Focusing on the SWOT analysis on Deep Roots Distillery a lot can be established about the company. It emerges that the company has a good source of organic ingredients that are used in the production of quality liquor (Beamish, 2016). Additionally, the establishment has complied with various regulations which have made it enjoy the ease in operations. Its continued stability has boosted its local profile during the start-up period. However, it continues to face challenges in its quest to expand its market behind its tourist market niche which is highly dominant in the Prince Edward Island (PEI) (Beamish, 2016). The company has enjoyed better returns due to the minimal competition at PEI especially when it comes to organic/natural liquor. However, in cognizance of the founders' goal to improve the company's equity and profitability, it is prudent that DPD pursues merging as a strategy. Mergers for a long time have been looked at as possible avenues for entities to tap into new markets and niches, acquire new technologies or tap into new competencies (Marren, 2007). According to the SWOT analysis, the company has a significant weakness when it comes to its marketing. The case study points to the fact that DRD does not have a substantial marketing budget and department that can push its products across and beyond PEI. It is through a merger that also that the company can gain the right competence to expand its product range. The product differentiation is a critical aspect of any expansion strategy, and this can be achieved only technology and specific skills are applied.
The key departments that will be committed in the implementation of this strategy are operations, marketing, production, and sales. The operations department will be integral as it entails the management of production and the end delivery of products. Through a merging strategy, DRD will expand the scope of its operations by including new value addition channels and distribution paths. This will be fundamental in encouraging and connecting DRD with new markets with the intent of ensuring that they connect with different parties. The marketing department, on the other hand, will benefit immensely with the strategic merger (Acquaah, 2007). This is because DRD will acquire new personnel and resources to mount serious campaigns. As aforementioned, being a local distillery, DRD did not invest much in marketing its product due to less competition and small market scope. A merging strategy is set to catapult the fortunes of the organization by enhancing branding visibility and value beyond PEI. The production department will see to it new technology is introduced to boost output quantity and quality. This is essential particularly with the proposed expansion of the market due to the accrued benefits linked with the merging strategy.
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According to the case study per capita sales of alcohol and spirits in PEI were $226 versus the national average of $182 (Beamish, 2016). This meant that the PEI region was good for the alcoholic business. With the high uptake of the liquor, a merger could exploit these positive trends to the advantage of the company and its shareholders. From the background information, it is understandable that the company made a loss of $16,822 which could be linked to its inefficient systems put in place (Beamish, 2016). With a merger, the loss could be absorbed or spread across to ensure that it does not affect the long-term profitability of the company. A strategic merger also may bring with it the much-needed expertise which if utilized entirely can steer a company in a more positive direction. For instance with proper technology and value addition, the Maple liqueur that is currently the top selling product could outsell other rival products by a factor bigger than 5 to 1 as denoted in the case study. These elements are linked to the organization's mission to be a dominant force in the organic liquor production business. As such, there is need to adopt structured strategies targeting the entity's growth. The plan, therefore, will be shifting the company's operations through value addition and high technology based production.
With the set plan, the key departments will be affected making them highly functional and productive. It is expected that the marketing department will gain from a customer-centric, value-based marketing system (Marren, 2007). These systems are integral in creating platforms that can ensure that with new markets more interactions are forged to make the DRD products relatable to the desired consumer experience. The operations department, on the other hand, will benefit from the planned strategy through enhanced efficiency. Coordination and optimization of functions will be enjoyed across the board. Cross functions will be based on creating a synergistic experience for the company and involved parties. The human resource will gain from the professional insight brought about by the merger (Zott & Amit, 2007). Through merging the best talents are brought together to guide the innovative process that is needed in transforming DRD. Additionally, the improvement plan will be fundamental in connecting the personnel with new operational techniques that will enhance their expertise and overall performance in their respective capacities within the organization.
There are some key performance indicators that characterize DRD. These are cost-reduction, revenue improvement, and increased customer satisfaction. The merging strategy will be critical in expanding the company's operational scope but also boosting efficiencies that will reduce costs in the long run. Through the merging brought about by the strategy as well as the value enjoyed in various departments, it is observable that the revenue will be increased across different market niches. As aforementioned, merging will bring in positive attributes will lead to expanded consumer choice and product quality. All these will be pivotal in boosting the consumer experience.
References
Acquaah, M. (2007). Managerial social capital, strategic orientation, and organizational performance in an emerging economy. Strategic Management Journal , 28 (12), 1235-1255. doi:10.1002/smj.632
Beamish, P. W. (2016). Deep Roots Distillery. Ivey Publishing , 1-11.
Marren, P. (2007). High ‐ functioning business strategy. Journal of Business Strategy , 28 (6), 37-39. doi:10.1108/02756660710835914
Zott, C., & Amit, R. (2007). The fit between product market strategy and business model: implications for firm performance. Strategic Management Journal , 29 (1), 1-26. doi:10.1002/smj.642
