Strategic Analysis of the Tribe Stout Company Essay Example

management where individuals holding key positions like production, warehouse, and delivery director lack the required formal qualifications. This composition of the workforce poses internal challenges as many employees are long-time friends or family members of John who have not pursued further education or accreditation. As a result, numerous errors occur within the organization. In my research, I found an error in the accounting section involving unqualified staff members occupying crucial roles such as directors. This incorrect calculation highlights the lack of competence among TSC Company's staff and directors. It should be noted that fiscal statements contain incorrect figures due to clients going out of business or filing for bankruptcy resulting in bad debts totaling ˆ50,000. Furthermore, there was also an error in calculating overhead costs.Regarding financial figures, it is worth noting that Tribe Stout Company procures all of its raw materials and ingredients from a local supplier who only accepts cash on delivery. This decision is made due to concerns about the company's solvency and ability to survive. Moreover, a quarter of TSC's total debts are deemed bad debts, indicating a flawed policy regarding credit sales. The founder and current CEO of Tribe Stout Company, John Murphy, plans to retire at the end of this year. His intention is for his son Cillian Murphy, who holds a BA Marketing diploma, to take over as CEO. However, John's wife, who heads the accounting section, does not have any retirement plans yet.

The overall strategy for organizing the company involves having one director in charge of accounting and disposal activities while another director oversees production, warehouse operations, and logistics under the leadership of the CEO. The accounting section

has two part-time employees while the production section employs 15 full-time workers. Despite minimal investment in construction and installations over time, the company continues producing its products under conditions similar to those in the 1980s.

External Environment Analysis

When analyzing the external environment factors that impact the company and should be taken into consideration (PESTEL analysis), various aspects will be examined.

PESTEL Factors

Political and Legal Factors:

When discussing political factors related to the brewery industry in Ireland, it is necessary to mention the government's efforts to promote responsible drinking through campaigns like "DrinkAware." Additionally, significant influencing factors include governmental taxes and excises on alcoholic beverages. In Ireland, the Value Added Tax (VAT) is already high at 21% without considering additional excises. Annually, the government earns approximately ˆ427 million from beer excises and ˆ642 million from VAT on beer. Ireland has one of the highest VAT rates in Europe, as well as the fourth highest excise rate on intoxicants (Foley, 2010). Breweries, like other companies, are subject to taxes related to their employees such as income-related taxes. It is also worth mentioning that alcohol cannot be sold in stores in Republic of Ireland after 10 pm and most bars and clubs close around 3 am.

Economic Factors:

Regarding economic factors, Ireland's beer industry supports over 50,000 jobs despite the impact of the economic crisis. Irish people have the highest beer consumption per person per year, with a preference for stout beer. However, there has been an increase in the number of bars opening each year, resulting in an excess of around 2000 bars. The ban on smoking in bars has significantly impacted how and where people drink beer which is important

for Tribe Stout Company (TSC).Lager beer holds the majority market share at 68%, but it is encouraging that most imported beers are also lagers. In Ireland, drinking beer in saloons fosters social interaction and conversations while enjoying drinks, which benefits breweries like TSC. Moreover, the presence of tourists interested in trying local brews creates an advantageous environment for TSC to capitalize on. Technological advancements and environmental factors are also crucial in this industry. Top-notch natural ingredients and water are indispensable for producing high-quality beer. Leveraging technology allows brewers to maintain desired quality over time by controlling these elements effectively. Brewers must utilize this technology to achieve the perfect pint. Weather and other environmental factors can impact ingredient availability, flavor, people's mood, driving them to pubs for a spirit boost through pints. Additionally, these factors influence tourist numbers and their visiting periods in a country. TSC management should consider these aspects carefully.Moving to the next section titled "FIVE Forces Analysis," I will discuss how Porter's five forces impact both the industry and company. Specifically, I will focus on the threat of new entrants, which falls into the medium category due to certain barriers to entry. In Ireland, there are established traditional large beer makers with only a few companies dominating market share. However, it is possible for anyone to produce beer in small quantities, such as starting a home brewery like TSC did initially.

Considering the challenges faced by newcomers in establishing distribution channels and making an impact in the market, I have categorized this threat as medium. Recently, established breweries have been investing more heavily in marketing efforts to differentiate their brand and products from competitors.

Tribe Stout Company could benefit from following the example set by market leaders in Ireland since their current marketing expenses are relatively low.

The intense rivalry among beer companies in the country is a significant factor contributing to this. Market leaders invest heavily in reducing costs, increasing output, and marketing efforts. On the other hand, Tribe Stout Company operates locally in Galway with limited investments and expansion opportunities.

Both local and imported beers pose competition for TSC while substitutes like other beers, liquors, and wines also threaten the industry.The purchasing power of buyers such as pubs, hotels, and supermarkets is medium. They have the ability to negotiate with various providers offering different types of beer. TSC faces a high power of purchasers due to their perceived desperation during negotiations with clients. In comparison, purchasers across the industry as a whole have average bargaining power since they can easily switch between manufacturers and supermarkets possess strong negotiation abilities through their alliances with breweries.

