet manufacturing and retailing business,based within the USA but with interests all over the world.

Bowland Carpets operates within the UK in various market segments,including the high value contract and industrial Carpeting area-hotels and office blocks,etc.-and in the domestic (household)market.Within the latter the choice is reasonably wide ,ranging from luxury carpets down to the cheaper products.Industrial and contract carpets contribute 25% of Bowland carpets' total annual turnover which is currently $ 80million.Up until 15years ago the turnover of the company was growing at 8% per annum,but since 20X2 sales have dropped by 5% per annum in real terms

Bowland carpets has traditionally been known as a producer of high quality carpets,but at competitive prices.it has a powerful brand name,and it has been able to protect this by producing the cheaper,lower quality products under a secondary brand name.it has also maintained a good relationship with the many carpet distributors throughout the UK,particularly the main stream retail organisations.

The recent decline in carpet sales ,partly recession induced,has worried the US parent company.it has recognised that the increasing concentration within the European carpet manufacturing sector has led to aggressive competition within a low growth industry.it does not believe that overseas sales growth by Bowland Carpets is an attractive proposition as this would compete with other Universal Carpet companies.it does,however,consider that vertical intergration into retailing(as already practised within the USA) is a serious option.This would give the UK company increased control over its sales and reduce its exposure to competition.The president of the parent company has asked Jeremy Smiles,managing director of Bowland carpets,to address this issue and provide giudance to the US board of directors.Funding does not appear to be a major issue at this time as the parent company has large cash reserves on its statement of financial position.

REQUIRED:
Acting in the capacity of Jeremy Smiles you are required to outline the various issues which might be of significance for the management of the parent company.Your answer should cover the following:

a)To what extent do the distinctive competences of Bowland carpets conform with the key succes factors required for the proposed stratergy change? (10marks)

b) In an external enviroment analysis concerning the proposed stratergy shift, what are likely to be the key external influences which could impact upon the Bowland carpets decision. (15marks)

[neway]

a)To what extent do the distinctive competences of Bowland carpets conform with the key succes factors required for the proposed stratergy change? (10marks)

Distinctive competences or core competences are the activities, processes and methods which an organisation does extremely well/ effectively to beat its competitors, in ways that others cannot imitate or obtain.

Key success factors/ critical success factors are performance requirements that are fundamental to an organisation’s success in a chosen industry/ environment.

It is very important to ensure company has the distinctive competence which is the critical success factor in a chosen industry.

Distinctive competences
Bowland has various market segmentations (including the high value contract and industrial Carpeting area-hotels and office blocks, etc.-and in the domestic (household)market), wide product ranges (ranging from luxury carpets down to the cheaper products.) and powerful brand name (traditionally been known). Bowland also have strong support from parent company, Universal carpet (is a giant, vertically integrated carpet manufacturing and retailing business, based within the USA but with interests all over the world. Funding does not appear to be a major issue at this time as the parent company has large cash reserves on its statement of financial position.)

the proposed stratergy change
vertical integration into retailing

Key success factors for the proposed strategy change
-Extensive wide market coverage to compensate retaliation from existing distributors who might reluctant to stock Bowland carpets as a result of bad relationship due to opening of retailing stores
-Expertise in retailing, e.g. manage new structure of value chain activities inclusive of stock/ warehouse management for retailing stores (inbound logistic), stocking and selling process for retailing stores (operation), transport scheduling systems (outbound logistics ) marketing & sales for retailing stores. Backroom supports activities such as expertise in sites selections, setting up of sites, ( retailing infrastructure ) etc.
-Huge cost of investment in opening up retailing stores, developing extensive market coverage, & provide comprehensive range of products

As Bowland carpet has no expertise in retailing management & looking at the cost of investments are far more overweight benefit gained (increased control over its sales and reduce its exposure to competition.), therefore there is no close conformity the distinctive competences of Bowland Carpets with the key success factors in vertical intergration into retailing.