[Solved] Mighty Delights LTD and Torremolinos Contract Q&A

Business Studies

Question 1: MIGHTY DELIGHTS plc is a large consortium that owns a UK subsidiary Delightful Ltd which manufactures luxury ice creams. Background Information DELIGHTFUL LTD is a well-known luxury brand based in Liverpool in the North of England; it is a UK market leader in the manufacture of ice cream products. DELIGHTFUL LTD’s ice creams […]

Mighty Delights LTD and Torremolinos Contract Q&A

Question 1: Mighty Delights LTD Case Study

Delightful LTD adopts a differentiation focus strategy to remain competitive in the manufacture of ice cream products. The organization strives to outperform its competitors by availing products that customers perceive to be of better quality than those of its competitors. It packages its ice cream in plastic or cardboard-lined containers and only produces three different product categories. Unlike other companies that produce multiple types of products within the United Kingdom’s ice cream production industry, Delightful LTD only specializes in ice-creams. According to Islami et al., businesses that adopt a differentiation focus strategy develop competitiveness by focusing on a narrow market segment to which they offer superior products. As a result, such organizations are perceived to be unique producers of high-quality products, which attracts a positive reputation and customer loyalty in the long run. To achieve such an objective, Delights LTD focuses on improving the quality of its products rather than developing new brands to seize emerging market niches. For example, although the company has multiple branches, only the head office is responsible developing new products. The organizational structure helps to ensure that the company’s workforce mainly focuses on improving the quality of its products and refining customer service to attract more prospects. Therefore, Delights LTD owes its competitiveness to its differentiation focus strategy.

Porter’s value chain involves several primary activities: inbound logistics, operations, marketing and sales, and outbound logistics. Inbound logistics focuses on how the resources required in the production process are availed into the company, while outbound logistics focuses on the demand side of the supply-demand equation through which goods and services leave the company to satisfy the prevailing demand in the market. Services and marketing, and sales focus on ensuring that potential customers gain access to the company’s products. Operations include daily organizational activities that are conducted to ensure the steady production of goods and effective management of the company’s resources. On the other hand, support activities include strategic management activities such as procurement, human resources, technology development, and firm infrastructure. Procurement involves the process of finding and acquiring resources required by an organization to continue producing goods and services and maintain its operations. Human resources and technology development initiatives seek to ensure that the organization has adequate equipment and workforce to maintain or expand its productivity. As illustrated in Figure I below, both primary and support activities of Porter’s value chain interact to create a clear picture of an organization’s cost drivers and sources of differentiation to inform strategic decisions.

Figure 1

Porter’s value chain model

Based on Porter’s value chain model, the strategic alliance for Delightful LTD would attract multiple strategic benefits. Delightful LTS’s head, Navia, identifies that the company has sufficient resources to support the manufacture of smoothie products after forging a strategic alliance with Smelt. Since the company has adequate resources, engaging in an alliance with Smelt would open up more effective inbound and outbound logistics and procurement opportunities. For example, the company will likely gain a new customer base and access Smelt’s resources. The company will also benefit from increased intellectual capital as its workforce collaborates with specialized and experienced employees from Smelt. Moreover, the strategic alliance will allow the organization to reach a broader audience without putting in extra time and capital, which will attract economic and competitive benefits in the long run. Therefore, the proposed strategic alliance between Delights LTD and Smelt will refine both organizations’ value chains.

Question 2: Torremolinos Public Transport Contract Case Study

The current operational strategy adopted by Vroom company faces multiple inconsistencies that pose potential threats to profitability. The company uses an outdated payment system through which passengers purchase tickets from bus drivers. As a result, the buses spend significant time as drivers issue tickets to all passengers. Moreover, a mismatch between the number of passengers and the amounts collected by the drivers has been realized, which demonstrates the ineffectiveness of the company’s payment system. Such a faulty payment system could expose the company to security and fraud risks, resulting in a significant decline in profitability and a negative reputation as potential customers associate drivers with thievery. To avoid such risks, Vroom company should consider leveraging emerging payment system technologies that guarantee accuracy and a timely experience for the business and its customers. For example, the company could implement a digital wallet system allowing passengers to pare for their fares online with a few clicks. The technology could integrate other payment methods to allow passengers to complete their payments by using the balances available on their banking accounts, credit cards, or loyalty cards. The company could also implement leverage contactless payment methods that allow passengers to make payments for their trips without involving liquid cash or swiping cards. The technology allows users to complete payments by tapping a card or waving their mobile phones near a compatible card reader when checking out. Implementing such technologies could help save a lot of waiting and processing time and reduce fraud cases to safeguard the company’s profitability.

Effective corporate governance strategies could also help to address the risks associated with the traditional payment method used by the company. Effective corporate governance ensures employees’ compliance with an organization’s mission, vision, and strategic objectives to minimize business risks (Li et al. 101334). Through corporate governance, business leaders oversee the actions of junior and subordinate staff members to ensure that all activities conducted within the company are focused on its strategic goals. As a result, effective corporate governance encourages positive behaviour among workforce members and reduces risks associated with employee misconduct. Vroom company should, therefore, refine its corporate governance structure to address inconsistencies in its payment system. For example, the company could establish the position of a chief technological officer who would address its technological needs. The organisation could implement an efficient payment system through the help of a chief technology officer.

The company adopted a risk reduction approach to avoid the potential implications of the existing irregularities in its payment system. The company is considering implementing a new payment system to replace the traditional payment method that it has been using. In so doing, the company seeks to reduce the risk of loss by implementing a more stable payment system that helps to save time and increases revenue in the long run. A risk reduction approach focuses on establishing new ways to perform a task through which a risk becomes less severe. Companies that implement a risk reduction approach assess the available measures or courses of action that would help to make risk more manageable. Therefore, Vroom company adopted a risk reduction approach to reduce the possibility of loss resulting from using an outdated payment system.

Works Cited

Islami, Xhavit, Naim Mustafa, and Marija Topuzovska Latkovikj. “Linking Porter’s generic strategies to firm performance.” Future Business Journal, vol. 6, no. 1, 2020, pp. 1-15. https://link.springer.com/article/10.1186/s43093-020-0009-1

Li, Zhiyong, et al. “Predicting the risk of financial distress using corporate governance measures.” Pacific-Basin Finance Journal, vol. 68, 2021, p. 101334. https://www.sciencedirect.com/science/article/pii/S0927538X19305542

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Published On: 01-01-1970

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