Manufacturers have a wide range of farmers and suppliers to choose from in the industry overall; however, TSC's supply is limited to local farmers. Although there are no substitutes for the main ingredients used in brewing beer, companies must prioritize sourcing high-quality raw materials for their products.

TSC is facing difficulties in obtaining goods on credit due to their suppliers considering them bankrupt. As a result, the brewery must make cash payments, which makes it challenging to obtain favorable prices for the goods.

The TOWS MATRIX assesses the internal strengths and weaknesses of the brewery, as well as external opportunities.

Internal Strengths:
- The beer is of good quality.
- They have a tradition in brewing.
- Tribe has received a quality

award.

Internal Weaknesses:
- The company is insolvent.
- There is a lack of skilled staff.
- No investment has been made.
- Debtors are not being managed effectively.External opportunities include the potential in the local brewed beer market and the existence of a niche within the beer market. Additionally, tourists provide an opportunity for sales. To overcome challenges and capitalize on these opportunities, it would be beneficial for the brewery to focus more on attracting tourists and regaining its presence in the local market by offering unique taste and quality. This can be achieved by hiring more skilled staff, improving management efficiency, and investing in marketing strategies targeted at attracting tourists.

There are also external threats that need to be addressed, such as buyer power, competition, and economic crisis. To differentiate themselves from competitors and increase market share and profits, TSC should emphasize their unique taste and quality. Alongside this strategy, it is important for TSC to work on improving relationships with both suppliers and purchasers to negotiate better deals with these stakeholders.

Overall, I recommend implementing these strategies to help TSC achieve success and increased profitability. These recommendations can serve as guidelines for future actions taken by company management.

COMPETITIVE STRATEGY

Tribe Stout Company has a unique and high-quality product that should not be compromised. This aspect should be extensively utilized in the company's strategy.To achieve this goal, I propose implementing a focal point distinction scheme that provides high-quality merchandise. The strategy of TSC should focus on improving communication with customers and suppliers to increase their market share. In addition, the company should improve debt management by offering discounts for early or cash payments. Credit sales should be limited to trusted bars

and hotels while implementing risk calculations and management measures. This approach will enhance cash flow and ensure a stable financial situation. To effectively execute this scheme, it is crucial to increase brand awareness. If expanding quickly in larger markets proves challenging, the company can concentrate on establishing local brand recognition in Galway. It is essential for future investments and further expansion to establish themselves as a dominant player in the stout beer market in Galway next period. However, achieving this objective may require personnel changes. Instead of relying on hiring family or friends, the company must recruit skilled employees. While working with family can be enjoyable and reliable, it can have negative effects if they lack the necessary skills. The main focus should always be on TSC's excellent product offerings.Investing in marketing efforts will not only generate brand awareness but also promote the exceptional taste of their beer and its numerous awards receivedThe successful implementation of a new directional strategy is vital for TSC in order to enhance communication, achieve better solvency and stability. The primary focus should be on the local Galway market and attracting tourists to generate sufficient funds for expansion. Externally, it is crucial to attract more buyers, while internally maintaining the current size but with improved technology and efficiency. Additionally, the new marketing department should utilize locally sourced materials to enhance brand awareness and company image. Participating in beer exhibitions or festivals would also be beneficial as it would provide an opportunity for people to sample TSC's beer. Involving the local tourist community is essential for the success of this project.

Ultimately, Mr. Murphy has the final decision on whether to pursue

actions to save the brewery and its reputation; however, prioritizing human resource enhancement through hiring skilled individuals before implementing this strategy is crucial. It is suggested that costs can be reduced by developing current employees rather than employing expensive experts; however, if development is not feasible, hiring an expert, especially for vital positions such as accounting director, is recommended.

To improve efficiency, the company should implement a turnaround scheme and invest in production procedures. One suggestion is replacing a truck that frequently breaks down as it would save money on repairs and reduce delivery time.In addition, it is recommended to consider investing in more efficient machinery, with calculations for payback and return rates. Furthermore, efforts should be made to enhance sales of smaller beer packs through promotions or discounts. If these efforts are unsuccessful, the option of removing them from the product portfolio and exploring new packaging options should be considered. By following these recommendations, the brewery can achieve future success and steady growth.

The overall conclusion emphasizes that both internal and external problems exist within the company but can be addressed over time since external issues often stem from internal ones. It is expressed that there is confidence in your son taking heed of the provided advice and strategies when assuming control of the company. With your guidance at the start of his career, coupled with his talent and youthful spirit as an entrepreneur, this company is ready to thrive in the future by implementing the aforementioned schemes.

It is vital for the company to prioritize improving internal affairs such as human resources and other aspects in the short term. Simultaneously, in the long term, there should

be a focus on the market, clients, and market share while continuously investing in human resources, technology, and marketing.