When to terrorize talent

Some people think that in sport the management tactics are out in the open for all to see. For example, David Backham was kicked by his coach Alex Ferguson. Moreover, Bobby Knight a former basketball coach tried to strangle his subordinates.

In business, lots of successful chief executives rule by terror. However, none reaches the standard set up by John Patterson who built NCR. There was one situation when an NCR employee found his desk and chair in flames when he was fired. But modern laws on constructive dismissals and employee’s harassment have put an end to such fun.

However, terror in the workplace is making a comeback during an economic upswing. Workers are scarce and bosses must handle talent with care. But in times of recession the balance of power swings. As Hank Paulson said the 15-20% of people add 80% of the value, but other 80-85% are largely, redundant.

In sport coaches need to strike the right balance in order to develop talent. Fear can become a barrier to taking risks, but can provide the essential emotional kick needed to meet a challenge.

Jim Collins author of a book that explains why some firms succeed in making the jump from good to great found that fear was a key to survive. He found that in the truly successful firms people were productively neurotic. The driving fear of failure is not unique. This kind of fear is common among the artists and in professional where lots of fragile egos have to be managed.

8. Speak about Greenbakers' recipe for success.

The answer to the qustion of Greenbakers' success is very simple – You have to know what people whant and you have to give it to them at the right price!

They launch a new product, which the customers want at an economical price. They respond to consumers’’ demand.

When Sam Greenbaker back in Cjicago in the 50s, he learned fast that what people wanted was high quality biscuits at low prices. And that is what they gave them – Greenbakers’ Colorado Cookies.

In the 60s people wanted good chocolates at an economical price, so the Greenbakers’ range of chocolates was born.

Of course, they had some mistakes, but they have learned from them. They started exporting operated through agents abroad and they just didn’t care about the product and about customers. So, they disposed of the agents and set up in each country a wholly-owned subsidiary which had its own manufacturing and marketing capacity.

They built factories in Britain, South America, Australia and South Africa. Their next step will be to open factories in ge3rmany and France.

They are investing in their products: build new factories, invest in research and development (developing the new range of products), they advertise heavily, they launch aggressive marketing campaign, they consolidate their hold on the market.

7. Speak about the proposal darlings received from their German agent.

What kind of agreement do you think Darlings should sign with them?

In 2007 Darlings received a letter from Deutsche Einfuhr GmbH. Mr Rolf Herbst wrote to Miss E. O’Reilly, Darlings’ Export Sales Manager.

Deutsche Einfuhr have acted as Darlings’ agents in Germany for 5 years with the considerable success. Their turnover in the financial year ending 2007 was a 30% increase on their performance in 2006. They invested considerable time, energy and money in establishing Darlings boxed chocolates on the German market.

However, Deutsche Einfuhr felt that the boxed chocolate sector offered little scope for future growth. The market was saturated and it was unlikely that a highly priced product like the Colonel’s Choice could gain extra market share.

In order to capitalize on their investment in darlings’ products they proposed increasing their involvement with Darlings in one or both the following ways:

1. By widening the range of products.

In Britain Darlings produced and market a wide range of chocolate bars, which could be successful on the German market. Darlings had a reputation here for quality and goods could have been sold at a premium price, also goods were unable to compete in price against domestically produced products.

2. By increasing their presence in Europe.

Deutsch Eifuhr already acted as marketing agents fot Darlings’ parent company, Fountain Foods, in all countries of the EU. They understood European markets, had contacts with all the major European retailers and would have been able to coordinate the whole of Darlings marketing strategy.

Darlings should sigh an exclusive agreements with Deutsche Einfuhr.

If they do this, they could benefit from it. First of all, Germany can coordinate the whole of Darlings European marketing strategy, they are well-established company, and they are well-connected. But, in this case, Darlings will have to cancel all the contracts with other agencies in other European countries. It is risky, they may fail.

6. Describe Darlings’ historical approach to export.

Identufy the difficulties they have been facing with their agents in different countries since then.

Darlings started exporting after the Second World War, setting up ad hoc agency agreements throughout the world: India, Australia, Latin America - their strongest export markets. In the mid 60s they penetrated the European market and established agencies in Germany, France, Belgium, Holland, Italy.

Following the Britain’s entry into the EEC, Darlings export trade has grown significantly, although they have never tried to exploit the EEC market.

To the rest of the world Darlings export trade has declined and stagnated.

Export in non-European countries is hampered by high and rising transportation costs and difficulties in co-ordination and communication.

Due to the strengthening of the sterling exchange rate, the increase in the cost of cocoa, higher transport costs, aggressive marketing by their rivals, Darlings price competitiveness has declined.

Darlings export trade is only in boxed chocolates with «The Colonel's Choice» accounting for 82 % of all Darlings export. They can compete in terms of quality, so, agents can increase prices to cover transportation cocts and still compete with domestic producers.

It would be impossible with more price-sensitive products, unless Darlings could export in very high volume.

2. Problems of Darlings agency system.

Almost each country has ist own agent. Darlings believe that the quality if individual agent is the most important factor in determing their success in any country. But agents only sign an annual agreement, and some can transfer to their competitors. As we can see, ong-term planning is also impossible.

Moreover, Darlings have no central strategy – their expenditures vary greatly from country to country.

In India:

The sales of Darligs’ products in India declined and Indian marker could not give them necessary sales and marketing support. Darlings’ agent in India could not renew their agreement. If there was an increase in demand for high quality British boxed chocolates they would have been delighted to renew their agreement with Darlings.

• Severe competition of traditional sweets; boxed chocolates are expensive;

• A fall in Darlings price competitiveness

• The standard of living in India is lower then in European countries, Darlings’ products are too expensive for Indian consumers.

Solutions:

Short-term decision

• Lower prices

• Find a new agent/leave the Indian market

Long-term decision

• Open a subsidiary, diversify into chocolate Biscuit bars(they will make high profits, because the raw materials, transport costs, labour costs are cheaper).