Answered: The case study is based on an article…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

The case study is based on an article about Pataka Tea Co., Ltd. (PT) - Reassessing the External Environment.

This is the final part of the case study. The other parts of the case study were already submitted with the same questions

Assignment Questions

As of May 2018, what challenges had PT faced in recent years? Assess the factors in the internal and external environment that led to those challenges?
Analyze the industry competition conditions that PT faced. Identify the key external factors that affected PT’s strategic decision.
Develop a SWOT Analysis for PT to help King develop his strategy. Indicate how each of elements from the four (4)components from your SWOT, can be used to enhance PT’s competitive advantage. Each component of your SWO must have at least three (3) elements
If you were Phillip King, chairman of PT, what recommendations – at least four (4), would you make to improve company performance and address the challenges you outlined in question 1. Provide clear justifications for your reasons.

Transcribed Image Text:PT operated three tea categories and eight brands, and its prices spanned high, medium, and low budgets. Diversification could not only meet the needs of different consumer groups but also share fixed costs and ensure the company's stable profits. Coupled with the Amoeba business model, diversification provided customers with the most cost-effective tea and drinking services while implementing a cost leadership consumed by customers. If the best-value focus strategy was implemented, and only the main brand Lemongrass was developed, would consumers accept PT's high-priced products? Would front- line employees have the ability to sell? How should the national market break through? Although King hesitated, it was time to make a strategic decision. Direction 1: Adhere to the cost leadership strategy PT operated three major categories and eight brands, covering consumer groups and market scope to the greatest extent, and providing mass-market customers with cost-effective products. However, the implementation of this strategy meant that only limited resources and attention would be allocated among the eight brands. Each brand would receive fewer resources and less attention. There was a risk that none of the brands would succeed in transformation. Direction 2: Adopt the best-value focus strategy PT focused on category and brand, and on transforming Lemongrass into Trinidad's leading high-end green tea producer. Different from its first national market expansion, this expansion was undertaken on the basis of strategic priorities. The transformation of national tea brands needed to be realized in stages for PT to truly become the leader. The resources and organizational conditions required by the best-value focus strategy differed, which meant PT would face huge changes ahead.

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